State seeks more money for builders’ collusion

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Published Jul 23, 2014

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South Africa’s government is putting pressure on construction companies to make further payments as punishment for rigging contracts to build the stadiums for the 2010 World Cup and other projects.

Antitrust authorities fined 15 builders, including Murray & Roberts and Aveng, a total of R1.5 billion in June last year, after a probe that spanned almost four years found they had colluded to drive up prices.

“The R1.5bn in penalties is not the end of the story with the construction industry,” Economic Development Minister Ebrahim Patel told legislators in Cape Town yesterday. “We are now in discussion with the construction industry on a restitution package for their collusion and price fixing.”

The Competition Commission’s probe found that companies held meetings to rig profit margins on the construction of six stadiums ahead of the soccer tournament.

Murray & Roberts, South Africa’s biggest listed builder, and competitors met twice and agreed to exchange cover prices, allocate tenders and aim for a 17.5 percent margin, according to documents on the competition tribunal’s website.

The papers also detailed collusion on projects ranging from roads to offices.

Murray & Roberts was fined R309 million, Aveng R307m, Wilson Bayly Holmes-Ovcom R311m and Stefanutti Stocks Holdings R307m.

Patel did not specify which construction companies were being targeted to make additional payments or how much the government expected to raise from the exercise. - Bloomberg

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