Immunity won't spare firm lawsuits

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Immunity won't spare firm lawsuits

The Competition Commission believes it has set straight a blunder that allowed self-confessed colluders to escape being sued.

Though the commission granted construction company Basil Read immunity from prosecution, it made sure that the company’s wrongdoing was recorded in a declaration by the Competition Tribunal last week.

In 2006 Basil Read, Wascon and Meyker engaged in collusive tendering for upgrades to a section of the P65/2 road from Parys to the N1.

Basil Read and Wascon bid an inflated price to enable Meyker to win the contract with the SA National Roads Agency. In exchange, Meyker paid them a loser’s fee of R2-million.

After the Competition Commission launched a complaint against the firms in 2009, Basil Read applied for leniency under a policy that offers immunity to the first member of a cartel who agrees to cooperate with the commission in prosecuting the fellow colluders.

In this case no company will be prosecuted because Wascon has been liquidated and Meyker is in the process of liquidation.

But in referring Basil Read to the Competition Tribunal, despite reaching a consent agreement with it, the commission has made an attempt to ensure the company is open to civil action by third parties.

This follows a recent Supreme Court of Appeal judgment in which the court said the commission’s actions protected Premier Foods from civil litigation for its role in the 2006 Western Cape bread cartel.

The commission granted Premier Foods immunity as a whistleblower and did not refer it to the Competition Tribunal. The tribunal nonetheless made a declaration that Premier Foods had engaged in a prohibited practice under competition laws, but the SCA said it did not have the power to do so and the declaration was invalid.

This meant that Cosatu, the National Consumer Forum and others planning to sue bread cartelists Tiger Brands and Pioneer Foods in a class action, cannot sue Premier Foods as well.

Following the SCA’s ruling, competition law experts said that the commission was likely to be more careful in future and refer leniency applicants to the tribunal with their partners-in-crime.

Competition Commission spokesman Itumeleng Lesofe said: “In the consent agreement, which has been confirmed by the Competition Tribunal, Basil Read has admitted to having contravened the Competition Act. Thus, third parties should be able to initiate civil action [against it].”


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