South African Biggest Construction Companies Admit to Collusion

Eighteen South Africa construction companies, including the six biggest, have admitted to price- fixing and collusion, Economic Development Minister Ebrahim Patel said.

Antitrust regulators have identified 300 cases of illegal or irregular behavior by companies that won about 47 billion rand ($5.2 billion) in contracts, including those to build stadiums for the 2010 soccer World Cup, Patel told lawmakers in Cape Town today. Companies that have confessed to anti- competitive behavior are in discussion with the commission about a settlement, he said.

“We are determined to ensure that we develop an affordable infrastructure build program and that our tax rands do not improperly find a way into private pockets,” Patel said.

Wilson Bayly Holmes-Ovcon Ltd. (WBO) and Aveng Ltd. (AEG) are among the companies that have said they are in talks with the Competition Commission. Fines will be relatively lenient depending on levels of co-operation and the value of the projects, Trudi Makhaya, deputy commissioner of the antitrust body, said on March 27.

A settlement should be reached by the end of June, said Dirk Noeth, an analyst at Avior Research (Pty) Ltd.

“They are in the final part regarding the quantum of fines,” he said by phone from Cape Town. “Paying the Competition Commission a fine now is probably not the best timing” as companies battle subdued demand.

Health-care Investigation

The FTSE/JSE Africa Construction and Building Materials Index rose 0.6 percent by the close in Johannesburg today. Aveng gained 0.9 percent to 30.52 rand, while Wilson Bayly slumped 1.2 percent to 154 rand.

Patel also announced that the Competition Commission will proceed with an investigation into the private medical-care industry.

“Private medical care is becoming unaffordable,” he said. “It is expected that the inquiry will commence before the end of September this year.”

South Africa’s largest private hospital groups are Netcare Ltd. (NTC), Mediclinic Holdings Ltd. and Life Healthcare Group Holdings Ltd. (LHC)

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net; Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net; Simon Thiel at sthiel1@bloomberg.net

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