Group Five readies for battle over collusion
Maximum penalty on the cards
LISTED construction and engineering company Group Five is heading for a battle with the Competition Commission at the Competition Tribunal over alleged collusive tendering by the group on a SA National Roads Agency Limited (Sanral) contract.
This follows Group Five failing to enter into any settlement agreement with the commission over the alleged contravention of the Competition Act.
The commission yesterday confirmed that it had referred the case to the tribunal for prosecution and it was pushing for the maximum penalty of 10 percent of annual turnover against Group Five.
Group Five’s shares yesterday slid 3.95 percent to R24.30.
The case is one of four in which Group Five declined to reach a settlement agreement with the commission in terms of the fast-track settlementprocess after being granted conditional leniency for 25 rigged projects it declared to the commission.
The commission alleges there was collusive tendering between Group Five, Wilson Bailey Holmes-Ovcon (WBHO) Construction and Concor, a subsidiary of Murray and Roberts (M&R), on a tender for the rehabilitation of National Route 5, section 4 between Senekal and Vaalpenspruit in the Free State.
M&R agreed in 2013 to pay a fine of R309 million in respect of 17 prohibited practices or contraventions of the Competition Act. This Senekal road rehabilitation project was among the 17 cases it settled with the commission.
The commission claimed Group Five had bilateral collusive agreements with WBHO and Concor in terms of which Group Five would submit a bid price lower than those submitted by WBHO and Concor to ensure that Group Five won the tender.
The commission said its investigation found there was sufficient evidence that Group Five colluded with WBHO and Concor on the Senekal project.
Eric Vemer, the chief executive of Group Five, said yesterday that the group was implicated in four projects that were not protected by immunity and were not settled “due to discernible factual and evidentiary discrepancies in the commission’s case”.
Vemer said the commission had recently elected not to proceed further in respect of one of these implicated projects, which he did not identify.
“Group Five maintains there are evidentiary hurdles in the commission’s case in respect of the remaining implicated projects and has been advised it has good prospects of success in opposing the commission’s referral of the matter.”
He said Group Five was unable to comment on the quantum of any potential administrative penalty that might arise in respect of this conduct.
“Group Five considers the referral a positive step towards fully ventilating the issues in respect of the alleged conduct, interrogating the evidence in the possession of the commission and obtaining an objective decision on the group’s liability from the tribunal,” he said.
The Senekal project is the second Group Five case the commission has referred to the tribunal for prosecution.
In November it referred a case against Group Five Construction, WBHO Construction, Stefanutti Stocks and Basil Read to the tribunal for prosecution related to collusion and bid rigging on the 2010 World Cup stadium tenders.
M&R was been granted conditional leniency for this case, while Aveng concluded a consent settlement agreement with the commission in June last year that included this offence.
It is alleged that following a meeting between the Fifa local organising committee and construction firms in Sandton in July 2006 to discuss the construction of the stadiums, two meetings took place at which the firms discussed and agreed on the allocation of tenders and cover pricing arrangements.