Download Construction Cartel - Amazon Web Services

cidb
Presentation to the:
Parliamentary Portfolio Committee
of Public Works on the:
Competition Commission construction cartel
23 April 2013
cidb
development through partnership
Presentation Layout
•
•
•
•
•
•
•
Purpose
Background on the Competition Commission
The construction industry cartel
The construction fast track settlement process
Update on progress
Way forward
Discussion matters
cidb
development through partnership
Purpose
•
•
•
•
To brief the Committee about the Competition Commission’s (CC)
investigation in the construction sector
To brief the Committee about the CC’s Construction Fast Track
Settlement
To update the Committee about progress made by the CC
To discuss a way forward with the CC
cidb
development through partnership
Background on the Competition Commission
•
The CC is a statutory body constituted in terms of the Competition Act,
No 89 of 1998 by the Government of South Africa empowered to
investigate, control and evaluate restrictive business practices,
abuse of dominant positions and mergers in order to achieve equity
and efficiency in the South African economy.
•
The CC has a range of functions in terms of Section 21 of the Act.
These include:
–
•
investigating anti-competitive conduct in contravention of the Chapter 2 of the Act;
assessing the impact of mergers and acquisitions on competition and taking
appropriate action; monitoring competition levels and market transparency in the
economy; identifying impediments to competition and playing an advocacy role in
addressing these impediments.
In taking these actions, the Commission must balance issues related to
competition with the broader social and economic goals outlined in the
Act, such as :
–
employment, international competitiveness, efficiency and technology gains, as well as
the ability of small and medium sized businesses and firms owned or controlled by
historically disadvantaged persons to compete.
cidb
development through partnership
Background on the Competition Commission
•
In order to ensure the consistent application of the Act across sectors,
the CC may:
–
•
The Competition Commission is independent but its decisions may be
appealed to the:
–
–
•
negotiate agreements with other regulatory authorities, participate in their proceedings
and advise, or receive advice from, any regulatory authority.
Competition Tribunal and the
Competition Appeal Court.
The objectives of the Competition Act are:
–
–
–
–
–
–
To promote the efficiency, adaptability and development of the economy;
To provide consumers with competitive prices and product choices;
To promote employment and advance the social and economic welfare of South
Africans;
To expand opportunities for South African participation in world markets and recognize
the role of foreign competition in the Republic;
To ensure that small and medium-sized enterprises have an equitable opportunity to
participate in the economy;
To promote a greater spread of ownership, in particular to increase the ownership
stakes of historically disadvantaged persons.
cidb
development through partnership
The construction industry cartel
•
Amongst the divisions in the CC, CARTELS is one of the divisions
within the CC. Its core functions are to:
–
–
•
•
•
•
•
Investigate cartel complaints and
Administer the Corporate Leniency Policy (CLP)
The construction industry is but one of the CC’s priority sectors
In 2008, the CC conducted research in the industry following an outcry
about the costs of the 2010 FIFA World Cup stadiums
The CC uncovered evidence of possible collusion
In February & September 2009 the CC initiated investigations against
major construction firms for the possible collusion in the industry
including stadiums
In November 2009, the CC received approximately 160 CLP
applications
–
–
CLP: policy used by the CC to bust cartels
It encourages firms involved in cartels to come forward in return for immunity to
prosecution
cidb
development through partnership
The construction industry cartel
•
In February 2011, the CC launched a Construction Fast Track Settlement
to process matters expeditiously
•
An additional 131 rigged projects to a tune of R26bn involving 21 firms
were then brought forward, thus giving a total of 291 projects being
investigated
•
The projects include major infrastructure projects such as: stadiums, roads,
dam, mines and shopping centres in both public and private sectors
cidb
development through partnership
Construction Fast Track Settlement process
•
To incentivise firms to admit their anti-competitive conduct
•
To encourage truthful and comprehensive disclosure by firms involved
in bid rigging
•
Strengthen evidence against other firms
•
Minimise legal costs and speedily resolve complaints
•
To give firms that disclosed their involvement in bid rigging better
financial settlement terms
•
Set the construction industry on a new competitive trajectory
cidb
development through partnership
Update on Progress
•
•
•
•
•
•
From the settlement applications, the 21 firms also implicated an
additional 22 firms that had not participated in the settlement process
The 22 firms will be investigated after the completion of the settlement
discussions with the 21 firms
The CC is currently in settlement discussions with the 21 firms
The process is envisaged for completion in mid-May 2013
The CC will then file the Consent Agreement with the Tribunal at the
end of May 2013
The Tribunal is likely to finalise the Consent Agreement in June/July
2013
cidb
development through partnership
Way Forward
•
•
•
•
•
Rule 14 of the CC Rules prohibits sharing of information prior to
finalisation at Tribunal stage
The CC will only be able to make detailed information available to the
cidb when the Tribunal has confirmed the Consent Agreement by
issuing “An Order”
It is after this process that other stakeholders may be able to proceed
with taking steps in terms of possible transgressions of their individual
Acts, Codes etc.
In terms of Regulation 28(10) of the cid Regulations, 2004 (as
amended): If an organ of state, other than the cidb, undertakes an
investigation and the finding of that organ of state indicates that a
person acted contrary to or has omitted to act in terms of the code of
conduct, that organ of state must provide the cidb with its findings and
all other documentation relevant to its investigation.
In the meantime, the cidb will be scheduling a meeting with all entities
(viz. CC, NPA, SARS, NT, DPW etc.) concerned to discuss the
possible implications of the outcome of the CC’s investigation report.
The meeting is earmarked to take place by the first week of May.
cidb
development through partnership
Discussion matters
cidb
development through partnership