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Construction cartel: Three companies face prosecution

The Competition Tribunal on Wednesday said agreements with the two outstanding construction compamies Aveng and Guiricich Bros Construction had been concluded, which means all 15 fast-track agreements have now been approved.

Three companies, Group Five, Construction ID and Power Construction, will face prosecution after they failed to come to a settlement with the construction commission. Four other companies, which did conclude agreements with the competition commission, face prosecution for failing to pay fines for projects they were implicated in by other companies. These companies are Basil Read, WBHO, Murray & Roberts and Raubex. 

These four companies can still make a deal with the competition commission but it won't be as favourable as the fast-track deal. 

The extent of the collusion, particularly around the World Cup stadiums and some roads projects, was revealed at the two-day presentation before the competition tribunal. The companies agreed to projects where they engaged in bid rigging, cover pricing (exchanging information on pricing and submitting dummy tenders) and the paying of losers' fees to cover some of the costs for the dummy tenders. 

The projects included a number of road projects for the South African National Roads Agency (Sanral) and projects for universities and cement producer PPC. 

The losers' fees paid to companies were often hidden in books under "plant hire", a few companies testified. 

The contravention, which took place between 2006 and 2009, was said to involve projects worth about R46-billion, a fair percentage of them public sector projects. 

In return for disclosing projects during this period, which may have contravened the Competition Act, companies were given leniency on projects where they were the first to come forward. They then paid fines based on their annual profit in that sector – such as civil engineering – for 2010. The fines were not taken from the company's full annual profit, the view being put forward that the commission did not want the whole company to be punished. 

Senior managers and chief executives who attended the two-day hearing apologisied unreservedly for the transgressions. They said they had not taken action against any staff found to have been involved – the argument in most cases was that the staff members had resigned or retired. 

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