About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2014
>>
[2014] ZACT 82
|
|
Competition Commission v Civcon Construction (Pty) Ltd (019786) [2014] ZACT 82 (19 November 2014)
COMPETITION
TRIBUNAL
REPUBLIC OF SOUTH
AFRICA
Case No: 019786
In the matter
between:
The
Competition
Commission
..........................................................................................
Applicant
and
Civcon
Construction (Pty)
Ltd
.......................................................................................
Respondent
Panel: M Mazwai
(Presiding Member)
M Mokuena (Tribunal
Member)
F Tregenna (Tribunal
Member)
Heard on:19 November
2014
Decided on : 19
November 2014
Order
The Tribunal hereby
confirms the order as agreed to and proposed by the Competition
Commission and Civcon Construction (Pty) Ltd,
annexed hereto marked
“A”.
19
November 2014
Date
Presiding
Member
Ms. M Mazwai
Concurring: Ms. M
Mokuena and Prof. F Tregenna
IN THE
COMPETITION TRIBUNAL OF SOUTH AFRICA
(HELD IN
PRETORIA)
CT CASE NO:
CC CASE NO:
2009Sep4641
In the matter
between:
THE
COMPETITION
COMMISSION
........................................................................
Applicant
and
CIVCON
CONSTRUCTION (PTY)
LTD
...................................................................
Respondent
CONSENT AGREEMENT
IN TERMS OF SECTION 49D, READ WITH SECTIONS 58(1)(a)(iii) and
58(1)(b) OF THE
COMPETITION ACT, NO. 89 OF 1998
, AS AMENDED, BETWEEN
THE COMPETITION COMMISSION AND CIVCON CONSTRUCTION (PTY) LTD , IN
RESPECT OF CONTRAVENTIONS OF
SECTION 4(1
)(b)(iii) OF THE
COMPETITION
ACT, 1998
.
Preamble
The Competition
Commission and Civcon Construction (Pty) Ltd hereby agree that an
application be made to the Competition Tribunal
for the confirmation
of this Consent Agreement as an order of the Competition Tribunal in
terms of
section 49D
as read with
sections 58(1
)(a)(iii) and 58(1
)(b) of the
Competition Act no. 89 of 1998
, as amended (“the
Act”), in respect of contraventions of
section 4(1)(b)(iii)
of
the Act, on the terms below:
1 DEFINITIONS
For the purposes of
this consent agreement the following definitions shall apply:
1.1
“
Act”
means
the Competition Act, 1998 (Act No. 89 of 1998), as amended;
1.2
“
Civcon”
means
Civcon Construction (Pty) Ltd, a company duly incorporated under the
laws of the Republic of South Africa with its principal
place of
business at 18 Industry Road, Clayville, Oiifantsfontein, Gauteng,
1665. Civcon is involved in the provision of civil
infrastructure,
mining work, roads construction and building work. Civcon, is
formerly known as Civcontract Civils (Pty) Ltd.
1.3
“
CLP”
means
the Commission’s Corporate Leniency Policy (Government Notice
No. 628 of 23 May 2008, published in Government Gazette
No. 31064 of
23 May 2008);
1.4
“
Commission”
means
the Competition Commission of South Africa, a statutory body
established in terms of section 19 of the Act, with its principal
place of business at 1
st
Floor, Mulayo Building (Block C), the dti Campus, 77 Meintjies
Street, Sunnyside, Pretoria, Gauteng;
1.5
“
Commissioner”
means
the Commissioner of the Competition Commission, appointed in terms of
section 22 of the Act;
1.6
“
Complaint”
means
the complaint initiated by the Commissioner of the Competition
Commission in terms of section 49B of the Act under case number
2009Sep4641;
1.7
“
Consent
Agreement”
means
this agreement duly signed and concluded between the Commission and
Civcon;
1.8
“
Cover Price”
means
generally, a price that is provided by a firm that wishes to win a
tender to a firm that does not wish to do so, in order
that the firm
that does not wish to win the tender may submit a higher price; or
alternatively a price that is provided by a firm
that does not wish
to win a tender to a firm that does wish to win that tender in order
that the firm that wishes to win the tender
may submit a lower price;
1.9
“
Infraset”
means
a division of Aveng (Africa) Limited (“Aveng”), a public
company incorporated in terms of the laws of the Republic
of South
Africa with its registered place of business at Block A, Aveng
Grinaker-LTA Park, Jurgens Street, Jet Park, Boksburg,
1459. Aveng is
a multi-disciplinary construction and engineering group, anchored in
South Africa with expertise in a number of
market sectors namely
