By: Zandile Mavuso
The Competition Commission of South Africa’s fast-track settlement for firms in the construction sector has resulted in more than 20 companies disclosing information pertaining to bid-rigging and collusion to date, which involves more than 130 projects.
“The process was designed for companies to disclose projects that were subject to anticompetitive conduct. Upon complying with the requirements, the commission will settle with participating firms by levying penalties,” explains Competition Commission of South Africa advocacy and stakeholder relations head Trudi Makhaya.
Last month, a daily business newspaper reported that four of the biggest construction companies in the country were tight-lipped about the probes into alleged collusion in major infrastructure projects and that these companies were cooperating with the commission in its investigation.
The investigation of by the South African Police Service’s directorate for priority crime investigation, commonly known as the Hawks, into the construction industry is a completely separate process from the commission’s fast-track settlement process.
“What is important is that the commission eliminates anticompetitive conduct and transforms the sector, especially during this time of [expanded government] infrastructure investment. We want the construction industry to be more vigilant to such acts, so that we can build a sector that encourages investment,” she explains.
Corporate Leniency Policy
Makhaya notes that underpinning the fast-track settlement process is the commission’s corporate leniency policy (CLP), which offers a cartel member the opportunity to disclose information about a cartel before further investigation reveals the extent of the misdemeanour, in return for immunity from prosecution and fines.
The CLP is applicable with respect to alleged cartels. A cartel refers to an agreement or concerted practice among competing firms, or a decision by an association of firms to coordinate their otherwise competitive behaviour, for instance, through conduct such as price fixing, the division or allocation of markets and/or collusive tendering.
This conduct typically constitutes a contravention of Section 4(1)(b) of the Competition Act.
Immunity in this context means that the commission would not seek a penalty from the successful applicant before the Competition Tribunal for its involvement in the cartel activity, which is part of the application under consideration.
The CLP is lenient in that the first cartel member that approaches the commission of its own accord and provides information that will result in proceedings against a cartel, will not be subjected to prosecution in relation to the alleged cartel, which forms part of the application under the CLP.
The granting of immunity under the CLP is not based on the fact that the applicant is viewed as less of a cartelist than the other cartel members, but on the fact that the applicant is the first to approach the commission with information and evidence regarding the cartel.
Therefore, a firm involved, implicated in or suspecting that it is involved in cartel activity, would be able to come forward of its own accord and confess to the commission in return for conditional immunity.
The immunity is confirmed at the end of the case process by the tribunal, if the firm is found to have fulfilled the requirements of the CLP.
Meanwhile, the commission notes the important role that National Treasury has played through its fraud [detection] policies, which have allowed for a more effective mandate.
The commission also provides training to State-owned enterprises, educating them on issues pertaining to anticompetitive conduct.
“Business Unity South Africa has also been instrumental in educating companies about competition law as part of its work programme. It has competition champions that maintain a keen interest in national and international developments in competition law. We hope to advise their member companies accordingly,” says Makhaya.
Makhaya states that competition law plays an important role in stimulating economic growth, development and employment creation.
“Competition law is crucial in supporting other policies set by government, as the law has the ability to transform different sectors by instilling the rules that promote fair competition. By advocating for competition and investigating anticompetitive conduct in different sectors, we will be able to promote economic growth,” she adds.
The commission is looking forward to its next strategic planning phase, when it will engage with stakeholders on work completed by the commission and find ways in which to improve. The commission also hopes that the planning phase will foster the identification of other sectors that require scrutiny in terms of competition law, in addition to the current priority areas.
The commission states that anticompetitive conduct is an international problem, which has caused welfare deficits in many countries. Therefore, the commission is actively involved in the African Competition Forum, an informal association of competition agencies across the continent, which it hopes will assist the countries to develop ways to eliminate anticompetitive conduct.