Cover pricing in construction sector ‘endemic’ worldwide

Neil Cloete speaking for G Liviero on Thursday was responding to questions about what action was being taken against an employee who was involved in a project which contravened the Competition Act.

"We have taken the view that simple cover pricing was endemic in the construction sector at the time [2006] not only in South Africa but around the world."

The Competition Commission said cover pricing, even if it was bilateral, meant buyers still distorted the price. Companies that have testified on Thursday were G Liviero & Son, Wilson Bayly Holmes-Ovcon and Hochtief.

G Liviero told the Competition Tribunal that loser fee payments were listed as "plant hire" in their account records. 

On Wednesday Corruption Watch said it made a submission to the Competition Tribunal for the hearings into the R1.46-billion settlement agreements facing top listed construction firms, which rigged bids for, among other large projects, the 2010 soccer World Cup infrastructure projects.

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Aveng, the country’s biggest construction company by market value, was fined R306.6-million by the Competition Commission for price-fixing and collusion last month.

Murray & Roberts agreed to pay R309-million. Wilson Bayly Holmes-Ovcon was fined R311-million. 

The submission follows the Competition Commission's call on June 24 for 15 construction firms to pay penalties for collusive tendering. The penalties announced at the time were a percentage of the annual turnover of each company and took into account the number of projects each company was involved in.

It was the commission's single biggest collective settlement involving private companies, according to Minister of Economic Development Ebrahim Patel at the time.

In Corruption Watch's submission, the organisation said it pointed to other action that could be taken to increase the effective penalties imposed on the firms settling, and so increase the level of deterrence.

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