Esor firms fined R15.7m
CHARGES: PRICE-FIXING AND BID-RIGGING
Finalisation of the case will allow the construction company to close off its business rescue process.
Three companies that formed part of the former JSE-listed civil engineering and geotechnical construction group Esorfranki, later renamed Esor, have been collectively fined R15.7 million by the Competition Tribunal.
The tribunal found that Esor Ltd, Esor Africa (Pty) Ltd and Esor Construction (Pty) Ltd contravened sections of the Competition Act in that from at least 1999 to 2008 they were part of a construction cartel that concluded agreements among themselves, fixed tender prices and allocated tenders/customers and projects among themselves, and engaged in bid-rigging through cover pricing.
Cover pricing involves creating the illusion of competition by some firms submitting non-competitive bids to enable a fellow conspirator to win a tender.
Esor, which filed for business rescue in August 2018, had its listing on the JSE terminated in June 2020.
Esor Construction CEO Wessel van Zyl said on Friday that none of three entities have funds available for any lengthy legal action. Van Zyl said Esor Limited and Esor Africa were still in business rescue while Esor Construction exited the business rescue process in 2019.
“Following the ruling and the quantification of a penalty, the final creditor liability can now be finalised and a dividend will be paid to creditors to close off the Esor Construction business rescue process,” he said.
The case is linked to a fast-track settlement process initiated by the Competition Commission that resulted in 15 construction companies concluding consent agreements in 2013, in which they agreed to pay penalties totalling R1.46 billion for collusion and bid-rigging.
Van Zyl said Esor has always maintained that Esor withdrew from the socalled Book Club in 2005 and did not participate in any further practices.
The tribunal found the construction cartel formalised what was known as the Book Club, which was an arrangement to fix prices and collusively tender for geotechnical projects, including piling, lateral support, drilling and grouting.
Some of the projects included the Lusip Dam in Swaziland, the Sappi/Saiccor piling project, the Moses Mabhida Stadium piling project, the Braamhoek Dam grouting project, the Coega Harbour diaphragm wall project, the Gautrain Rapid Rail Link project, the Olifantsfontein treatment plant and the Lesotho Highlands Water Project.
The case against Diabor Pty (Ltd) was dismissed. Four other companies were initially cited as respondents but reached settlement agreements with the commission.
In terms of these settlements, Geomechanics CC and Geomech Africa (Pty) Ltd, which are part of the same group, agreed to pay a total fine of about R1.65 million for collusive tendering; Rodio Geotechnics (Pty) Ltd agreed to pay a fine of R885 963 for collusive tendering on nine projects in a joint venture with Grinaker-LTA’s ground engineering division; Dura Soltanche Bachy agreed to pay a fine of R988 589.08 for collusive tendering on 11 projects. All these firms were initially charged with Grinaker-LTA, the leniency applicant in the case.
Esor always maintained it withdrew from the Book Club in 2005