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COMPETITION TRIBUNAL

REPUBLIC OF SOUTH AFRICA

Case No: 016964

In the matter between:

The Competition Commission Applicant

and

G Liviero & Son Building (Pty) Ltd Respondent

Panel:	N Manoim (Presiding Member), Y Carrim
	(Tribunal Member) and T Madima (Tribunal
	Member)
Heard on:	17 July 2013
Decided on:	22 July 2013
Order

The Tribunal hereby confirms the order as agreed to and proposed by the Competition Commission and the respondent, annexed hereto marked “A”.

Presiding Member

N Manoim

Concurring: Y Carrim and T Madma

IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA

HELD IN PRETORIA

CT Case No.

CC Case No. 2009Feb4279/2009Sep4641

Application for confirmation of a consent agreement

In the matter between:

THE COMPETITION COMMISSION Applicant

and

G LIVIERO & SON BUILDING (PTY) LIMITED Respondent

CONSENT AGREEMENT IN TERMS OF SECTION 49D READ WITH SECTION 58(1)(a)(iii) AS READ WITH SECTION 58(1)(b) OF THE COMPETITION ACT, 1998 (ACT NO. 39 OF 1998), AS AMENDED, BETWEEN THE COMPETITION COMMISSION AND G LIVIERO & SON BUILDING (PTY) LIMITED ("G LIVIERO”), IN REGARD TO CONTRAVENTIONS OF SECTION 4(1)(b)(iii) OF THE COMPETITION ACT, 1998

PREAMBLE

WHEREAS the Competition Commission is empowered to, inter alia, investigate alleged contraventions of the Competition Act, 1998;

WHEREAS the Competition Commission is empowered to, inter alia, conclude consent agreements in terms of section 49D of the Competition Act, 1998; "

WHEREAS the Competition Commission has invited firms in the construction industry to engage in settlement of contraventions of the Competition Act, 1998;WHEREAS G Liviero & Son Building has accepted this invitation and has agreed to settle in accordance with the terms of the invitation;

NOW THEREFORE the Competition Commission and G Liviero & Son Building hereby agree that application be made to the Competition Tribunal for the confirmation of this consent agreement as an order of the Competition Tribunal in terms of section 49D as read with sections 58(1)(a)(iii) and 58(1 )(b) of the Competition Act_r 1998,

1. Definitions

For the purposes of this consent agreement the following definitions shall apply:

1.1. “Act" means the Competition Act, 1998 (Act No. 89 of 1998), as amended;

1.2. "GIDB” means the Construction Industry Development Board;

1.3. “CIDB Regulations” refers to the Construction industry Development Regulations, 2004 {as amended) (Government Notice No. 692 of 9 June 2004, published in Government Gazette No. 26427 of 9 June 2004);

1.4. “CLP” means the Commission's Corporate Leniency Policy (Government Notice No. 828 of 23 May 2008, published in Government Gazette No. 31064 of 23 May 2008);

1.5. “Commission” means the Competition Commission of South Africa, a statutory body established in terms of section 19 of the Act with its principal place of business at 1^st Floor, Mulayo Building (Block C), the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria, Gauteng;

1.6. “Commissioner” means the Commissioner of the Competition Commission, appointed in terms of section 22 of the Act;.

1.7. “Complaints” means the complaints initiated by the Commissioner ol the Competition Commission in terms of section 49B of the Act under case numbers 2009Feb4279 and 2009Sep4641;

1.8. “Consent Agreement" means this agreement duly signed and concluded between the Commission and G Liviero & Son Building (“G Liviero”);

1.9. “Cover Price" means generally, a price that is provided by a firm that wishes to win a tender to a firm that does not wish to do so, in order that the firm that does not wish to win the tender may submit a higher price; or alternatively a price that is provided by a firm that does not wish to win a tender to a firm that does wish to win that tender In order that the firm that wishes to win the tender may submit a lower price;

1.10. "G Liviero” G Liviero & Son Building (Pty) Ltd, a company incorporated under the laws of the Republic of South Africa with its principal place of business at cnr Dytchiey & Marcius Roads, Barbeque Downs, Kyalami, and Johannesburg.

