South Africa- Competition Tribunal confirms 10% turnover consent order

The Competition Tribunal confirmed the settlement agreements concluded between the Competition Commission and two small furniture removal companies, Propack Removals and Cape Express Removals. Propack Removals was allegedly involved in over 500 instances of “cover pricing” and received a fine of R454 127, which is equal to the 10% of the firm’s turnover for the 2012 financial year, while Cape Express was allegedly involved in over 1700 instances of “cover pricing” and an administrative penalty of R645 710 has been imposed, which is equal to 10% of its turnover for the 2012 financial year.
The Competition Commission launched an investigation in 2010 against 69 furniture removal companies for colluding on tenders issued by government institutions such as the South African National Defence Force and South African Police Service, as well as corporate companies such as Pretoria Portland Cement. The Commission also conducted dawn raids at the offices of certain removal companies in 2010 to obtain evidence of the collusion.
Furniture removal companies, including well-known removal companies such as Stuttaford Van Lines and Elliott International, allegedly colluded in respect of over 3500 relocation tenders between 2007 and 2012. In terms of the collusive arrangement, the first removal company to be contacted for a quotation would offer to source two or more quotations on behalf of the customer. That removal company would subsequently request two or more of its competitors to provide quotes as “cover prices”. Such a price would have been agreed upon between the colluding bidders and the winner will have been pre-determined amongst the colluding bidders. The competitors would therefore submit a non-competitive quote which is not intended to win the tender for them.
The Commission has indicated that it is currently in discussions with several other removal companies involved in the collusion and it expects to reach settlements by the end of October 2014, which will be considered by the Tribunal.
The imposition of a penalty in the amount of 10% of a companies previous year’s financial turnover is the maximum amount which the Competition Tribunal may impose by way of administrative penalty. It is only imposed for the most serious breaches of the local legislation.

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