The Competition Commission on Tuesday said it had received several applications for corporate leniency from construction companies for collusive practices with respect to certain
construction projects.

It follows an ongoing investigation into collusive practices in construction industry since March.

The Commission said preliminary investigations indicated that there may be widespread collusion in the construction industry.

"In particular, the applications revealed that the following collusive practices could be prevalent in the sector: price fixing in the form of fixing margins for tenders and compensating the losing bidder; allocation of customers/projects/tenders through the use of score cards; and collusive tendering by submitting uncompetitive bids (cover pricing).

"The Commission's preliminary investigations also show that construction firms, which will ordinarily bid independently, often form joint ventures when bidding for certain projects.

"In so far as they bring competitors together, these joint ventures may be used as a platform to engage in collusive practices. Some of the joint ventures have permanent status and
continue to be used by competitors in the industry as a platform for sharing sensitive competitive information," it said.

Company's under investigation include Grinaker, Stefanutti, Group Five, WBHO, Concor, Liviero, Giuricich, Hochtief, Dura, Nishimatsu, Esorfranki, VNA Pilings, Rodio, Diabor, Gauteng Piling, Fairbrother, Geomechanics, Murray & Roberts, Aveng and other firms, including joint ventures in the construction industry.

The commission said that collusive practices tended to distort competition and increase prices. "This is particularly problematic given the recent boom in activity in infrastructure and construction in the country, as it implies that costs have been inflated while above desirable
competitive levels creating burden on the state and the economy.

The collusive practices may also slow down delivery of key infrastructure as well as houses in the country," it said.

"International experience has shown that collusive practices of this nature are also prevalent in the construction industry in other countries," said deputy commissioner, Tembinkosi Bonakele.

"Examples include the Netherlands and the United Kingdom where a large number of construction firms took advantage of the corporate leniency policy to come forward and to
clean up their act once investigations were launched," Bonakele concluded.