Pretoria - The Competition Appeal Court has dismissed an appeal by Power Construction and subsidiary Power Construction Western Cape, two construction companies who disputed the Competition Commission’s jurisdiction and the validity of its investigation into collusion and bid-rigging in the construction sector.
Sipho Ngwema, the head of communications at the commission, said yesterday that the commission welcomed the judgment, adding it paved the way for the prosecution of Power Construction before the tribunal.
The appeal by the two companies followed the judgment by the Competition Tribunal in September last year rejecting their bid to have charges against them dismissed.
The charges related to a collusive tendering complaint filed by the Competition Commission with the Competition Tribunal in December 2014, involving a maintenance project for the SA National Roads Agency (Sanral) on the N1 between Touws River and Laingsburg.
Pervasive collusion
The case involved Power Construction and Haw and Inglis, which was awarded the contract.
It stemmed from an investigation by the commission into the construction industry in 2009 after it had received evidence that there was pervasive collusion in the sector.
The results of the investigation led to the commission launching the fast track settlement process in February 2011 to expedite the resolution of these cases.
Haw and Inglis participated in the commission’s construction fast track settlement process, admitted liability and paid a fine of R45.3 million.
To date, the commission has reached settlements with 22 firms in terms of the fast track settlement process, resulting in these firms collectively paying fines totalling more than R1.5 billion.
The commission has referred a further 19 cases to the tribunal. These were firms who decided not to settle with the commission and included the case against Power Construction.
Power Construction Western Cape is now a shell company following a corporate restructuring undertaken by Power Construction.
Read also: Cover price was no price fixing
Power Construction, when it brought the application seeking to prevent the tribunal from hearing the case, argued the complaint had expired and the commission could not impose a penalty on a firm that had not contravened the act.
The tribunal was told at the hearing that Power Construction was not guilty of price fixing despite submitting a cover price to Haw & Inglis for the Sanral tender.
Martin Brassey, senior counsel for Power Construction, said at the time his client was admitting the submission of a tender for the purpose of ensuring at least three tenders were submitted, but did not admit its conduct had any influence on the price that was set by Haw & Inglis.
Brassey said if there was a sham bid to secure the evaluation of the bids that had no impact on the price, then there was no price fixing or other manipulation of the terms of the tender and no contravention the Competition Act.
The tribunal in its judgment also dismissed arguments that Power Construction Western Cape was not directly named in the original complaint initiation, that Power Construction could not be held accountable for the actions of a subsidiary it bought after the contravention and that the prohibited conduct had occurred more than three years before the commission initiated its complaint.
The Competition Appeal Court this week upheld the tribunal’s decision that the commission had met all the requirements for a valid initiation and therefore had jurisdiction to investigate the collusion.