Maximum Penalty Imposed

First Time Maximum Penalty Of 10% Of Turnover Imposed For Anti-Competitive Activity

The Competition Tribunal fined Southern Pipe Contractors an amount of R16.8 million. It is the first time that the Tribunal imposed the maximum penalty of 10% of annual turnover on a business enterprise in South Africa for anti-competitive activity. Southern Pipe Contractors was one of eight members of a cartel in the concrete pipes manufacturing and supply industry that operated from 1973 to 2007. Earlier another cartel member, Conrite Walls, was fined R6.1 million or 8% of turnover. The Competition Tribunal said concrete pipe manufacturing and supply was the most enduring, comprehensive and stable cartel prosecuted to date. It had operated in such secrecy that members were referred to “by numbers and not by name”.

A spokesperson for the Competition Commission said that anti-competitive behaviour in the construction sector was prevalent worldwide, and more than 3 200 instances of bid rigging in the U.K. had been unearthed by the U.K.’s office of Fair Trading.

The construction sector in South Africa was one of four priority industries earmarked for rigorous investigation by the Competition Commission said Thembinkosi Bonakele, the Deputy Commissioner of the Commission and the results of current investigations will be made public during the first quarter of 2011.

An earlier study indicated that construction material prices had risen by 80% between 2000 and 2007 compared with the 60% increase in producer price inflation over the same period. It is apparent that the Competition Tribunal is taking an aggressive approach to imposing penalties when exposing cartels.

Pieter Rautenbach