Six Eastern Cape construction companies are being investigated by the Competition Commission (CCSA) for alleged involvement in collusive tendering, otherwise known as bid rigging.
The companies were reported by a number of municipalities over their bids for construction of much-needed schools and roads infrastructure across the province.
The six companies, whose identities were not revealed by the commission, are said to be scattered across Chris Hani District municipality, Mnquma municipality and other areas further east.
Speaking in East London this week, the CCSA’s Mziwodumo Rubushe said collusive tendering or bid rigging was “widespread all across the Eastern Cape”.
Addressing a small group of construction industry stakeholders and municipal CFOs at the South African Local Government Association (Salga) offices in East London, Rubushe said the practice was not only rampant across South Africa, but was a “disease that was prevalent all across the globe”.
He said the commission was concerned that some small businesses across the country were engaging in this illegal practice, “many doing so unknowingly and unwittingly”.
He was in the province as part of the commission’s nationwide advocacy initiative and education drive on how to detect and prevent collusive tendering.
“Collusive tendering is an agreement amongst competitors not to compete on the bids they submit after being invited to tender.
“It can take many forms, including complementary bidding, where firms or individuals agree to submit bids that are higher than the designated winner.
“It includes bid suppression, where companies agree to refrain from bidding or to withdraw a previously submitted bid so that the designated winner’s bid will be accepted,” said Rubushe.
Bhisho legislature’s expenditure and finance portfolio committee chair and ANC MPL Xolile Nqatha said collusive tendering was prevalent in the province.
Rubushe said another form of rigging was a bid rotation scheme, where conspiring firms continue to bid but agree to take turns at submitting a winning bid.
He told the small gathering that collusive tendering was often present and could be detected in bids that displayed one or more of the following suspicious bidding patterns:
- Bids received at the same time;
- Bids with similar or unusual wording;
- Common mistakes across different bids;
- Similar contact details across different bids;
- Identical prices quoted in
bids; and
- Prices with an equal difference between each bid.
He said companies involved could face possible administrative penalties in terms of section 59 of the Competition Act No 89 of 1998, “or may be reported to the National Prosecuting Authority for criminal investigation.
“They may also be restricted from conducting business with the public sector for a period not exceeding 10 years.”
Rubushe said the Competition Act had been amended in May to allow for company directors to be criminally charged and prosecuted.
The revelation comes as pressure on the province grows to build more schools and improve roads as backlogs intensify.
Collusive tendering has been rife in the South African construction industry for some time.
Ahead of the 2010 Fifa World Cup hosted in South Africa, 15 of the biggest construction companies in the country admitted to price-fixing and collusion, and later in 2013, settled with the commission to pay R1.46-billion in fines.
Murray and Roberts, WBHO, Stefanutti Stocks, Basil Read, Raubex, Group Five, Aveng and others were identified in hundreds of cases involving projects worth nearly R50-billion.
The companies that incurred the largest penalties at the time for collusive practices were WBHO, which was fined R311.29-million for 11 projects; Murray & Roberts, fined R309.05-million for 17 projects; Stefanutti Stocks, fined R306.89-million for 21 projects; and Aveng, which was fined R306.57-million for 17 projects.
Probe into six EC tender cheats
The companies were reported by a number of municipalities over their bids for construction of much-needed schools and roads infrastructure across the province.
The six companies, whose identities were not revealed by the commission, are said to be scattered across Chris Hani District municipality, Mnquma municipality and other areas further east.
Speaking in East London this week, the CCSA’s Mziwodumo Rubushe said collusive tendering or bid rigging was “widespread all across the Eastern Cape”.
Addressing a small group of construction industry stakeholders and municipal CFOs at the South African Local Government Association (Salga) offices in East London, Rubushe said the practice was not only rampant across South Africa, but was a “disease that was prevalent all across the globe”.
He said the commission was concerned that some small businesses across the country were engaging in this illegal practice, “many doing so unknowingly and unwittingly”.
He was in the province as part of the commission’s nationwide advocacy initiative and education drive on how to detect and prevent collusive tendering.
“Collusive tendering is an agreement amongst competitors not to compete on the bids they submit after being invited to tender.
“It can take many forms, including complementary bidding, where firms or individuals agree to submit bids that are higher than the designated winner.
“It includes bid suppression, where companies agree to refrain from bidding or to withdraw a previously submitted bid so that the designated winner’s bid will be accepted,” said Rubushe.
Bhisho legislature’s expenditure and finance portfolio committee chair and ANC MPL Xolile Nqatha said collusive tendering was prevalent in the province.
Rubushe said another form of rigging was a bid rotation scheme, where conspiring firms continue to bid but agree to take turns at submitting a winning bid.
He told the small gathering that collusive tendering was often present and could be detected in bids that displayed one or more of the following suspicious bidding patterns:
bids; and
He said companies involved could face possible administrative penalties in terms of section 59 of the Competition Act No 89 of 1998, “or may be reported to the National Prosecuting Authority for criminal investigation.
“They may also be restricted from conducting business with the public sector for a period not exceeding 10 years.”
Rubushe said the Competition Act had been amended in May to allow for company directors to be criminally charged and prosecuted.
The revelation comes as pressure on the province grows to build more schools and improve roads as backlogs intensify.
Collusive tendering has been rife in the South African construction industry for some time.
Ahead of the 2010 Fifa World Cup hosted in South Africa, 15 of the biggest construction companies in the country admitted to price-fixing and collusion, and later in 2013, settled with the commission to pay R1.46-billion in fines.
Murray and Roberts, WBHO, Stefanutti Stocks, Basil Read, Raubex, Group Five, Aveng and others were identified in hundreds of cases involving projects worth nearly R50-billion.
The companies that incurred the largest penalties at the time for collusive practices were WBHO, which was fined R311.29-million for 11 projects; Murray & Roberts, fined R309.05-million for 17 projects; Stefanutti Stocks, fined R306.89-million for 21 projects; and Aveng, which was fined R306.57-million for 17 projects.
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