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Seven construction firms collude to agree on a 17.5% profit margin on World Cup tenders

by , 16 July 2013

After much publicity surrounding the construction ‘cartel's' bid-rigging, the Competition Tribunal published some documents relating to the investigation. Read on to find out more about what's going on…

In documents published by the Competition Tribunal, “seven major construction and engineering firms met secretly in 2006 to allocate tenders” for projects for the World Cup, reports Fin24. And if that wasn’t bad enough, the companies in question decided on “a 17.5% profit margin”.

The ‘guilty’ parties include Grinaker-LTA, Wilson Bayly Holmes-Ovcon Ltd, Murray & Roberts Holdings Ltd, Group Five Ltd, Concor, Basil Read Holdings and Stefanutti Stocks Holdings, details Bloomberg.

The collusion between these companies was rife.

For instance, Wilson Bayly Holmes-Ovcon “won the R4.5 billion Cape Town stadium contract,” notes IOL. The company “admitted to reaching an agreement with Group Five in which WBHO would provide Group Five with a cover price on the basis that Group Five would not win the stadium contract”.

The Competition Tribunal’s two day meeting starts tomorrow to discuss constructors’ collusion fine

The Competition Tribunal is meeting over the next two days to “decide whether to approve a R1.5 billion fine” that 15 construction companies agreed to, adds Bloomberg.

This followed “15 companies” admitting to “rigging 300 projects nationwide,” adds Fin24. Despite this admission, the companies were only penalised for “145 projects as the others fell within a period outside the commission's investigation”.

As well as the fines the construction companies face, there are now reports of legal cases beginning.

The “South African Local Government Association is seeking as much as R3.9 billion from the construction companies, notes Bloomberg. Local governments feel duped out of money over the construction companies’ bid-rigging.

We’ll find out at the end of the week the conclusion of the Competition Tribunal’s meeting about whether to approve the fine or not.

Seven construction firms collude to agree on a 17.5% profit margin on World Cup tenders
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