Competition Commission takes Group Five to ConCourt

THE Competition Commission will face off with Group Five Construction Limited in the Constitutional Court, over alleged collusive practices related to the tenders for the Fifa 2010 World Cup stadia.

Group Five has thus far blocked action against it based on a claim that the Competition Commission granted the company immunity from prosecution in November 2009.

The construction firm, one of the biggest in the country, built Green Point Stadium in Cape Town. It was one of seven major construction and engineering firms alleged to have colluded in 2006 to share contracts for the World Cup stadium projects.

The commission said collusion by the groups resulted in inflation of construction costs by about R14 billion. Municipalities footed the bill.

No criminal charges were pursued against the groups and their officials.

Instead, the Competition Commission gunned for administrative penalties that equalled to 10% of the culprits’ total annual turnover.

According to the commission most of the companies played ball back in 2011 with the firms paying the penalties.

But it said that Group Five bluntly refused to pay up and insisted that it had been granted it immunity.

The commission referred the firm to the Competition Tribunal for prosecution on November 12, 2014.

Group Five crushed this referral by approaching the North Gauteng High Court for an order setting it aside and winning.

It raised “immunity” as one of the key grounds necessitating the setting aside of the referral for prosecution.

Group Five further won at the Supreme Court of Appeal (SCA) last year, where the commission had argued that the high court had no jurisdiction to adjudicate the matter.

The commission now wants the apex court to rule that both the high court and SCA erred.

In its heads of argument, filed at the Constitutional Court, the commission submitted that only the Competition Tribunal had jurisdiction to entertain Group Five’s application.

“We submit that all issues arising in Group Five’s high court application fall within the Tribunal’s exclusive jurisdiction. Accordingly, the high court ought to have found that it did not have jurisdiction and the SCA erred in holding otherwise,” said the papers.

The SCA effectively endorsed a practice by companies to evade the tribunal and prosecution, the commission said.

“This case is a prime example,” said its court papers. We are now 11 years since the initiation was first made, but the prosecution is yet to commence. That contradicts the wording and intention of the (Competition) Act.”

In its opposing papers, Group Five disputed the commission’s version that most of the firms had settled. It said the firms continued to oppose the matter on the grounds that it had no merit.

It submitted that the SCA was correct to rule that the high court had jurisdiction to entertain its application against the prosecution referral.

“…The commission’s contentions are not a sufficient reason for this Court to denude the high court of its inherent jurisdiction,” Group Five said in papers filed at the apex court.

It repeated that the commission granted it immunity in 2009.

“Following numerous engagements between Group Five (through its attorneys) and the Commission in respect of the implicated projects, the Commission decided not to pursue a fine against Group Five in respect of the World Cup Stadia matter,” said the papers.

The “immunity” rendered the prosecution “vexatious, oppressive and taken in bad faith”, said the firm.

Mfundo Ngobese, an inspector at the Commission’s cartel division, denied in an affidavit that Group Five was granted immunity.

“The Commission maintains that Group Five was not granted immunity and elected not to settle the matter with the Commission. This factual dispute is not before this Court,” Ngobese said.

“Group Five has yet to answer the allegations against it.”

The Constitutional Court will hear the matter on May 3.