N17 Toll Operators owns up to collusion

21-08-2014
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Pretoria News
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N17 TOLL Operators, owned jointly by French construction group Bouygues, Basil Read and Ubambo, colluded and agreed in 2001 with Murray & Roberts (M&R), Group Five and Concor to allocate the N17, N1 North and N1 South toll and maintenance contracts, the Competition Tribunal heard yesterday.

The collusion occurred before the merger between Concor and M&R in 2006. The SA National Roads Agency Limited (Sanral) was the client.

In terms of the agreement reached between the various construction companies, Group Five agreed to pay M&R and Concor a loser’s fee in exchange for being allocated the N1 North and N1 South toll and maintenance contracts.

The parties to this agreement further agreed that N17 Toll Operators should win the N17 contract and would therefore not be paid a loser’s fee.

In line with the collusive arrangement, Group Five paid M&R a loser’s fee after the former was awarded the N1 North and N1 South toll and maintenance contract and N17 Toll Operators won the N17 project.

The contracts involved the tolling and maintenance of the N1 North, N1 South and N17, which commenced in 2002 and expired in March 2010 but was subsequently extended until November 30 last year.

N17 Toll Operators admitted that the agreement was collusive tendering in contravention of the Competition Act and that it was a beneficiary of this illegal conduct.

The hearing was related to a settlement agreement entered into between the commission and N17 Toll Operators, which agreed to pay a fine of R424 121, which represented 2 percent of N17 Toll Operators’ annual turnover in the financial year to March last year.

Bouygues has a 50 percent shareholding in N17 Toll Operators; Basil Read and Ubambo each have a 25 percent stake.

The tribunal did not confirm the settlement agreement and requested further information before deciding.

The information requested relates to whether Sanral sets the toll fee independently, or whether consumers could have paid more passing through the N17 tolls because of this collusion; if the commission took into account the possibility of consumers paying higher toll fees when deciding on the penalty; and the turnover figures for every year of the N17 contract.

N17 Toll Operators was one of 25 firms that did not respond to the invitation from the Competition Commission in 2011 for construction companies involved in collusive conduct to engage in a fasttrack settlement process on favourable terms.

It was implicated by one or more of the 21 firms that took up the commission’s invitation and disclosed a total of 300 projects that were subject to collusive conduct.

Of the firms that initially responded to the process, only 15 concluded consent agreements with the commission in terms of which they agreed to pay penalties totalling R1.46 billion.

The commission thereafter continued with its investigation of the 25 firms that had not responded.