Red card for Cup stadium construction
Competition Commission targets big firms
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.
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.