1.11. “Invitation* means the Invitation to Firms in the Construction Industry to Engage in Settlement of Contraventions of the Competition Act, as published on the website of the Commission on 1 February 2011;

1.12. “Non»prescribed prohibited practices” refers to prohibited restrictive horizontal practices relating to the construction Industry that are contemplated in section 4(1 )(b) of the Act and that are on-going or had not ceased three years before the complaints were initiated, as contemplated in section 67 of the Act;

1.13. “Parties” means the Commission and G Liviero;

1.1.4. “Prescribed prohibited practices'’ refers to prohibited restrictive horizontal practices relating to the construction industry that are contemplated in section 4(1 )(b) of the Act and that ceased after 30 November 1998, but more than three years before the complaints were initiated;

1.15. “Respondent” means G Liviero & Son Building’

1.16. “Settlement” refers to settlement in terms of the invitation to firms in the construction industry to engage in settlement of contraventions of the Act and the procedures detailed therein;

1.17. “Sub-sectors of the construction Industry” refers to the classes of construction work defined in Schedule 3 of the CIDB Regulations, substituted by Government Notice No. 8986 of 14 November 2008, published in Government Gazette No. 31603 of 14 November 2008; and

1.18. “Tribunal” means the Competition Tribunal of South Africa, a statutory body established in terms of section 26 of the Act, with Its principal place of business at 3^rd Floor, Mulayo building (Block C), the dti Campus, 77 Meintjies Street Sunnyside, Pretoria, Gauteng; and -

2. The Complaint

2.1. On 10 February 2009 the Commission initiated a complaint in terms of section 49B(1) of the Act into alleged prohibited practices relating to collusive conduct in the construction of the stadiums for the 2010 FIFA Soccer World Cup against Grinaker- LTA-(the construction operating business unit of Aveng), Group Five Limited, Basil Read (Pty) Ltd, WBHO Construction (Pty) Ltd, Murray & Roberts Limited, Stefanutti Stocks Limited, interbeton Abu Dhabi nv He and Souygues Construction SA.

2.2. In addition, on 01 September 200P. following the rpc-nlpt of applications for immunity in terms of the CLP, the Commission Initiated a compiaint in terms of section 49B(1) of the Act into particular prohibited practices relating to conduct in construction projects, by the firms listed below. The compiaint concerned alleged contraventions of section 4(1 )(b) of the Act as regards price fixing, market allocation and collusive tendering. The investigation was initiated against the following firms: Grinaker-LTA, Aveng (Africa) Ltd, Stefanutti Stocks Holdings Ltd, Group Five Ltd, Murray & Roberts, Concor Ltd, G. Liviero & Son Building (Pty) Ltd, Giuricich Coastal Projects (Pty) Ltd, Hochtief Constructing AG/ Dura Soletanche Bachy (Pty( Ltd Nishimatsu Construction Co Ltd, Esorfranki Ltd, VNA Pilings CC, Rodio Geotechnics (Pty) Ltd, Diabor Ltd, Gauteng Piling (Pty) Ltd, Fairbrother Geotechnicai CC, Geomechanics CC, Wilson Bayiy Holmes-0vcon Ltd and other construction firms, including joint ventures.

3. The Invitation to Firms in the Construction Industry to Engage in Settlement of Contraventions of the Act

3.1. The Commission’s investigation j)Hhe_com plaints, as well as several other of the Commission's investigations in the construction industry, led the Commission to believe that there was widespread collusion in contravention of section 4(1)(b)(iii) of the Act in the construction industry.

3.2. Section 4(1 )(b) provides-

“4. Restrictive horizontal practices prohibited

(1) An agreement between, or concerted practice bv, firms, or a decision bv an association of firms, is prohibited if it is between parties in a horizontal ~ relationship and if -

(a) it has the effect of substantially preventing, or lessening, competition in a market, unless a party to the agreement, concerted practice, or decision can prove that any technological, efficiency or other pro-competitive gain resulting from it outweighs that effect; or

(b) it involves any of the following restrictive horizontal practices:

(i) directly or indirectly fixing a purchase or selling price or any other trading condition;

(ii) dividing markets by allocating customers, suppliers, territories, or specific types of goods or services; or

(iii) collusive tendering

3.3. The collusive conduct..engaged in, in the context of the Invitation and this Consent Agreement, was collusive tendering or “bid-rigging". Collusive tendering involves particular conduct by firms whereby as competitors they collude regarding a tender resulting in the tender process being distorted. The bid prices and tfie bid submissions by these competitors as well as the outcome of the tender process is not the-result of competition on the merits. “Cover pricing” in this context occurs when conspiring firms agree that one or more of them will submit a bid that is not intended to win the contract. The agreement is reached in such a way that among the colluding firms, one firm wishes to win the tender and the others agree to submit non-competitive bids with prices that would be higher than the bid of the designated winner, or the price wlli be too high to be accepted, or the bid contains special terms that are known to be unacceptable to the client Collusive tendering therefore applies to agreements or concerted practices which have. as their object or effect the prevention, lessening, restriction and distortion of competition in South Africa.

3.4. In terms of section 2 of the Act, two of the key objects of the Act are to promote the efficiency, adaptability and development of the economy, and to provide consumers with competitive prices and product choices. Section 217 of the Constitution, 1996 calls for a procurement or tender system which is fair, equitable, transparent, competitive and cost-effective,

3.5. In addition, the Commission is required in terms of section 21(1) of the Act, inter alia, to implement measures to increase market transparency; to investigate and evaluate alleged contraventions of Chapter 2 of the Act, and to negotiate and conclude consent agreements in terms of section 49D for confirmation as an order of the Competition Tribunal in terms of section 58 (1)(b) of the Act.

