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.
Future Plans
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.
End.