The Competition Tribunal will, this week, hold hearings related to the Competition Commission’s R1.46-billion settlement with 15 construction firms found guilty of collusive tendering, as well as the commission’s R200-million settlement with telecoms group Telkom over charges of abusing its market dominance.

On June 24, the Competition Commission fined the 15 construction firms a collective R1.46-billion for collusive tendering related to projects concluded between 2006 and 2011.

Wilson Bayly Holmes Ovcon was given the largest fine of R311.29-million for 11 projects, followed by Murray & Roberts, which was fined R309.05-million for 17 projects, Stefanutti Stocks, which was fined R306.89-million for 21 projects, and Aveng, which was find R306.57-million for 17 projects.

The settlement with each of the firms was reached in terms of the Construction Fast-Track Settlement Process, launched in 2011, which incentivised firms to make full and truthful disclosures of bid-rigging in return for penalties lower than what the commission would seek if it prosecuted such cases.

Twenty-one firms responded to the commission’s offer of a fast-track settlement; however, while over 300 instances of bid-rigging were revealed through the initiative, the settlements were reached only with respect to projects that were concluded after September 2006, before which transgressions are beyond the prosecutorial reach of the Competition Act.

In terms of the Act, the Competition Tribunal must confirm a settlement agreement between the commission and a respondent in order for the settlement to be legally enforceable.

The tribunal will, on July 17, hold settlement hearings between the commission and six of the fined construction companies, namely Aveng, Raubex, Haw & Inglis Civil Engineering, Guiricich Bros Construction, G Liviero & Son Building and Norvo Construction.

It will hold settlement hearings with the remaining nine construction companies – WBHO, Stefanutti Stocks, Basil Read, Rumdel Construction Cape, Vlaming, Tubular Technical Construction, Hochtief Construction, Esorfranki and Murray & Roberts – on July 18.

The South African Local Government Association (Salga) and the Gauteng Provincial Government have asked to intervene in the hearings and will be given the opportunity to present their case on July 17.

On July 5, Salga said it would seek some form of restitution from the construction companies found guilty by the commission, noting that it would pursue compensation through participation in the tribunal’s hearings.

TELKOM SETTLEMENT

Meanwhile, the tribunal would, on July 17, also hear the commission’s R200-million settlement with Telkom, related to charges of abusing its market dominance.

This followed a series of complaints lodged against Telkom between 2005 and 2007 by Internet service providers (ISPs). The commission found that Telkom had contravened the Competition Act by engaging in a margin squeeze of its ISP competitors.

The specific aspects listed were charging an excessive price to customers for some services; refusing to give a competitor access to an essential facility when it was economically feasible to do so; engaging in exclusionary acts and selling services by forcing the buyer to accept a condition unrelated to the contract.

The case was referred to the Competition Tribunal in 2009.

The settlement package, which was subject to confirmation by the tribunal, further included a functional separation between Telkom’s retail and wholesale divisions, along with a transparent transfer-pricing programme to ensure nondiscriminatory service provision by Telkom to its retail division and ISPs.

Telkom would also have to put in place effective monitoring arrangements of its future conduct, as well as wholesale and retail pricing commitments for the next five years, which was estimated to yield R875-million in savings to customers.