The Competition Commission (the ‘Commission’) today announced a “fast track settlement” for firms in the construction sector who have been party to collusive practices in bidding for projects in the public and private sectors. Construction firms are invited to apply for fast-track settlement with complete and truthful disclosure of information regarding collusion. In addition the firm must undertake to cooperate and cease anti-competitive conduct.
Upon complying with the requirements, the Commission will settle with participating firms with a reduced administrative penalty compared to the penalty if each transgression were to be prosecuted separately.
The Commission’s investigation in the construction industry has uncovered widespread anti-competitive conduct through various arrangements. Major firms in the sector, for example, have held meetings to allocate tenders and police each other’s behaviour through a structure referred to as ‘The Party’.
It is against this background that the Commission has devised a fast-track settlement procedure to incentivise firms to enter into a comprehensive settlement that is financially advantageous. It aims to minimise the associated legal costs and speedily resolve cases. Further, the process will strengthen evidence against those firms not taking advantage of this initiative.
The Commission is currently investigating 65 bid rigging cases in the construction sector implicating over 70 projects with an estimated value of R29 billion. Further, markets for construction products such as long steel, mining roof bolts, concrete pipes, plastic pipes, wire-mesh, reinforcing steelbar installation and pilings construction have also been investigated. Subsidiaries of several major construction companies are involved in these cartels. A case against the primary producers of reinforcing steel bar (the steel mills) was previously referred to the Tribunal. The Commission will soon be referring cases in rebar and pilings.
In addition, 150 marker applications (indicating an intention to apply for corporate leniency), some relating to more than one project, have been received by the Commission. Most of these corporate leniency applications were submitted by Group Five which has been cooperating with the Commission since 2009. In addition, applications were received from Grinaker- LTA and Murray & Roberts, who have committed to cooperate with the Commission.
The fast-track settlement process will work concurrently with the Commission’s Corporate Leniency Policy (CLP). A firm that applies for settlement may also apply for leniency. The provisions of the CLP process will then apply. A firm that has received conditional immunity for a particular conduct will not pay a penalty for it in terms of the settlement process.
For the purpose of calculating the penalty in each of the 6 main construction sub-sectors delineated by the Construction Industry Development Board, the following factors will be taken into account:
• the number of contraventions in the relevant subsector;
• whether or not the applicant won or lost the bid;
• the size of the contract(s); and
• whether the applicant has settled any claim for damages that may arise as a result of the non-prescribed prohibited practice.
Firms in the construction sector are invited to respond to this invitation in order to settle their bid-rigging and collusive conduct by making an application to the Commission by no later than 15 April 2011 at 12:00 pm.
The procedure, forms, and substantive terms and conditions of the fast-track settlement process is set out in detail in the document “Invitation to Firms in the Construction Industry to Engage in Settlement of Contraventions of the Competition Act” available on the Commission’s website www.compcom.co.za . Alternatively, a copy can be obtained from the Commission’s Registry at 77 Meintjies Street, dti Campus: Block C, Sunnyside, PRETORIA or via email by writing to [email protected].
Should a firm fail to take advantage of this settlement procedure the Commission will prosecute and ask for the imposition of maximum penalties with respect to each project. Further, the Commission will advocate that Government cease conducting business with firms found guilty of collusion following a prosecution.
For any enquiries regarding the settlement process please contact Lemogang Moletsane on 012 394 3408, or by email, [email protected].
Upon complying with the requirements, the Commission will settle with participating firms with a reduced administrative penalty compared to the penalty if each transgression were to be prosecuted separately.
The Commission’s investigation in the construction industry has uncovered widespread anti-competitive conduct through various arrangements. Major firms in the sector, for example, have held meetings to allocate tenders and police each other’s behaviour through a structure referred to as ‘The Party’.
It is against this background that the Commission has devised a fast-track settlement procedure to incentivise firms to enter into a comprehensive settlement that is financially advantageous. It aims to minimise the associated legal costs and speedily resolve cases. Further, the process will strengthen evidence against those firms not taking advantage of this initiative.
The Commission is currently investigating 65 bid rigging cases in the construction sector implicating over 70 projects with an estimated value of R29 billion. Further, markets for construction products such as long steel, mining roof bolts, concrete pipes, plastic pipes, wire-mesh, reinforcing steelbar installation and pilings construction have also been investigated. Subsidiaries of several major construction companies are involved in these cartels. A case against the primary producers of reinforcing steel bar (the steel mills) was previously referred to the Tribunal. The Commission will soon be referring cases in rebar and pilings.
In addition, 150 marker applications (indicating an intention to apply for corporate leniency), some relating to more than one project, have been received by the Commission. Most of these corporate leniency applications were submitted by Group Five which has been cooperating with the Commission since 2009. In addition, applications were received from Grinaker- LTA and Murray & Roberts, who have committed to cooperate with the Commission.
The fast-track settlement process will work concurrently with the Commission’s Corporate Leniency Policy (CLP). A firm that applies for settlement may also apply for leniency. The provisions of the CLP process will then apply. A firm that has received conditional immunity for a particular conduct will not pay a penalty for it in terms of the settlement process.
For the purpose of calculating the penalty in each of the 6 main construction sub-sectors delineated by the Construction Industry Development Board, the following factors will be taken into account:
• the number of contraventions in the relevant subsector;
• whether or not the applicant won or lost the bid;
• the size of the contract(s); and
• whether the applicant has settled any claim for damages that may arise as a result of the non-prescribed prohibited practice.
Firms in the construction sector are invited to respond to this invitation in order to settle their bid-rigging and collusive conduct by making an application to the Commission by no later than 15 April 2011 at 12:00 pm.
The procedure, forms, and substantive terms and conditions of the fast-track settlement process is set out in detail in the document “Invitation to Firms in the Construction Industry to Engage in Settlement of Contraventions of the Competition Act” available on the Commission’s website www.compcom.co.za . Alternatively, a copy can be obtained from the Commission’s Registry at 77 Meintjies Street, dti Campus: Block C, Sunnyside, PRETORIA or via email by writing to [email protected].
Should a firm fail to take advantage of this settlement procedure the Commission will prosecute and ask for the imposition of maximum penalties with respect to each project. Further, the Commission will advocate that Government cease conducting business with firms found guilty of collusion following a prosecution.
For any enquiries regarding the settlement process please contact Lemogang Moletsane on 012 394 3408, or by email, [email protected].