3.6. Therefore, in the interest of transparency, efficiency, disrupting cartels and incentivising competitive behaviour in the construction industry and a cost- effective, comprehensive and speedy resolution of the investigations referred to above, the Commission decided to fast track these investigations and their resolution by inviting firms that were involved in collusive tendering in the form of bid-rigging of projects in the construction industry, to apply to engage in settlement on the terms set out in the Invitation.

3.7. On 1 February 2011 the Commission issued a media release about the Invitation and published same on its website, in the invitation, hereto attached and marked as Annexure A, the Commission offered firms the opportunity to settle alleged contraventions of the Act, if they would:

3.7.1. submit an application in terms of PART 2 of the invitation:

3.7.2. agree to pay an administrative penalty or penalties determined by the Commission as envisaged in paragraph 10.2 read with paragraphs 19-28 of the Invitation; and

3.7.3. comply with the requirements of the Settlement as set out in PART 1 and PART 3 of the invitation.

3.8. This agreement sets out the details of the non-prescribed prohibited practices only, which the respondent is liable to settle regard being had to the provisions of section 67(2} of the Act and the penalty is calculated taking Into account only the said non-prescribed prohibited practices.

3.9. Applying firms were required to inter aiia provide the Commission with truthfu/ and timely disclosure of information and documents relating to the prohibited practices and to provide full and expeditious co-operation to the Commission concerning the prohibited practices.

3.10. An applying film could request the Commission to consider its application in terms of the invitation as an application for a marker or as an application for immunity under the CLP. Firms could also apply for a marker or for immunity under the CLP before making an application in terms of the Invitation.

3.11. The deadline to apply for a Settlement in terms of the Invitation was 12h00 on Friday 15 April 2011.

4. Applications by G Liviero

4.1. G Liviero applied for leniency and Settlement in terms of the Invitation. G Liviero operates multi-disciplinary construction and engineering firm focused on selected Infrastructure, energy and mining opportunities.

4.2. G Liviero applied on 14 April 2011 and disclosed seven (7) prohibited practices. Subsequent to that on 15 December 2011, in terms of clause 43 of the invitation, G Liviero provided further information to the Commission which included three (3) new additional-prohibited practices

4.3. Overall, G Liviero disclosed ten (10) (i.e. 7 plus 3) prohibited practices. Six (6) of these are prescribed prohibited practices and four (4) are non-prescribed prohibited practices,

4.4. Out of the four (4) non-prescribed practices, G Liviero is first to apply in respect of three (3) non-prescribed prohibited practices for Conditional Immunity in terms of the CLP.

4.5. In respect of the one (1) (i.e. 4 less 3) non-prescribed prohibited practice where G Llvlero is not first to apply, such non-prescribed practice is in the General Building subsector.

4.6. Furthermore, G Liviero is implicated in two (2) projects which it did not disclose. Out of these 2 projects, 1 is a prescribed practice and 1 project is a non-prescribed practice. G Liviero has agreed to settle these.

4.7. The two (2) (i.e. 1 plus 1) prohibited practices or contraventions by G Liviero of section 4(1)(b)(iii) of the Act which are the subject of this Consent Agreement are set out below.

5. Disclosed Project

Tamboti at Simbithi Estates (Tender no. D680)

G Liviero reached an agreement with WBHO, Group Five, Norvo Construction (Pty) Ltd (“Notvo") and Concor on or about May 2004 in respect of the Tamboti project at Simbithi Estates. G Liviero agreed with these firms to add on a loser’s fee to their respective bid prices, so that the winning bidder would pay the fee to the losing bidders. This conduct is collusive tendering in contravention of section 4(1 )(b)(iif) of the Act.

The project was for the construction of 66 units of luxury residential apartments at Tamboti, Lot 6, Simbithi Eco-Estates_, Balltto, The client for the project Cedar Trading 138 (Pty) Ltd. The tender was awarded to G Liviero and completed in November 2006. The last payment of the loser’s fee was in November 2006.

6. Non-Disclosed Project

Nicol Apartments (Tender no. BJ1139)

G Liviero reached an agreement with Vlaming (Pty) Ltd (“Vlaming*), on or about November 2006 in respect of the Nicol Apartments project, in that Vlaming agreed to give G Liviero a cover price to enable Vlaming to win the tender. Further, G Liviero requested payments of R100 000.00 from Vlaming to cover their costs of tendering for this project. This conduct is collusive tendering in contravention of section 4(1)(b)(iii) of the Act

The project was for the construction of a high-rise building comprising of 80 residential apartments. The client for this project was Precoated Metals. The tender was awarded to Vlaming and the project was completed on 3 October 2008.

