A multi-million Rand fine issued to one of the country’s major construction firms recently should act as a warning to companies in the industry, including construction material suppliers, to steer away from collusive behaviour or face the wrath of the law.
This is according to Nico Pienaar of surface mining industry association, ASPASA, who adds that a fine line exists between industry cooperation on non-competitive matters such as health and safety as opposed to collusive behaviour such as price fixing and allocations. The risk of such behaviour was highlighted by the Competition Commission finding construction company, Esor, guilty of market allocation and collusive bidding and fined R15-million.
He says the dangers of collusion exist even at grass roots level with the supply of raw materials such as aggregates and warns that suppliers guard against any practices that can be seen as being anti-competitive. In the interest of informing the industry he points to the following tactics to avoid collusion:
- Train staff and management about the dangers of collusion.
- Do not discuss details of pricing with competitors in any settings, even informally.
- Compete fairly and avoid entering into agreements with competitors.
- Blow the whistle on collusive behaviour wherever it is encountered.
- Voice your concerns if communications in any form seems to be anti-competitive.
- Object on record and leave any meeting if it becomes collusive.
- Trust your instincts – if it feels wrong, it probably is
“Ignorance of the law is no excuse; therefore, it remains the responsibility of all staff involved in the sales process to be well informed. Managers and directors are at even greater risk of implication and should be especially aware of laws and regulations in dealing with sales agreements and contracts. No contract is worth the risk of criminal prosecution nor the reputational damage that is associated with being found guilty of anti-competitive, collusive or cartel-like behaviour,” concludes Pienaar.