Cabinet welcomes construction sector investigation

Cabinet has welcomed the outcome of the investigation showing evidence of pervasive price fixing, collusion and corruption in the private construction industry.

“The scale of the collusion warrants firm action by the competition authorities. Cabinet awaits the outcome of the Competition Tribunal process but notes that the evidence shows substantial damage to the public interest with inflated prices that the state paid as a result of the collusion,” Cabinet said in a statement yesterday, following its meeting last Wednesday.

On 24 June, the Competition Commission reached a settlement with 15 construction firms, who agreed to pay fines to the tune of R1.46 billion for collusive tendering.

The commission has reached settlement with 15 construction firms for collusive tendering, in contravention of section 4(1) (b) of the Competition Act.

The commission said earlier the settlements were reached in terms of the Construction Fast Track Settlement Process, launched in February 2011. The fast-track process incentivised firms to make full and truthful disclosure of bid rigging in return for penalties lower than what the Commission would seek if it prosecuted these cases.

According to the commission, 21 firms responded to the offer of a fast-track settlement.

Subsequent to the announcement by the commission, the Construction Industry Development Board (CIDB) welcomed the announcement.

This paves the way for CIDB to initiate its own process of investigation and inquiry into the firms’ conduct, in terms of Section 28 of the Construction Industry Development (CID) Regulations of 2004, as amended, and the CIDB Code of Conduct, said the CIDB.

The CIDB is established in terms of the CIDB Act 38 of 2000 to regulate the construction industry and promote its development, including the development of the emerging sector.

The Gauteng Department of Infrastructure Development’s MEC Qedani Mahlangu said recently the revelations of price collusion and bid rigging had serious implications for the work of the department, which includes the construction of schools, hospitals and community centres.

“As the department responsible for the construction and maintenance of socio-economic infrastructure in the province, we are deeply disturbed by revelations of cartel behaviour within this sector, whose services we procure on an on-going basis,” said Mahalngu last Wednesday.

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