South Africa’s Construction Industry to Settle Antitrust Fines

South Africa’s construction companies should expect a relatively lenient fine from the country’s Competition Commission when its investigation into collusion in the industry ends later this year.

“Leniency will vary from company to company, depending on level of cooperation, projects won, and value of projects,” Trudi Makhaya, deputy commissioner of the antitrust body, said by phone today. The fine “will be lower than normal circumstances,” she said.

The Competition Commission is investigating construction companies over cartel-style collusion on prices for contracts issued back as far as three years, Makhaya said last month.

Companies including Wilson-Bayly Holmes-Ovcon Ltd. (WBO) and Murray and Roberts Holdings Ltd. have put cash aside to pay potential penalties. Basil Read Holdings Ltd. (BSR), which said today it would return to profit this year after a loss-making 2012, has increased provisions to 75 million rand ($8.1 million) from 65 million rand a year ago.

The commission has entered talks with 18 companies including the “major ones” with an aim of reaching a settlement, according to Makhaya. The process is expected to conclude by the end of June.

“It’s about cleaning the slate and giving the industry the chance to become more competitive,” she said.

The seven-company FTSE/JSE Africa Construction and Building Materials Index was down 0.4 percent by 1:52 p.m. today in Johannesburg. PPC Ltd., South Africa’s biggest cement maker with a 29 percent weight in the index, declined 0.1 percent, while Aveng Ltd. (AEG), the second largest member, was down 2 percent.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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