The R323-million penalty the Competition Commission proposed to levy against construction group Stefanutti Stocks was “higher than expected”, said Stefanutti Stocks CEO Willie Meyburgh on Tuesday.

Announcing the company’s financial results for the year ended February 28 in Johannesburg, he noted that the company was “giving consideration” to the proposed penalty it had to pay in the Competition Commission’s nationwide investigation into collusion in the construction industry, and that “it would respond in due course”.

Meyburgh added that Stefanutti Stocks would have to borrow the funds to pay the penalty, but that it had facilities in place to do so.

Stefanutti Stocks CFO Dermot Quinn said the commission had put forward payment terms for the proposed fine, which structured payment of the penalty “across years, and not months”.

The transgressions for which the penalty was imposed, happened prior to the company’s listing in 2008, emphasised Meyburgh.

“This behaviour has been out of our business for a very long time. We are clean now.”

Stefanutti Stocks also inherited some infringements through a spate of acquisitions in recent years, with these newcomers to the company bought “warts and all”, noted Quinn.

The size of Stefanutti Stocks’ fine was linked to the number of projects in which there had been evidence of anticompetitive behaviour, and not the value of the projects. The fine was also linked to building and civil engineering project turnover in the 2010 financial year.

Meyburgh could not say why the commission chose 2010 as the determining year.

Commenting on the general impact of the commission’s investigation of the local construction industry, he said the system of structured payment terms would soften the blow to an industry still struggling to shrug off the past recession.

It was also good news that the uncertainty around the issue of penalties would now disappear.

“We can now again focus on what we do: construction.”

Quinn, however, warned that the expected spate of penalties would cause some financial distress in the construction industry over the next “couple of years”, as companies had to “find the funds to pay the penalties”.

Murray & Roberts and Basil Read on Tuesday indicated that they were still locked in negotiations with the Competition Commission regarding the investigation, and that they expected to conclude these discussions soon.