Marking the end of the Competition Commission’s investigation into the alleged collusive conduct in the construction sector arising out of the fast-track process, the commission has referred to the Competition Tribunal the last case arising out of its investigation of bid-rigging in that sector.

The commission alleged that WBHO Construction colluded with Group Five Construction by fixing contractual conditions relating to the N17 link road between New Canada and Soccer City, in Johannesburg.
 
It said in a statement on Monday that an investigation had found that, at a meeting of the South African Forum of Civil Engineering Contractors (Safcec), WBHO and Group Five agreed on a preferred set of contractual conditions for the N17 tender, which was issued by the South African National Roads Agency Limited (Sanral).

On the basis of this agreement, the parties requested that Safcec approach Sanral on their behalf to demand the roads agency change its tender conditions and issue the tender with the conditions agreed upon.

“This amounts to fixing of trading conditions, which contravenes . . . the Competition Act,” said the commission.
 
WBHO was notified of the investigation during the construction fast-track settlement process and was invited to settle, but rejected the offer.

The commission initiated investigations in the construction sector in 2009 after receiving evidence that collusion was pervasive in the sector.

It subsequently launched the construction fast-track settlement process to expedite the resolution of these cases.
 
In 2013, the commission settled with 15 out of 18 firms that participated in and were found liable under the process. The settlement agreements with the 15 firms were confirmed by the tribunal in July 2013, with a combined R1.4-billion in administrative penalties levied against the firms.

The commission’s investigation into collusive conduct in the construction sector continued into a second phase, referred to as the Phase Two construction investigations, which entailed the investigation of firms that did not participate in the fast-track settlement process but were implicated in certain projects by firms that had participated in the process.

The second phase of the investigation also looked into the conduct of firms that participated in the fast-track settlement process and had settled certain projects, but refused to settle some projects in which they were implicated.

It further entailed the investigation of firms that participated in the fast-track settlement process but refused to settle projects that they had disclosed in their applications.
 
Twenty-four firms did not participate in the expedited process but were implicated in collusive tendering by those who had participated. These firms were implicated in 31 projects.
 
Firms that participated in and settled under the fast-track process but refused to settle certain projects they were implicated in were Basil Read, with four projects; WBHO, with four projects; Raubex, with two projects; and Murray & Roberts, with one project.

The firms that participated in the process but refused to settle projects that they disclosed were WBHO and Power Construction, with one project each.
 
“The commission settled with some of the firms investigated under the Phase Two construction investigation and referred to the tribunal for prosecution cases against those firms that did not settle.

“Also, the commission decided not to prosecute cases against certain firms where there was insufficient evidence against them or where the firms had been liquidated,” it held.

In the Phase Two construction investigation, the commission settled with seven firms, with a combined settlement penalty paid by these firms of R13.44-million.

During these investigations, it referred 19 cases, including the 2010 FIFA World Cup stadia projects, to the tribunal for prosecution. These cases were now at various stages in the litigation process.
 
“Our focus will now be on the litigation of cases that were referred to the tribunal for prosecution.
 
“The construction sector remains one of the key sectors of the economy which government is prioritising to drive infrastructure development. It is, therefore, necessary to address any collusive conduct which might inflate the cost of rolling out infrastructure development,” commented Commissioner Tembinkosi Bonakele.