30
REGIONAL REPORT: SOUTH AFRICA
international
construction
july-august 2013
Branching out
I
t has been a grim few years for South African construction
companies, battered by tough economic conditions and a
price fixing scandal, but indications are that the situation
could be about to improve.
Two years ago, contractors were struggling to survive the slump
that followed the construction boom ahead of 2010’s World Cup
football tournament, and the industry was hit by a collusion
investigation that threatened the survival of some of the sector’s
largest companies.
It turned out to be the industry’s worst scandal in years and
resulted in soured relations with its biggest client, the government,
as well as taking up hundreds of hours of management time.
Now, with all the skeletons out of the closet, fines paid and guilty
companies admitting anti-competitive behaviour, the issue is
drawing to a close.
A group of 15 contractors active in South Africa have agreed
to pay fines totalling ZAR 1.46 billion (US$ 145 million) for
anti-competitive behaviour. The fines were agreed with South
>
Africa’s Competition Commission under its Construction Fast
Track Settlement Process, and the allegations of irregular conduct
stretch back decades on contracts worth around ZAR 47 billion
(US$ 4.7 billion). The most recent transgressions were alleged to
have occurred on the building of stadiums for the 2010 World
Cup.
The issue also strained relations with the government to breaking
point. As the single biggest buyer of construction services, the
government felt that it was being ripped-off. In public, officials
have expressed increasing levels of outrage as the level of price
fixing became apparent.
“Private sector collusion and price-fixing cost the state many
billions in previous infrastructure projects, including the 2010
World Cup stadia,” Economic Development Minister Ebrahim
Patel said in parliament.
While the size of the penalties has left the industry stunned, the
agreements also point to closure. The uncertainty is almost over
and the industry can begin to move in a more positive direction.
As far as business performance is concerned, early indications
suggest that construction business is improving.
CREDIT: ESKOM
Branching out
After a tough few years, South African contractors are
looking for growth from the rest of the continent as well
as from the domestic market.
Gavin du Venage
reports.
Piling work
at Medupi
coal plant,
currently under
construction
