Mar 07, 2008
Contractor promises proactive engagement with competition body in construction sector probeBack
Murray & Roberts|South Africa|Cement|Construction Group|Construction-services|Steel|Transport|Competition Commission|Brian Bruce|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
Other News This Week News
Recent Research Reports
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 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...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
This Week's Magazine
A structured approach, wherein managers personally engage at each level of the project, is necessary to mitigate delays to the workflow on mega construction projects, says State-owned Eskom Kusile power station projects GM Abram Masango. The 4 800 MW Kusile power...
Construction of transmission lines to evacuate power from a regional hydroelectric project in East Africa, which was hanging on the balance following the withdrawal of financing by key partners, is now back on track. After six months of uncertainty, the African...
Three Memorandums of Understanding (MoUs) were signed between South African and Malaysian companies at the Malaysian High Commission in Pretoria on Friday. These MoUs are part of the indirect offsets programme South Africa is providing in return for Malaysia’s...
The South African new vehicle market may well dip to 640 000 units in 2014, says Toyota South Africa Motors (TSAM) sales and marketing senior VP Calvyn Hamman. This is the first prediction that anticipates a drop in the market. To date economists and industry bodies...
Nissan will re-enter the South African minibus taxi industry in March, when the new NV350 Impendulo goes on sale. The 16-seater has been specifically tailored to meet the terms of government’s Taxi Recapitalisation Programme, which aims to replace South Africa’s...