South Africa targets fast track settlements for cartels

By Helen Wright02 February 2011

South Africa's competition authority has launched a fast track settlement scheme targeted at construction companies which admit to anti-competitive practices.

The Competition Commission said it is currently investigating 65 bid rigging cases in the construction sector involving over 70 projects with an estimated value of ZAR 29 billion (US$ 4 billion).

Markets for construction products such as long steel, mining roof bolts, concrete pipes, plastic pipes, wire mesh have also been investigated together with reinforcement bar producers and piling contractors.

"Construction companies are invited to apply for fast track settlement with complete and truthful disclosure of information regarding collusion. In addition, the company must undertake to cooperate and cease anti-competitive conduct," the Commission said.

Companies which offer up information in this way would pay a reduced penalty compared to the fine involved if each transgression were to be prosecuted separately. The process will also work concurrently with the Commission's corporate leniency policy and companies applying for settlements could also apply for leniency.

In addition to minimising legal costs, the Competition Commission said the scheme aimed to strengthen evidence against companies which chose not to take part in the initiative.

"The Commission's investigation in the construction industry has uncovered widespread anticompetitive conduct through various arrangements," the authority said.

The announcement comes after the South African Competition Tribunal handed down the maximum penalty of ZAR 22.9 million (US$ 3.2 million) in November last year to two concrete pipe manufacturers which pleaded guilty to participating in a price-fixing cartel that was started in 1973.

Southern Pipeline Contractors (SPC) was fined ZAR 16.8 million (US$ 2.3 million) and Conrite Walls' penalty was ZAR 6.1 million (US$ 0.8 million), representing 10% and 8% of their respective annual revenues in 2006.

The contractors decided not to settle with the Commission, but to contest the matter with the Tribunal.

"Where companies contest the Commission's findings of hardcore cartel backed by leniency applications, the Tribunal, in this ruling, shows that it may impose the maximum allowable penalty," the watchdog warned.

The fast track system is necessary to rid the sector of "widespread and deeply-entrenched anticompetitive conduct in the context of some firms cooperating with the Commission but many others remaining in denial," the Commission concluded.

Construction companies are invited to respond to the Commission's invitation no later than 15 April.

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