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Esor Construction group fined R15.7m for collusion

The Esor Construction group has been fined R15.7 million by the Competition Tribunal for collusion. Picture: File image

The Esor Construction group has been fined R15.7 million by the Competition Tribunal for collusion. Picture: File image

Published May 7, 2022

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On Friday, the Competition Tribunal found the Esor Construction group guilty of collusion and slapped it with a R15.7 million fine.

The penalty was issued to the construction cartel for price fixing, market allocation and collusive bidding.

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The Esor Construction group is one of South Africa’s prominent civil engineering construction groups that provides specialist construction solutions.

The group’s services include development, building, housing, infrastructure, pipelines, pipe services and sanitation.

Esor, which was formerly known as Esorfranki, was established in 1985. In more recent years, the group has worked on the Kusile Power Station in Mpumalanga.

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The Esor group was found guilty of colluding with competitors to fix prices, allocating customers and engaging in bid rigging through cover pricing.

The specific matter in question concerns construction projects that are in the market for geotechnical services which include piling, lateral support, grouting and geotechnical drilling investigation services.

In 2013, the company was fined R155 850 by the Competition Commission for collusive tendering, along with other construction companies, where the penalty given amounted to just more than R1.46 billion.

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The commission said eight respondents had colluded on various tenders between 1970 and 2015. The same companies had colluded through formal agreements until 2005, after which they engaged in what were known as ad hoc arrangements.

The Esor group admitted to participating in these formal arrangements but said that it had stopped its proceedings in 2005.

The commission started its investigation in 2009, in line with section 67 (1) of the Competition Act which states that “a complaint in respect of a prohibited practice may not be initiated more than three years after the practice has ceased”.

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The Competition Tribunal dismissed the argument based on the projects that had continued, “at least until after June 2008”.

When it came to ad hoc arrangements, the Esor group admitted to its participation in collusive conduct specifically with the Sappi/Saiccor project.

The Competition Tribunal said: “Its conduct after 2005 can be characterised as a continuation of the overall agreement, albeit in a different form.”

After considering all available evidence, the Competition Tribunal found that the Esor group of companies had contravened section 4(1)(b)(i)(ii)(iii) of the 1970 Competition Act, “in that they colluded with their competitors to fix prices, allocate customers, and engage in bid rigging through cover pricing from at least 1999 to 2008”.

Four other companies had initially been cited as respondents in the case but reached settlement agreements with the Competition Commission. These companies are Geomechanics CC, Geomech Africa, Rodio Geotechnics and Dura Soletanche Bachy.

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