Collusion: Imperial doubts it was hurt

Roy Cokayne

Imperial Properties, a division of Imperial Holdings, doubts that the tender price for its Renault dealership in uMhlanga was inflated by collusion between two bidders.

However, it has not yet taken a decision on whether it will lodge civil damages claims against the implicated contractors: listed construction and engineering company Group Five and KwaZulu-Natal construction and engineering group Harding Allison.

Dean Merredew, a project development manager, said he was the developer on the project for Imperial Properties, which acted as a developer with all its projects put out to tender by a quantity surveyor on a bill of quantities.

Merredew said he had no idea construction companies were involved in collusion and bid-rigging on the project. However, he believed it was futile for bidders to collude because the contract was always awarded to the lowest bidder.

“We have five or 10 tenderers on our list and so we have [a] good idea of… what is happening. It’s presumptuous for them to collude because how do they know they will be the lowest,” he said. “We follow the tender process as group but at arm’s length. [It’s] not a public but selected tender based on who in [the] market is capable of doing the job and has the capacity to do [the] job on time.”

He did not think the collusion had resulted in any damage to Imperial Properties, but was sceptical about whether it would trust these two construction companies in the future.

He said any decision about a civil damages claim against the two companies did not rest only him. “I’ll discuss it with the professional team and take it from there,” he said.

The Competition Tribunal last week confirmed a provisional settlement deal between Harding Allison and the Competition Commission related to collusion on the project.

In terms of the settlement agreement, Harding Allison has agreed to pay a fine of R78 821.94 for providing Group Five with a cover price for the tender for the construction of a Renault dealership in uMhlanga.

A cover price is provided by a firm that wants to win a tender to a firm that does not want to be awarded the contract. It enables the firm that wants the contract to submit a higher price or a lower tender price than the firm to which it has provided a cover price.

Construction on the uMhlanga Renault dealership commenced in July 2006 and it was completed in October 2007.

The penalty represents 2 percent of Harding Allison’s annual turnover in the firm’s 2009 financial year.

The case was one of 25 rigged projects for which the commission previously granted Group Five conditional leniency, subject to the group fully co-operating with the commission in prosecuting transgressors of the Competition Act for these cases.

The granting of leniency by the commission does not prevent any client from submitting a civil claim against contractors involved in collusion.

Heidi Geldenhuys, a spokeswoman for Group Five, said the leniency process had not yet been concluded and the group was, therefore, not in a position to make public statements about individual cases.

However, she said the board and executive of Group Five once again confirmed its support for the commission’s process and its commitment to assist the commission in its objective to rid the sector of anti-competitive behaviour.


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