power, mining, infrastructure, commercial, retail, industrial, oil
and gas;
1.10
“
Invitation”
means
the Invitation to Firms in the Construction Industry to Engage in
Settlement of Contraventions of the
Competition Act, as
published on
the website of the Commission on 1 February 2011;
1.11
“
Loser’s fee”
in
the context of collusive tendering, means a fee paid by the
successful tenderer to the losing tenderer(s) as compensation for
the
costs of tendering;
1.12
“
Non-prescribed
prohibited practices”
refers
to prohibited restrictive horizontal practices relating to the
construction industry that are contemplated in
section 4(1
)(b) of
the Act and that are on-going or had not ceased three years before
the complaint was initiated, as contemplated in section
67 of the
Act;
1.13
“
Parties”
means
the Commission and Civcon;
1.14
“
Prescribed
prohibited practices”
refers
to prohibited restrictive horizontal practices relating to the
construction industry that are contemplated in section 4(1
)(b) of
the Act and that ceased after 30 November 1998, but more than three
years before the complaint was initiated;
1.15
“
Respondent”
means
Civcon;
1.16
“
Tribunal”
means
the Competition Tribunal of South Africa, a statutory body
established in terms of section 26 of the Act, with its principal
place of business at 3
rd
Floor, Mulayo building (Block C), the dti Campus, 77 Meintjies
Street, Sunnyside, Pretoria, Gauteng.
2 BACKGROUND
2.1 On 01 September
2009, following the receipt of applications for immunity in terms of
the CLP, the Commission initiated a complaint
in terms of section
49B(1) of the Act under case number 2009Sep4641 into particular
prohibited practices relating to conduct in
the construction industry
in relation to various projects, by the firms listed below.
2.2 The complaint
concerned alleged contraventions of section 4(1)(b) of the Act as
regards price fixing, market allocation and
collusive tendering. The
investigation was initiated against the following firms: Grinaker LTA
, Aveng (Africa) Ltd, Stefanutti
Stocks Holdings Ltd, Group Five Ltd,
Murray & Roberts, Concor Ltd, G. Liviero & Son
Building (Pty) Ltd, Giuricich
Coastal Projects (Pty) Ltd, Hochtief
Construction AG, Dura Soletanche-Bachy (Pty) Ltd, Nishimatsu
Construction Co Ltd, Esorfranki
Ltd, VNA Pilings CC, Rodio
Geotechnics (Pty) Ltd, Diabor Ltd, Gauteng Piling (Pty) Ltd,
Fairbrother Geotechnical CC, Geomechanics
CC, Wilson Bayly
Holmes-Ovcon Ltd and other construction firms, including joint
ventures.
2.3 The Commission’s
investigation of the above complaint, as well as of several others in
the construction industry, led
the Commission to believe that there
was widespread collusion in the construction sector in contravention
of section 4(1 )(b)(iii)
of the Act. Accordingly, in line with the
purposes of the Act as well as the Commission’s functions, the
Commission decided
to invite construction firms that were involved in
collusive conduct to apply to engage in settlement on favourable
terms.
The Invitation was
issued in the interests of transparency, efficiency, adaptability and
development of the construction industry,
the provision of
competitive prices. It was also intended to expedite the finalisation
of the investigations in a cost-effective
manner.
2.4 The Invitation
was published on the Commission’s website on 1 February 2011.
The Invitation required firms to apply for
settlement by disclosing
all construction projects that were the subject of prescribed and
non-prescribed prohibited practices.
The closing date to apply for
settlement in terms of the invitation was 15 April 2011.
2.5 The Commission
received settlement applications from twenty one (21) firms that
disclosed a total number of 300 projects which
were the subject of
collusive conduct. Of the three hundred (300) projects disclosed, 160
(one hundred and sixty) (160) projects
involved prescribed prohibited
practices and 140 (one hundred and forty) involved non-prescribed
prohibited practices. The 21 firms
that responded to the invitation
implicated 25 firms which did not respond to the Invitation. Of the
21 firms, fifteen concluded
consent agreements with the Commission,
which agreements were confirmed as orders of the Tribunal on 22 and
23 July 2013. This
phase of the investigation of the complaint was
termed “’Phase 1”.
