SA Property Sector speaks out on collusive tendering in Construction Industry

The South African Property Owners Association (SAPOA) has condemned the collusive practices of local construction companies between 2006 and 2011.

The Competition Commission fined 15 major construction firms a combined R1.46 billion for ‘rampant’ collusive tendering in projects during this time.

In a fast-track disclosure process, the commission had applications for settlement from 21 companies revealing collusion or anticompetitive behaviour in over 300 projects, public and private. The value of these projects is estimated to total R47 billion.

“We disapprove of anti-competitive behaviours. We trust this collusion has now ceased and is in the past,” says Neil Gopal, CEO of SAPOA.

“Collusion represents a negative impact for our members in the form of escalated development costs and reduced yields, with knock-on impacts for demand in the economy and the growth of the property sector,” says Gopal.

He adds that SAPOA is unable to remedy the losses potentially suffered by its members but will continue to lobby regulators, like the Competition Commission, to ensure these practices are eradicated from our economy.

Several of the JSE-listed construction groups that have settled with the commission have made preliminary provisions for the fines.

The commission had been investigating 65 bid-rigging cases in the construction sector, involving infrastructure projects since 2006.

These projects included building stadiums for the 2010 Soccer World Cup; the upgrading of airports; highway improvement projects, including the Gauteng toll roads; and the construction of hospitals, dams and bridges.

Economic Development Minister Ebrahim Patel said if the state overpaid for infrastructure, it meant there would be fewer projects, which in turn created fewer job opportunities for South Africans.

He said the settlements with the companies were the first step in the process to avoid overpayment, and where government departments had suffered losses they were entitled to take the matter forward with the companies involved.