With the Competition Commission clamping down on collusive behaviour in South Africa, through a strict implementation of the Competition Act, a call from the industry has lead to discussions with the Commission, through the facilitation of the Master Builders Association.
It is common knowledge that collusive behaviour took place in the Construction Industry, through cover pricing, bid rigging or cartels. Numerous companies were prosecuted and fined, or reached settlement. With additional companies being targeted by the Commission, and the recent judgement of Power-Construction in the Western Cape, the need developed to address this matter.
In line with settlement agreements reached with the Competition Commission, by various companies, the commission required a full disclosure of all actions of these implicated companies. These affidavits then provided further names of other companies that are now implicated, as a consequence of merely quoting on prospective work.
These companies face various penalties, which include amounts of up to 10% of annual turnover. In light of the industry’s average profit margin of between 1% and 2%, these penalties are extremely harsh and will result in companies closing down if implemented.
In response, MBA North is engaging in ongoing discussions with the Competition Commission on the impact that the prosecution and penalties have on the industry, and the lack of information on how the the building and construction industry operates.
Any MBA North members may follow the below process if they have been implicated or are being prosecuted by the Competition Commission:
- Contact your MBA for a consultation on the process and on how to reach a settlement with the Competition Commission. This includes all companies who have been implicated or think they may be implicated following the Power Construction judgement.
- The Companies should approach the Commission with their unique circumstances, as well as their proposals of what they are willing to do as companies, beyond compliance with the Act. This includes training, corporate social investment, BB-BEE matters etc.
- The Commission has requested full disclosure from companies to gain an understanding of how the industry operates. Through this process, the MBA is available to assist members with informing the Commission of the industry practices as a whole.
For further information on how to deal with these matters, contact Enwee Human, Legal and Contractual Manager at MBA North: Enwee@mbanorth.co.za