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Conditional approval to merge major players in the construction industry sees the formation of alliances

The Competition Tribunal has conditionally approved three separate mergers involving Raubex, Stefanutti Stocks, and WBHO Construction – and their respective black-owned emerging contractors – following a settlement agreement with the South African government. 

The agreement followed the tribunal’s investigation into cartel conduct in the construction industry between 2009 and 2013. The merged entities will be referred to as the Raubex Alliance, the Stefanutti Stocks Alliance, and the WBHO Construction Alliance.

In a statement the Competition Tribunal said these companies, in terms of the settlement agreement, elected to enter into alliances with small to medium-sized black-owned companies, referred to as emerging contractors, with more than 51% black ownership.

They thereby agreed to participate in transformative initiatives aimed at improving competitiveness, innovation and entrepreneurial opportunities in the construction industry.

The agreement also provides for the establishment of a trust fund which aims to develop and enhance transformation in the construction industry. The agreement makes provision for the Tirisano Construction Fund. The fund, together with the Presidential Infrastructure Coordinating Commission and the Construction Industry Development Board, will be responsible for monitoring the compliance of the three companies.

The conditions attached to the approval of the merger are aimed at preventing the exchange of competitively sensitive information through the trust fund that forms part of the settlement, and at ensuring that post-termination of the alliances and future collusive conduct between the individual construction companies and the emerging contractors shall not take place.

The conditions aim to prevent the exchange of competitively sensitive information by requiring the companies to ensure that any person directly and operationally involved in the mentorship and development of emerging contractors is not the same person that the companies appoint as trustee to represent the interests of the companies in the fund.

“The companies must also ensure a trustee signs the necessary non-disclosure agreements to prevent the exchange of competitively sensitive information between an alliance and other construction companies, and to ensure competitively sensitive information does not flow from an alliance to other companies through the fund.”

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