Fines level construction playing field

Jun 24 2013 16:05
I-Net Bridge
 Johannesburg - Werksmans Attorneys director Paul Coetser said the Construction Fast Track Settlement Process‚ launched in February 2011 as a novel regulatory approach by the Competition Commission‚ has worked well as it would have taken years to resolve all the matters.

While three major settlements are still outstanding‚ including that of Group 5‚ Coetser does not believe the door is closed to those firms that did not reach settlement on Monday.

"To have one big bang finishes a lot of the cases and from now on the construction industry is placed on a competitive footing," he said in reaction to the announcement that 15 construction firms had settled collusive tendering cases with R1.5bn in penalties.

"To abide by proper tendering practices going forward should be regarded as a win for the Commission and the market as a whole."

The Commission said 21 firms responded to the offer of a fast track settlement.

While over 300 instances of bid rigging were revealed through this initiative‚ the settlements were reached only with respect to projects that were concluded after September 2006.

This meant settlement could not have been reached with three other firms due to the timing of those deals.

The firms affected are: Aveng‚ Basil Read‚ Esorfranki‚ G Liviero‚ Giuricich‚ Haw & Inglis‚ Hochtief‚ Murray & Roberts‚ Norvo‚ Raubex‚ Rumdel‚ Stefanutti‚ Tubular‚ Vlaming and WBHO.

The three firms that did not accept the Commission's settlement offer in terms of the fast track process were Group 5‚ Construction ID and Power Construction.

Coetser said the companies involved in negotiations with the Commission would look to make pragmatic decisions‚ like the management time it would take to challenge penalties

"I do not know whether the three not settling are guilty or not, but now that everything is out in the open others will see the consequences and the parameters and see how that will apply to their particular situations and see whether pragmatically it would also suit them to settle.

The way he understood it‚ the door is not entirely closed.

The Commission will have engaged with each firm that applied and each will have been designated its own time period to come up with an agreement.

The companies which did not settle can be prosecuted‚ with the cases going to Competition Tribunal for a full hearing.

Notably‚ those who have settled will have to co-operate and typically agree to testify against those firms involved in the same matters.

"The Commission has been engaged with this process for the past three years and I gather some have not settled‚ clearly because they have not reached agreement," said Coetser.

"Once they reach agreement‚ they cannot appeal - the next step is to go to the Tribunal and if it is happy with the bargain struck it puts an end to that particular matter."

If a company were not happy with what the Commission proposed it would not have been in the settlement process.

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