2.8 Upon completion
of Phase 1, the Commission proceeded to investigate the conduct of
the 25 firms that did not respond to the
Invitation and were
implicated by those that applied. Civcon is one of the 25 implicated
firms. Civcon has agreed to settle the
project it is implicated in.
3 CONDUCT IN
CONTRAVENTION OF THE ACT
South Deep Mine
Project
3.1. Civcon reached
an agreement with Infraset on or about 15 September 2006, in that
they agreed on a cover price and a loser’s
fee in respect of
the South Deep Mine project.
3.2. In terms of the
agreement, Infraset received a cover price from Civcon to enable
Infraset to win the tender, it was further
agreed that, in exchange
for the cover price, Infraset would pay Civcon a loser’s or a
compensation fee in the amount of
R500 000.00 (Five Hundred Thousand
Rand) should Infraset win the tender. Despite this agreement, Civcon
was awarded the tender.
Although it was agreed that the successful
bidder would pay the loser an amount of R500 000.00, Infraset
received a total amount
of,R171 000.00 (One Hundred and Seventy One
Thousand Rand), including value added tax, as a compensation or a
loser’s fee
from Civcon. This conduct is collusive tendering in
contravention of section 4(1) (b) (iii) of the Act.
3.3. The project was
for the manufacture and delivery of pre-cast concrete brattice wall
panels at the South Deep Twin Vent Shaft
Storage Area.
4 ADMISSION
Civcon admits that
it entered into the agreement detailed in paragraph 3 above with its
competitor, Infraset, in contravention of
section 4(1 )(b) (iii) of
the Act.
5 FUTURE CONDUCT
Civcon agrees and
undertakes to:
5.1. prepare and
circulate a statement summarising the content of this agreement to
its employees, managers and directors within
fourteen (14) days of
the date of confirmation of this Consent Agreement as an order of the
Tribunal;
5.2. refrain from
engaging in collusive tendering in contravention of section 4(1
)(b)(iii) of the Act, and from engaging in any
prohibited practice
under the Act in future;
5.3. develop,
implement and monitor a competition law compliance programme as part
of its corporate governance policy, which is
designed to ensure that
its employees, management, directors and agents do not engage in
future contraventions of the Act. In particular,
such compliance
programme should include mechanisms for the identification,
prevention, detection and monitoring of any contravention
of the Act;
5.4. submit a copy
of such compliance programme to the Commission within 60 days of the
date of confirmation of the Consent Agreement
as an order by the
Tribunal; and
5.5. undertake
henceforth to engage in competitive bidding.
6, ADMINSTRATIVE
PENALTY
6.1. Having regard
to the provisions of sections 58(1 )(a)(iii) as read with sections
59(1 )(a), 59(2) and 59(3) of the Act, Civcon
agrees that it is
liable to pay an administrative penalty of R798 385.98 (Seven Hundred
and Ninety Eight Thousand Three Hundred
and Eighty Five Rand and
Ninety Eight Cents) which penalty represents 1% of Civcon’s
annual turnover for the year ended February
2013.
6.2. Civcon shall
pay R798 385.98 to the Commission in six (6) monthly instalments of
R133 064.33 (One Hundred and Thirty Three
Thousand Sixty Four Rand
and Thirty Three Cents) per month. The first monthly payment shall be
payable within 30 days from the
date of confirmation of this Consent
Agreement as an order of the Tribunai.
6.3. This payment
shall be made into the Commission’s bank account, details of
which are as follows:
Bank name: Absa Bank
Branch name:
Pretoria
Account holder:
Competition Commission Fees Account
Account number:
4[...]
Account type:
Current Account
Branch Code: 323 345
Reference: Case
number 2009Sep4641/Civcon.
6.4. The penalty
will be paid over by the Commission to the National Revenue Fund in
accordance with section 59(4) of the Act.
7. FULL AND FINAL
SETTLEMENT
This agreement is
entered into in full and final settlement of the specific conduct set
out in paragraph 3 of this consent agreement
and, upon confirmation
as an order by the Tribunal, concludes all proceedings between the
Commission and Civcon in respect of this
conduct only.
For Civcon
Construction (Pty) Ltd
Dated and signed
at TECHNOPARK on the day of 11
th
day of September 2014
COENIE JB VERMAAK
CHIEF EXECUTIVE
OFFICER
For the
Commission
Dated and signed
at PRETORIA on the 22 day of September 2014
TEMBINKOSI
BONAKELE
COMMISSIONER