Mar 07, 2008
Contractor promises proactive engagement with competition body in construction sector probeBack
Construction|Engineering|Africa|Aggregates|Cement|Environment|Flow|Murray & Roberts|PROJECT|Africa|South Africa|Cement|Construction Group|Construction-services|Flow|Products|Services|Steel|Transport|Competition Commission|Brian Bruce|Infrastructure|Reinforcing|Ricoh Caplio R30 Digital Camera
© Reuse this
Speaking last week CEO Brian Bruce indicated that it was dealing with requests for information from the Competition Commission and that it would not be a "defensive player" in the unfolding processes.
He refused to be drawn on whether this engagement could result in an application for corporate leniency, saying only that "we are going to be proactive".
"We are not hiding under a tree, we are not going to deny issues, and we will deal with issues as they arise," Bruce said.
The company stressed, though, that "it would be incorrect to assume that corrupt practices are endemic to the industry and its associates".
Late last year, it emerged that the Competition Commission had set up a sizable multidisciplinary team to review the construction-materials and -services sector as a precursor to a full-scale investigation into possible anticompetitive practices in the industry.
Major areas of concern identified related to consistently high rates of price increases for many products, such as bricks, aggregates, cement and reinforcing steel; high levels of concentration and barriers to entry in the construction-materials market; and significant transport costs, which lowered the threat of import competition.
The commission was also concerned about the high levels of concentration in the construction-services sector, and the opportunity this offered for bid rigging, which if left unrestrained, could add to the costs associated with government's R500-billion-plus, five-year public infrastructure roll-out.
In a separate interview with Engineering News, Bruce stressed that, while there was a tendency towards negotiated contracts, there was still a strong competitive element in the sector.
"This [negotiated contracts] usually involves the preselection by the client of two or three preferred partners, which have to go through some initial hurdles. These hurdles are designed to choose the one most suited to go forward," he explained, adding that the key competitive element in these instances related to the economic viability of the project itself.
He acknowledged, though, that historical practices of similar contractors partnering to ensure work flow in the context of a market in decline, would probably be an anathema in the current environment.
"As we move forward into a growing market, it is incumbent on as many players as possible to grow their capacities, so as to be able to deal with the project in their own right and only alliance, or partner, with other players who bring a different set of skills into the mix."
He suggested that market participants with similar capabilities would probably no longer even consider partnering. "I think today, that would be viewed as anticompetitive," he concluded.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other News This Week News
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...