The R323-million penalty the Competition Commission wants to levy against construction group Stefanutti Stocks is “higher than expected”, says Stefanutti Stocks CEO Willie Meyburgh.
He notes that the company is “giving consideration” to the proposed penalty it has to pay in the Competition Commission’s nationwide investigation into collusion in the construction industry, and that “it will respond in due course”.
Meyburgh adds that Stefanutti Stocks will have to borrow the funds to pay the penalty, but that it has facilities in place to do so.
Stefanutti Stocks CFO Dermot Quinn says the commission has put forward payment terms for the proposed fine, which structures payment of the penalty “across years, and not months”.
Company’s ListingThe transgressions for which the penalty was imposed, happened prior to the company’s listing in 2008, emphasises 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”, notes Quinn.
The size of Stefanutti Stocks’ fine was linked to the number of projects in which there was 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.
Determining YearMeyburgh could not say why the com- mission chose 2010 as the determining year.
Commenting on the general impact of the commission’s investigation of the local construction industry, he says the system of structured payment terms will soften the blow to an industry still struggling to shrug off the past recession.
It is also good news that the uncertainty around the issue of penalties will now disappear.
“We can now again focus on what we do: construction.”
Quinn, however, warns that the expected spate of penalties will cause some financial distress in the construction industry over the next “couple of years”, as companies have to “find the funds to pay the penalties”.
Murray & Roberts and Basil Read indicate that they are still locked in negotiations with the Competition Commission regarding the investigation, and that they expect to conclude these discussions soon.