“The notion of “fast track settlement” is a good way to flush out contraventions in an industry that, worldwide, is beset with alleged impropriety. With hundreds of tenders and dozens of firms as potential respondents, the task of investigating and prosecuting each and every tender is impractical, if not impossible. By making this overture, the Commission is hoping to draw out a mass confession, rather than having to spend possibly years trying to build cases. Firms involved will presumably benefit from reduced fines and avoidance of protracted litigation. The process will also serve to destabilise existing anticompetitive arrangements and undermine the potential for collusion, as firms will be worried that competitors will be poised to confess all. Because of its secretive nature, bid rigging is difficult to prosecute without cooperation from whistleblowers, and the Commission needs to draw as many firms out of the tall grass as possible.

“Also, in this case the Commission is faced with a prosecutorial conundrum – as each tender involves different firms, it may be argued that each tender where there is evidence of collusion be treated as a separate cartel between the individual firms involved in that tender. While it may be simpler, quicker and more cost effective to characterise bid rigging in the construction industry in general a single cartel, involving different firms at different times, the legal hurdle would be to establish an overarching agreement between all the firms cited, especially as some might never have been in contact with each other. The Commission’s leniency programme (where firms that are first to confess to cartel conduct are immunised from prosecution) is also difficult to administer in such circumstances – can a firm get leniency for all its bid-rigging activities by copping to such behaviour in general, or must each individual bid be the subject of a separate leniency application? These technical legal problems become academic if settlements are reached.


“Finally, it may be worth noting that in Europe, similar problems were faced by the regulator in dealing with the sheer number of individual tenders that were alleged to have been rigged. As the scale of the contraventions became clear, hundreds of firms rushed to settle or apply for leniency. At one point, the regulator there had a dedicated team processing dozens of leniency applications on a weekly basis. “

Written by Chris Charter, director in the Competition and Regulatory practice at Cliffe Dekker Hofmeyr business law firm