While municipalities battled over the past decade to deliver sanitation and drinking water to millions of poor South Africans, manufacturers colluded to drive up the price of pipes needed for these services.

An investigation by the Competition Commission into the activities of certain major companies producing concrete and plastic pipes has revealed evidence of secret cartel meetings.

Many of the companies are now negotiating with the commission, and appear set to incur massive fines.

"Municipalities, construction companies and members of the public were the main end-users of plastic piping, and therefore the victims of the... cartel arrangement," the commission says in its 2008/09 annual report, tabled at Parliament on Thursday.

The report says members of the cartel were careful to meet away from their offices.

Reached agreements to fix prices

"(They) conducted the cartel mainly through meetings that took place in hotels, restaurants, coffee shops and golf clubs."

Manufacturers of pre-cast concrete products, mainly pipes, culverts, manholes and pre-stressed concrete sleepers, had also formed their own cartel.

"The commission investigated... and concluded that (these companies) had met and reached various agreements to fix prices and trading conditions; to divide markets geographically; and to allocate tenders, contracts and customers among themselves.

"In allocating contracts, the (companies) would identify and compile a list of all available tenders, agree among themselves who would be allocated what work... (as well as) on prices to be allocated for tenders," the report states.

It says the cartels, described as "hard core", have been operating since the 1970s and 80s.

In February this year, the commission referred both matters to its Competition Tribunal, which adjudicates competition matters in accordance with the 1998 Competition Act.

According to a report in the commission's March 2009 newsletter, the long-running and extensive nature of the cartels has sparked wider investigation.

"These two cartels have directly affected the costs of investing in water reticulation.

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