Johannesburg - Wilson Bayly Holmes-Ovcon (WBHO) has dug in its heels over an outstanding Competition Commission charge related to collusion with other construction firms on the 2010 Fifa World Cup stadium projects.
The listed construction and engineering group provided a glimpse this week of its defence against a charge it faces at the Competition Tribunal. .
The commission alleged that employees of WBHO, Aveng subsidiary Grinaker-LTA, Murray & Roberts (M&R), Group Five, Concor and Basil Read met twice in about 2006, and reached agreement about the construction of the stadiums, which was collusive tendering in contravention of the Competition Act.
In terms of this alleged deal, tenders for the Mbombela, Peter Mokaba, Moses Mabhida, Soccer City, Nelson Mandela Bay and Cape Town stadiums would be exchanged among themselves, along with cover prices, and the firms would aim to obtain a 17.5 percent profit margin.
Cover pricing involves creating the illusion of competition by some firms submitting non-competitive bids to enable a fellow conspirator to win a tender.
By taking this case to the tribunal, WBHO is potentially exposing itself to a higher penalty because the commission’s fast-track settlement process incentivised firms to reach settlements in exchange for reduced penalties.
The tribunal can impose a penalty for certain contraventions of the Competition Act of up to 10 percent of a company’s annual turnover in South Africa and its exports during its preceding financial year.
Mike Wylie, WBHO’s chairman, confirmed this week that the stadium meeting took place but stressed it was about capacity and how the industry was going to build the stadiums.
He said the meeting followed another arranged by the World Cup local organising committee that WBHO was asked to attend.
The settlement agreement reached with the commission in terms of which WBHO agreed to pay a R311 million fine for 11 non-prescribed prohibited practices did not cover a World Cup stadium meeting and four other alleged prohibited practices it declined to settle.
Aveng included the stadium meeting in its settlement agreement but it was excluded from those of M&R and Basil Read. It is believed M&R was the first to disclose this meeting and was granted conditional immunity.
Angus Band, Aveng’s chairman, said earlier this month that the group had a significant turnover of staff between 2007 and 2011, which meant it was not in a position to challenge allegations it was confronted with by the commission if that person was no longer with the firm and it could not find any record.
Without specifically mentioning the stadium meeting, Band said Aveng had decided, in the interests of wrapping up the matter and to take advantage of the fast-track settlement process, that it would “concede in respect of four or five items” presented to it by the commission.
Marius Heyns, Basil Read’s chief executive, said yesterday it had four matters outstanding that were not included in its settlement agreement, one of which was the stadium meeting. He denied anybody from Basil Read had attended.
Stefanutti Stocks was initially named among the firms that had attended the meeting but the commission issued an apology, stating it had incorrectly implicated it.
Group Five obtained conditional leniency from the commission for 25 projects but failed to agree to any settlement with the commission in terms of the fast-track settlement process related to four projects it did not disclose, one of which is the stadium meeting. The group is still involved in discussions with the commission about a settlement.
The fast-track settlement process was launched by the commission after it initiated a complaint in 2009 into alleged prohibited practices related to the construction of the stadiums. It resulted in 15 firms agreeing to pay penalties collectively totalling R1.46bn for collusive tendering in contravention of the Competition Act.
WBHO gained 0.43 percent to R164.70 yesterday. - Business Report