Commission sets civils firms’ fines

Raubex had reached agreement with the Competition Commission on the payment of a R58.8 million fine for contraventions of the Competition Act, the listed road construction and rehabilitation company confirmed yesterday. Listed construction company Stefanutti Stocks also disclosed in a revised trading update yesterday that the commission had proposed a penalty of R323m against the company, but its board was currently taking advice and “considering all its options”. Rudolf Fourie, Raubex’s chief executive, said yesterday that it had signed a settlement agreement with the commission about a week ago, but this still had to be approved by the Competition Tribunal.

Fourie said Raubex had to pay the R58.8m fine by the end of July and had made provision for this in its financial results for the year to February. He said the penalty related to eight offences, which related to “price covering”. This involved covering another firm’s bid price to make certain there were enough tenders, he said. Two of eight contracts were awarded to Raubex. Fourie declined to identify the firms whose tenders it had covered or the contracts involved. The settlement agreement reached with Raubex and the proposed penalty against Stefanutti Stocks follow the fast track settlement process for the construction sector launched by the commission in 2011 after all the major construction firms had been implicated in anti-competitive practices during the commission’s probe into 65 bid-rigging cases involving more than 70 projects valued at R29 billion.

Ebrahim Patel, the Minister of Economic Development, said last week that 18 construction firms, including the six biggest, had admitted to fixing prices and collusion and the commission had identified 300 cases of illegal or irregular behaviour by firms that won about R47bn in contracts, including those to build stadiums for the World Cup in 2010. Shan Ramburuth, the competition commissioner, confirmed to Business Report in March that the commission hoped to reach settlement agreements with 15 construction firms by June in terms of its fast-track settlement process. He said the National Prosecuting Authority (NPA) and Hawks would only proceed with their investigation into corruption in the sector after the commission had concluded its process.

The NPA and Hawks were drawn into the matter earlier this year when Stefanutti Stocks approached the NPA and certain of its senior management submitted sworn affidavits. Stefanutti Stocks has declined to comment on the reason for its approach to the NPA, but it is believed it was similar to the action taken by Group Five when it was first out of the blocks to approach the Competition Commission in a bid to obtain immunity from prosecution.