South Africa’s Minister of Economic Development, Ebrahim Patel, who wants restitution from the country’s top builders for collusion (Linh Do/Wikimedia Commons)

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World Cup woes: South Africa wants firms to pay even more for collusion

23 July 2014 | By GCR Staff | 0 Comments

The government of South Africa wants the country’s biggest construction companies to pay out still more cash as restitution for rigging contracts to build stadiums for the 2010 FIFA Soccer World Cup.

Last June antitrust authorities fined 15 builders, including Murray & Roberts Holdings Ltd. and Aveng Ltd., a total of 1.5 billion rand ($141m) after a probe found that they had colluded to drive up prices.

But that was not nearly enough, according to economic development minister Ebrahim Patel (pictured), who told lawmakers in Cape Town yesterday that he was negotiating with the industry on a further “restitution package”, Bloomberg-Businessweek reports.

“The 1.5 billion rand in penalties is not the end of the story with the construction industry,” he said. “We are now in discussion with the construction industry on a restitution package for their collusion and price fixing.”

The Competition Commission probe found that companies held meetings to rig profit margins on the construction of six stadiums ahead of the 2010 tournament. 

Murray & Roberts, South Africa’s biggest listed builder, and competitors met twice and agreed to exchange cover prices, allocate tenders and aim for a 17.5 percent margin, according to documents on the competition tribunal’s website. The papers also detailed collusion on projects ranging from roads to offices.

The country’s top builders faced heavy fines, including Murray & Roberts, who was was fined 309 million rand ($29.4m). Aveng Ltd. was fined 307 million rand, Wilson Bayly Holmes-Ovcom Ltd. 311 million and Stefanutti Stocks Holdings Ltd. 307 million.

Of the restitution package, Webster Mfebe, chief executive officer of the South African Forum of Civil Engineering Contractors, told Bloomberg-Businessweek: “We are in discussions with the government on a settlement package, which the government and the participating construction companies will unveil at an appropriate time yet to be mutually determined.”