THE next wave to hit the construction industry could be huge civil damage claims, as the 15 construction companies appear before the Competition Tribunal on Wednesday and Thursday to look at the consent agreements reached with the Competition Commission.
The companies admitted to collusive tendering and anticompetitive conduct in 2010 Soccer World Cup infrastructure projects that led to a collective fine of R1.46bn.
Confirmation of the consent agreements will provide the owners of the projects with their “go-to-court” card to claim any damages they can quantify.
Paul Coetser, head of Werksmans Attorneys’ competition practice in Johannesburg, says the tribunal is not a rubber stamp for the commission and has on occasion referred matters back. However, in this case the commission has engaged with the firms over a long period and has detailed knowledge of the projects.
“There will have to be serious discrepancies for any of the matters to be referred back to the commission and the tribunal’s case for doing so will have to be quite persuasive,” Mr Coetser says.
News of widespread collusive tendering, price fixing and market allocation in the construction industry emerging at the end of last month was met with great indignation and finger-pointing.
Realising that protracted litigation with construction firms could take years, the commission devised a mechanism to allow the firms to come clean, rid the industry of collusion and move on.
The commission developed its fast-track settlement process and identified 300 projects of which 140 were still eligible for settlement since the other had already prescribed in terms of the Competition Act.
Industry players were accused of anticompetitive conduct that ranged from cover pricing to loser’s fees — terms many South Africans heard for the first time when the issue of bid-rigging was investigated by the Competition Commission.
In the consent agreements with the commission the firms do admit to collusive tendering, accepting loser’s fees and splitting the gains of projects after sham tendering.
The tribunal will first hear submissions from Corruption Watch and the Gauteng provincial government before deciding to confirm, deny or refer the consent agreements back to the commission.
The consent order agreement between the commission and Aveng contains an allegation that Grinaker LTA, WBHO, Murray Roberts, Group Five, Concor, Basil Read and Stefanutti met twice in 2006. It was agreed at these meetings to divide the Mbombela, Peter Mokaba, Moses Mabhida, Soccer City, Nelson Mandela Bay and Green Point stadium projects among themselves.
The parties further agreed that they “should all aim to obtain 17.5% profit margin” in all the World Cup stadium projects. Aveng did not itself disclose these allegations, but was implicated by another firm.
Several firms, including WBHO, denied that profit margins or the carving up of the stadiums were discussed at the second meeting.
Murray Roberts was implicated in the Peter Mokaba stadium where it was alleged that its subsidiary, Concor, reached an agreement with G Liviero on a cover price so that G Liviero would submit a noncompetitive bid to ensure Concor won the tender. Murray Roberts did not have evidence to refute the allegation and settled.
Stefanutti disclosed cover pricing practices in the Green Point and Soccer City stadium projects. Group Five did not reach a settlement agreement with the commission.
The tribunal will also consider an application from the South African Local Government Association (Salga) to be allowed as an intervenor in the proceedings. Salga is concerned that not all the rot had been revealed and since the commission relied on the voluntary admissions of the firms and has indicated it will ask the tribunal to postpone the hearings.
The association says it needs time to reach agreements with some of the firms involved in projects identified by six municipalities.