7. Admission

G Liviero admits that it entered into the agreements detailed in paragraphs 5 and 6 above with its competitors in contravention of section 4(1)(b)(iii) of the Act.

8. Co-operation

In so far as the Commission is aware, and in compliance with the requirements as set out in the Invitation, G Liviero:

8.1. has provided the Commission with truthful and timely disclosure, including information and documents in its possession or under its control, relating to the prohibited practices;

8.2. has provided full and expeditious co-operation to the Commission concerning the prohibited practices;

8.3. has provided a written undertaking that it has immediately ceased to engage in, and will not in the future engage in, any form of prohibited practice;

8.4. has confirmed that it has not destroyed, falsified or concealed information, evidence and documents relating to the prohibited practices;

8.5. has confirmed that it has not misrepresented or made a wilfu! or negligent misrepresentation concerning the material facts of any prohibited practice or otherwise acted dishonestly.

9. Agreement Concerning Future Conduct

9.1. In compliance with the requirements as set out in the Invitation, G Liviero agrees and undertakes to provide the Commission with full and expeditious cooperation from the time that this Consent Agreement is concluded until the subsequent proceedings in the Competition Tribunal or the Competition Appeal Court are completed. This includes, but is not limited to:

9.1.1. to the extent that It is in existence and has not yet been provided, providing (further) evidence, written or otherwise, which is in its possession or under its control, concerning the contraventions contained In this Consent Agreement;

9.1.2. availing its employees and former employees to testify as witnesses for the Commission in any cases regarding the contraventions contained in this Consent Agreement

9.2. G Liviero shaft develop, implement and monitor a competition law compliance programme incorporating corporate governance designed to ensure that its employees, management, directors and agents do not engage in future contraventions of the Act. in particular, such compliance programme will include mechanisms for the monitoring and detection of any contravention of the Act.

9.3. G Liviero shall submit a copy of such compliance programme to the Commission within 60 days of the date of confirmation of the Consent Agreement as an order by the competition Tribunal

9.4. G Liviero shall circulate a statement summarising the contents of this Consent Agreement to all management and operational staff employed at G Liviero within 60 days from the date of confirmation of this Consent Agreement by the Tribunal.

9.5. G Liviero will not in the future engage in any form of prohibited conduct and will not engage in collusive tendering which will distort the outcome of tender processes but undertakes henceforth to engage in competitive bidding.

10. Administrative Penalty

10.1. Having regard to the provisions of sections 58(1 )(a)(iii) as read with, sections. 59(1 )(a), 59(2) and 59(3) of the Act, and as envisaged in paragraph 10.2 read with paragraphs 19-28 of the Invitation, G Liviero accepts that it is liable to pay an administrative penalty (“penalty”).

10.2. According to the invitation, the level of the penalty-is to be set on the basis of a percentage of the annual turnover of G Liviero in the relevant subsector in the Republic and its exports from the Republic for the financial year preceding the date of the Invitation.

10.3. The projects in respect of which G Liviero has been found to have contravened the . Act, fall under the General Building subsector.

10.4. Accordingly, G Liviero is liable for and has agreed to pay an administrative penalty in the sum of R 2 011 078 (Two Million Eleven Thousand and Seventy Eight Rand) which penalty is calculated in accordance with the Invitation.

11. Terms of payment

11.1. G Liviero shall pay the amount set above in paragraph 10.4 to the Commission in three payments, which shall be made as follows:

11.1.1. G Liviero shall make the first payment of R500 000 within 30 days from the date of confirmation of this Consent Agreement as an order of the Tribunal;

11.1.2. G Liviero shall make the second payment of R500 000 on or before 31 March 2014;

11.1.3. G Liviero shall make the third payment of R1 011 078 on or before 30 June 2014.

11.2. This payment shall be made into the Commission's bank account, details of which are as follows:

Bank name: Absa Sank

Branch name: Pretoria

Account holder: Competition Commission Fees Account

Account number: 4050778576 .

Account type: Current Account

Brach Code: 323 345

11.3. The penalty will be paid over by the Commission to the National Revenue Fund in accordance with section 59(4) of the Act.

12. Full and Final Settlement

This agreement is entered into in full and final settlement of the specific conduct listed in paragraphs 5.1 and 6.1 of this Consent Agreement and, upon confirmation as an order by the Tribunal, concludes all proceedings between the Commission and G Liviero in respect of this conduct only.

Dated and signed at KYALAMI on the 13^th day of MAY 2013.

For G Liviero

NEIL CLOETE

[FILL IN NAME AND POSITION OF PERSON THAT IS SIGNING]

Dated and signed at PRETORIA on the 21^st day of JUNE 2013.

For the Commission

Shan Ramburuth Commissioner

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