Red card for Cup sta­dium con­struc­tion

Com­pe­ti­tion Com­mis­sion tar­gets big firms

The Star Early Edition - - BUSINESS REPORT - Roy Cokayne

THE COM­PE­TI­TION Com­mis­sion has de­cided to re­fer a case of col­lu­sive ten­der­ing by the con­struc­tion busi­nesses of five listed con­struc­tion com­pa­nies re­lated to the con­struc­tion of the 2010 World Cup sta­di­ums to the Com­pe­ti­tion Tri­bunal for pros­e­cu­tion.

The im­pli­cated com­pa­nies are Wilson Bayly Holmes-Ov­con (WBHO) Con­struc­tion, Group Five Con­struc­tion, Mur­ray & Roberts (M&R), Ste­fanutti Stocks and Basil Read.

M&R was granted le­niency in terms of the com­mis­sion’s cor­po­rate le­niency pol­icy be­cause it was the first to dis­close the spe­cific con­tra­ven­tion of the Com­pe­ti­tion Act to the com­mis­sion.

The four other firms did not set­tle this case in terms of the con­struc­tion fast-track set­tle­ment process that re­sulted last year in 15 firms agree­ing to pay penal­ties col­lec­tively to­talling R1.46 bil­lion for col­lu­sive ten­der­ing in con­tra­ven­tion of the Com­pe­ti­tion Act.

The com­mis­sion pre­vi­ously claimed that in about 2006, Aveng sub­sidiary Gri­naker LTA, WBHO, M&R, Group Five, M&R sub­sidiary Concor and Basil Read met twice and reached agree­ment about the al­lo­ca­tion among them­selves of the con­struc­tion ten­ders for the Mbombela, Peter Mok­aba, Moses Mab­hida, Soc­cer City, Nel­son Man­dela Bay and Cape Town sta­di­ums; cover prices for th­ese ten­ders; and that they should all aim to ob­tain a 17.5 per­cent profit mar­gin on all th­ese projects.

Cover pric­ing in­volves cre­at­ing the il­lu­sion of com­pe­ti­tion by some firms sub­mit­ting non­com­pet­i­tive bids to en­able a fel­low con­spir­a­tor to win a ten­der. WBHO last year agreed in terms of the fast-track set­tle­ment process to pay a R311 mil­lion fine for 11 non-pre­scribed pro­hib­ited prac­tices but re­fused to set­tle the World Cup

Cover pric­ing in­volves cre­at­ing the il­lu­sion of com­pe­ti­tion to en­able a fel­low con­spir­a­tor to win a ten­der.

sta­di­ums case be­cause it did not be­lieve it had con­tra­vened the act.

Mike Wylie, WBHO’s chair­man, con­firmed last year the sta­dium meet­ing took place but stressed it was about ca­pac­ity and how the in­dus­try was go­ing to build the sta­di­ums and fol­lowed another meet­ing ar­ranged by the World Cup lo­cal or­gan­is­ing com­mit­tee that WBHO was asked to at­tend. WBHO was not avail­able for com­ment.

The World Cup sta­dium meet­ings were also ex­cluded from the con­sent agree­ments signed by M&R and Basil Read but in­cluded in the con­sent agree­ment signed by Aveng. Ed Jardim, a M&R spokesman, con­firmed yes­ter­day the company was the cor­po­rate le­niency ap­pli­cant and was there­fore not re­quired at this stage to “set­tle” the mat­ter with the com­mis­sion.

Jardim said M&R re­jected any form of anti-com­pet­i­tive be­hav­iour and would con­tinue to co-op­er­ate with the com­mis­sion and, ac­cord­ingly, did not ex­pect any penalty in relation to mat­ters re­lat­ing to the World Cup sta­di­ums.

Group Five said the re­fer­ral of the case was an­tic­i­pated and it “wel­comes the op­por­tu­nity to now fully ad­dress the is­sues sur­round­ing its in­volve­ment in the World Cup”.

“Group Five has en­gaged in lengthy dis­cus­sions with the com­mis­sion thus far re­gard­ing its in­volve­ment in the World Cup and hav­ing not reached con­sen­sus on the al­le­ga­tions made against Group Five, the company in­formed the com­mis­sion that it has elected to as­sess its po­si­tion upon re­view of the com­mis­sion’s re­fer­ral to the Com­pe­ti­tion Tri­bunal.”

Neville Ni­co­lau, the chief ex­ec­u­tive of Basil Read, said the group was con­fi­dent the out­come of this process would con­firm that Basil Read was not in­volved in anti-com­pet­i­tive be­hav­iour and had not con­tra­vened the Com­pe­ti­tion Act with re­spect to th­ese ten­ders.

At­tempts to ob­tain com­ment from Ste­fanutti Stocks were un­suc­cess­ful.

PHOTO: WILLEM LAW

The Cape Town Sta­dium in Green Point is one of the sta­di­ums that the Com­pe­ti­tion Com­mis­sion has said was in­volved in il­le­gal al­lo­ca­tion of con­struc­tion ten­ders.

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