Aveng Reaches Settlement

Wednesday 26th June, 2013

Today it was announced that Aveng (Africa) Limited entered into a R306.5 million settlement agreement with the Competition Commission with respect to its “fast track settlement” investigations into historical anticompetitive practices in the construction industry. 

This amount is to be settled in three annual payments of equal amount, commencing on 1 July 2013, or within 30 days from the date of confirmation of the settlement agreement as an order of the Tribunal, whichever is the later.

The Commission has referred this settlement to the Competition Tribunal. Once confirmed by the Tribunal, this represents a full and final settlement of all alleged collusive conduct as defined in the Consent Agreement.

Commenting on the announcement Aveng Group CEO Roger Jardine said: “We welcome the conclusion of this investigation which revealed the extent of the anti-competitive conduct in the industry over a period of time.”

Jardine added: “Any anticompetitive and unlawful practice by anyone within any industry is unacceptable and must be rooted out. We need to restore trust between the construction industry and its public and private sector clients, the various regulatory authorities and the general public. Such behaviour cannot be tolerated if we are to build a modern, competitive economy.”

Aveng worked closely with the Competition Commission to investigate projects where there were allegations of breaches of the Competition Act and potential irregular activities. Despite on-going efforts, Aveng was unable to gain the cooperation of a few key former employees who, based upon the information conveyed by the Competition Commission, had knowledge of the collusion. This situation severely prejudiced Aveng’s position with regards to firstly, obtaining leniency and secondly, to accurately verify the evidence submitted to the Competition authorities by other firms. For the purposes of settlement Aveng relied on the evidence presented to it by the Commission.

On this basis, Aveng believes that it has mitigated its risk appropriately by settling all outstanding matters defined in the consent agreement.  Aveng does not intend to expose itself further in terms of additional and onerous financial penalties, further legal expenses and managements’ time, by arguing any matters in the Tribunal. Further, the settlement has provided certainty and finality to Aveng stakeholders.

Aveng put into place many proactive measures to root out any anti-competitive practices that were widespread in the industry in the past. These have included internal compliance reviews, a group-wide competition law compliance program, education and awareness initiatives, immunity and anonymous tip-off hotlines to encourage people to come forward, rigorous audits of tender bids and independent external audits of IT systems.  Jardine goes on further to state: “I am pleased that this investigation has ended and that Aveng can now move forward after nearly five years of working with the Competition Commission to conclude this matter.”