The Competition Tribunal on Wednesday dismissed applications by the South African Local Government Association (Salga) and the Gauteng provincial government to intervene in the hearings of the settlement agreements between the Competition Commission and 15 construction firms, which have admitted to collusive tendering in contravention of the Competition Act.

The commission last month reached settlements with the construction companies and announced that they would pay a combined penalty of R1.46-billion.

The fines were agreed under the commission’s Construction Fast-Track Settlement Process, which was launched in February 2011. The commission found more than 300 cases of bid-rigging on projects concluded after 2006.

The involved contractors were, Aveng, Basil Read, Esorfranki, G Liviero, Giuricich, Haw & Inglis, Hochtief, Murray & Roberts, Norvo, Raubex, Rumdel, Stefanutti Stocks, Tubular, Vlaming and Wilson Bayly Holmes-Ovcon (WBHO).

Fines ranged from R155 850 for Esorfranki to over R300-million for Aveng, Murray & Roberts, Stefanutti and WBHO.

Salga and the Gauteng provincial government's legal representative Ngcebetsha Madlanga put forward that his clients were seeking recognition as participants in relation to the settlement agreement between the commission and Basil Read.

Salga was also seeking permission to make representations in relation to, among others, the appropriateness of the administrative fine of R94.94-million that Basil Read agreed to pay.

Setting out Salga's interest in the hearing proceedings, the association's CEO Lance Joel indicated in his affidavit that organised local government played a central role in developmental service delivery.

Joel stated that "the prohibited and unlawful conduct” by Basil Read had inhibited optimal use of much-needed public funds, as it obstructed the benefits that accrued from a competitive market.

Meanwhile, the Gauteng provincial government and Salga also sought access to the records of the commission’s investigations, which had been submitted to the tribunal.

The Gauteng provincial government called on the tribunal not to confirm the settlement agreement.

Gauteng Infrastructure Development Department head Bethuel Netshiswinzhe said in his affidavit that the Gauteng provincial government was not consulted in the process during which the settlement agreement was determined.

"The first time I became aware of the settlement agreement was when it was announced in the media on June 24, although the agreements appear to have been signed on June 21," Netshiswinzhe said, adding that the provincial government viewed itself as holding an interest in the matter, as it was the primary consumer of the services rendered by the involved construction firms.

However, Basil Read representatives at the hearings opposed the applications, dismissing it as being 'non specific', lacking merit and indicative of Salga and the Gauteng provincial government's lack of faith in the commission and the tribunal's ability to adequately handle the case. 

Meanwhile, in its submission to the hearing, public watchdog Corruption Watch asserted that the settlement agreement should be confirmed.

"While we have noted that a considerable body of public opinion appears to favour the imposition of significantly higher administrative penalties, we accord a high level of deference to the commission in the calculation of appropriate penalties.

"We do this because we note that, in settling, the commission has secured admissions of guilt from the respondents, thus opening the way to civil suits on the part of those directly damaged by the cartel," a statement by Corruption Watch, read by in-house lawyer Nicola Whittaker, said.

Corruption Watch further noted that those calling for higher penalties appeared to have weighted insufficiently the resources that the commission would have had to expend had it not achieved a settlement and were it, thus, obliged to investigate and prosecute collusion in each of the impugned construction projects.

"However, while we urge confirmation of the settlement agreements, we align ourselves with the sentiment that the punishment meted out to the companies by the imposition of administrative penalties does not sufficiently fit the offense, particularly this rigging of public sector tenders, and so may not constitute sufficient punishment or have an adequate deterrent effect. We note, particularly, that the settlement embodies no consequence for any individual officers of the companies involved.

"We, therefore, submit that additional sanctions must be imposed," the watchdog indicated.

In this regard, Corruption Watch recommended that the commission to make provision in future consent agreements for 'naming and shaming' of individual perpetrators. It also called on the relevant prosecuting authorities to lay criminal charges against those individuals who have contravened the Prevention and Combating of Corrupt Activities Act.

Further, companies and government entities that had suffered losses at the hands of the respondent construction companies were urged to institute damages actions to recover losses.

South African National Roads Agency CEO Nazir Alli indicated that the agency reserved its right to institute proceedings for civil damages and/or other proceedings and complaints against the construction companies.

"They have breached our trust and have acted to our detriment and against public interest. Collusion of this nature can never be condoned," Alli stated.