Construction Bid Collusion Wider Than Initially Thought

After preliminary investigations conducted earlier by the Competition Commission, a great deal of evidence was found of wide-scale construction tender collusion. The Commission decided rather than prosecute individual enterprises, which could take much time and effort, it during February 2011, announced a "fast track settlement” process which was work shopped to interested parties in some of the major centres.

The Commission claimed that evidence was found of anti-competitive behaviour which stemmed from a long term culture in the sector in which the heads of enterprises would meet and allocate projects. Tembinkosi Bonakele, the Deputy Commissioner said that since the workshops were held, some 20 construction enterprises have been communicating with the Commission with a view to participate in the "fast track settlement" process. He said that the Commission was looking into more than 65 projects including the construction of some of the facilities for the 2010 FIFA World Cup which was held in South Africa. 

He indicated that enterprises in the construction sector now had a major incentive to use the settlement process because the penalties are more lenient than the fines that can be imposed by the Competition Tribunal ---- which may up to 10 % of a group`s turnover. The projects under consideration for anti-competitive behaviour are estimated to be worth more than the R29-billion initially estimated and Bonakele said that the numbers of projects identified were more than first thought but he was not in a position to indicate the total value thereof. The Commission established that some enterprises rigged bids by allocating projects to certain enterprises, then the other bidders submitting false bids to ensure that the designated bidder was awarded the contract.

Pieter Rautenbach