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FOR an organisation that has been pilloried - at least in my circles - for being impotent if not useless, the Competition Commission showed its daggers two weeks ago.
During this time, in an almost unprecedented move, the commission came to a settlement with 15 construction companies, which agreed to pay fines worth R1.46bn for collusive tendering.
“The commission has reached settlement with 15 construction firms for collusive tendering, in contravention of section 4(1) (b) of the Competition Act. The firms have agreed to penalties collectively totalling R1.46 billion,” the commission said in a statement.
The payments were attained in terms of the Construction Fast Track Settlement Process, started in February almost two-and-a-half years ago.
The fast track course gave the firms incentives to make complete and honest revelations of bid-rigging in return for lesser fines.
These would be lower than what the commission would otherwise have called for if prosecuting these matters.
According to the commission, 21 firms replied to the offer of a fast track payment.
Over 300 instances of bid-rigging were discovered because of this course, but the settlements were reached only with projects that were signed after September 2006.
“The responses to the Construction Fast Track Settlement offer revealed various ways in which firms historically determined, maintained and monitored collusive agreements. These included meetings to divide markets and agree on margins,” the commission stated.
It has become known that a diverse number of companies had organised tenders over many developments.
According to the commission, these companies colluded to create the “illusion” of competition by submitting sham tenders (“cover pricing”) to enable fellow conspirators to win tenders.
Therein lies the rub. As South Africans, whose interests the commission claims to be protecting, there is a palpable sense of discomfort here.
The commission has had a new opportunity to advance this goal of protecting South Africans. But it seems this mission is not always the rule.
For one, how are South Africans better served by taking hefty fines from these firms and putting them in government coffers which corrupt members of the government are going to loot?
Why not make it clear that the money for these fines would be earmarked for other useful purposes? Some believe that the money should be used to build houses for the poor.
This could prevent these firms from repeating these actions, as it is well known that the capitalist firms hate to see their money being used for what they describe as “welfare.”
It is for this reason that the system of just fining these firms and leaving them to operate as if nothing has happened has not worked in past. And it is not going to work going forward.
Otherwise, why is this continuing when firms have been fined for many years in South Africa? Some of the 15 companies are repeat offenders.
Government and particularly the commission should find other forms of stringent penalties.
Be that as it may, I also have a bone to chew with the commission itself.
Granted, the commission claims there was evidence of misuse of dominance in the construction firms' collusion.
But is the commission certain that the bid-rigging was done with an intention to suppress competition, or whether it was done as part of the companies’ business strategies to increase market share?
There is a thin line between bid-rigging and increasing market share. The commission should therefore make sure it is clear on this next time around.
- Fin24
*Mzwandile Jacks is a freelance journalist. Opinions expressed are his own.
During this time, in an almost unprecedented move, the commission came to a settlement with 15 construction companies, which agreed to pay fines worth R1.46bn for collusive tendering.
“The commission has reached settlement with 15 construction firms for collusive tendering, in contravention of section 4(1) (b) of the Competition Act. The firms have agreed to penalties collectively totalling R1.46 billion,” the commission said in a statement.
The payments were attained in terms of the Construction Fast Track Settlement Process, started in February almost two-and-a-half years ago.
The fast track course gave the firms incentives to make complete and honest revelations of bid-rigging in return for lesser fines.
These would be lower than what the commission would otherwise have called for if prosecuting these matters.
According to the commission, 21 firms replied to the offer of a fast track payment.
Over 300 instances of bid-rigging were discovered because of this course, but the settlements were reached only with projects that were signed after September 2006.
“The responses to the Construction Fast Track Settlement offer revealed various ways in which firms historically determined, maintained and monitored collusive agreements. These included meetings to divide markets and agree on margins,” the commission stated.
It has become known that a diverse number of companies had organised tenders over many developments.
According to the commission, these companies colluded to create the “illusion” of competition by submitting sham tenders (“cover pricing”) to enable fellow conspirators to win tenders.
Therein lies the rub. As South Africans, whose interests the commission claims to be protecting, there is a palpable sense of discomfort here.
The commission has had a new opportunity to advance this goal of protecting South Africans. But it seems this mission is not always the rule.
For one, how are South Africans better served by taking hefty fines from these firms and putting them in government coffers which corrupt members of the government are going to loot?
Why not make it clear that the money for these fines would be earmarked for other useful purposes? Some believe that the money should be used to build houses for the poor.
This could prevent these firms from repeating these actions, as it is well known that the capitalist firms hate to see their money being used for what they describe as “welfare.”
It is for this reason that the system of just fining these firms and leaving them to operate as if nothing has happened has not worked in past. And it is not going to work going forward.
Otherwise, why is this continuing when firms have been fined for many years in South Africa? Some of the 15 companies are repeat offenders.
Government and particularly the commission should find other forms of stringent penalties.
Be that as it may, I also have a bone to chew with the commission itself.
Granted, the commission claims there was evidence of misuse of dominance in the construction firms' collusion.
But is the commission certain that the bid-rigging was done with an intention to suppress competition, or whether it was done as part of the companies’ business strategies to increase market share?
There is a thin line between bid-rigging and increasing market share. The commission should therefore make sure it is clear on this next time around.
- Fin24
*Mzwandile Jacks is a freelance journalist. Opinions expressed are his own.
