‘All four firms had colluded’

All four bidders for a tender for the extension of the Hartbeesfontein Water Care Works Project had colluded, the Competition Tribunal heard yesterday. The bidders agreed that the winning bidder would pay a loser’s fee of R500 000 to each of the losing bidders. The firms that submitted tenders for this project for the East Rand Water Care Company were Aveng subsidiary Grinaker-LTA; the Murray & Roberts/Dlamini joint venture; Pele Kaofela, which was previously named Civilcon; and the Concor/Masscrete joint venture. The tribunal hearing was convened to consider the confirmation of a provisional settlement agreement reached between the Competition Commission and Pele Kaofela. In terms of this agreement, Pele Kaofela had among other things agreed to pay a fine of R437 623.68 for reaching an agreement in May 2004 with the other bidders on a loser’s fee for the project.

Grinaker-LTA was awarded the tender and the project was completed in September 2007. Grinaker-LTA applied for leniency in terms of the commission’s corporate leniency policy. This was not one of the projects Murray & Roberts (M&R) disclosed to the commission during the fast-track settlement process, but it was among the projects in the settlement agreement it reached with the commission. Concor was acquired by M&R in 2006 but was not part of the listed construction and engineering group when this transgression of the Competition Act occurred. M&R agreed last year to pay a fine of R309 million for 17 prohibited practices or contraventions of the act. This followed the commission in 2011 inviting construction companies that were involved in collusive conduct to engage in a fast-track settlement process on favourable terms.

It resulted in 21 firms responding to the process and implicating 25 companies that had not responded. Of these 21 firms, only 15 had concluded consent agreements with the commission in terms of which they had agreed to pay penalties collectively totalling R1.46 billion. Pele Kaofela was one of the 25 firms that did not respond to the commission’s fast-track settlement process. Andreas Wessels, the chairman of the hearing, questioned the quantum of the fine imposed on Pele Kaofela, stressing that the fine was less than the loser’s fee. Layne Quilliam, the legal counsel for the commission, said that the loser’s fee was not paid to any of the companies involved and none of them had received any economic benefit. Hans Oosthuizen, the attorney for Pele Kaofela, confirmed that the firm did not receive any economic benefit; it was a small company compared with the other firms involved; it was the only case the firm was involved in; and the settlement agreement had taken a long time to negotiate because it had to be able to pay the administrative penalty.

The tribunal did not confirm the settlement agreement yesterday. Wessels said the tribunal would be requesting further information about the settlement agreement and would issue its decision on the case in due course.