ECONOMIC Development Minister Ebrahim Patel says it is important to have an appropriate balance between actions that are necessary to stamp out collusion and pricefixing in the construction industry and ensuring SA has an industry that can deliver on the mandate of the infrastructure build programme.

Commentators have expressed concern about suggestions by the Construction Industry Development Board (CIDB) that companies found guilty of bid-rigging and collusion may be deregistered from the CIDB and disqualified from state tenders.

Mr Patel said yesterday the Competition Commission would supply all its information to the CIDB, and if the conduct continued in future the board would be entitled to progressively apply proper sanctions as the circumstances might warrant. "We are in the process of cleaning up the industry," the minister said. CIDB spokeswoman Kotli Molise said it would await the decision of the Competition Tribunal and a report on the commission's findings. "The CIDB will determine its course of action on the basis of this report."

She said the board was obliged to investigate any breach of the CIDB code of conduct. The board was established to promote a regulatory framework for the industry.

Mr Patel said the settlements were the first step in the process to avoid overpayment in infrastructure programmes. Where government departments had suffered losses, they were entitled to seek civil damages. "One of the key gains for us out of the fast-track settlement process is that the cartels have been dismantled. Individuals who were the instruments of the cartels have been identified and have been brought to the attention of their CEOs, and their boards will have to reflect on the fines and the corrective action that will be required in each of those companies," he said.

Commissioner Shan Ramburuth said the commission had reached an understanding with the National Prosecuting Authority that no criminal investigations would proceed until the commission's fast-track process had been completed.

The Competition Tribunal still has to confirm the settlements. The 16 projects where no settlements have been reached will come before the tribunal for prosecution.

Justin Balkin, a director at law firm Edward Nathan Sonnenbergs, said it was essential an effective penalty was levied, but one that did not result in the decimation of the industry. "This is all the more true in an industry such as construction, which is so pivotal to SA's stability, growth and development," he said.

Mr Ramburuth said a competitive culture would be critical to bring down costs of future infrastructure investments, and would incentivise firms towards innovation and efficiency in future projects.

Previously published by on 25 June 2013

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