Johannesburg - JSE-listed construction company Aveng Group will pay a penalty of R46.3m to the Competition Commission, following an investigation into anti-competitive behaviour at its Infraset business unit.
The administrative penalty - paid as part of a consent agreement - amounts to 8% of the Infraset's turnover (excluding revenue from its paving products) in financial 2007. This amount will be paid to the commission in three equal annual payments.
The group has suspended two executives implicated in the investigation pending an internal probe into any misconduct associated with the findings of the commission. In addition, another executive has been placed on special leave.
Following the release of the news, Aveng's share price fell 5.8% to 2 638c on Friday afternoon. The JSE's all-share index was 0.1%.
According to a statement released by the Competition Commission on Friday, the fine follows an investigation into 10 companies involved in South Africa's precast concrete market.
The commission investigated allegations of price-fixing, market allocation for the production and distribution of pipes, culverts and manholes, and collusive tendering for precast concrete sleeper projects.
The investigation was sparked by an application for leniency under the commission's corporate leniency programme from a company called Rocla regarding its involvement in a cartel in the precast concrete market, the commission said.
The 10 companies investigated were Rocla, Southern Pipeline Contractors, Concrete Units, Infraset, Grallio, Cobro, Cape Concrete, Concrite Walls, Craig Concrete and D&D.
Infraset is involved in manufacturing precast concrete pipes and culverts which are used in building and construction.
Aveng has admitted that Infraset was party to price-fixing, market allocation and collusive tendering in the markets for concrete pipes and culverts in Gauteng, KwaZulu-Natal and the Western Cape.
In September 2008, Aveng warned shareholders that the commission had identified issues in the building materials operations of the group.
"At Aveng, we have zero tolerance for corrupt and unethical business practices. We have co-operated fully with the Competition Commission on this matter and will continue to do so to resolve anti-competitive practices across the industry as a whole," said Aveng Group CEO Roger Jardine.
Jardine said the executives involved were at business-unit level: "There is a process that must be followed and completed before anyone is found guilty." Further disciplinary action may be taken depending on the outcome of this process.
"The board condemns in the strongest possible terms the breaches that have taken place at Infraset. We are extremely disappointed that these managers have not honoured our internal codes of good corporate governance," said Jardine.
Aveng had already launched several initiatives to stamp out anti-competitive practices in the group prior to the Competition Commission investigation.
This included an educational programme in conjunction with a law firm to train senior executives in competition matters and the roll-out of an anti-corruption framework. In addition, Aveng will develop and implement a formal compliance programme as prescribed by the Competition Ccommission in terms of the consent agreement.
The group expects every employee to adhere not only to the letter, but also to the spirit of the code and all relevant legislation.
"While the commission's findings are in respect of historic practices, we are committed to strengthening the ethos of Aveng today. We are committed to co-operating fully with the commission," said Jardine.
- Fin24.com