ENFORCEMENT ALERT: SOUTH AFRICAN COMPETITION COMMISSION INVESTIGATE COLLUSIVE TENDERING CASE

The South African Competition Commission (SACC) recently referred a complaint investigation to the South African Competition (Tribunal) regarding a complaint lodged by South African power utility, Eskom in March 2016 vis-á-vis contracts for the supply and installation of scaffolding and thermal insulation for Eskom’s 15 coal-fired power station.

The companies involved are: Waco Africa‚ acting through its subsidiary SGB Cape‚ Tedoc Industries‚ Mtsweni Corrosion Control and Superfecta Trading‚ and three joint ventures involving these companies.

According to the SACC, SGB submitted multiple tenders (in its individual capacity and through the various joint ventures) which were all signed by the same individual (and which contained identical “Safety‚ financial‚ technical and quality document”) which it used to manipulate tender prices.

Interestingly, the complaint was subsequently withdrawn by Eskom when Matshela Koko (Koko) took over as interim CEO. The SACC, however, exercised its rights in terms of Rule 16 of the Competition Act to continue the investigation despite the complaint being withdrawn.

Notably, Koko has been the subject of various investigations into allegations of corruption, which included allegations that Koko allegedly engaged in tender rigging in awarding tenders to a company in which some members of his family had interests, without following proper process.

Collusive tendering is a contravention under section 4(1)(b) of the Competition Act (89 of 1998) (which is a per se contravention) and can lead to an administrative penalty of up to 10% of turnover and more recently, criminal prosecution. Collusive tendering also falls under the definition of corruption under the Prevention and Combating of Corrupt Activities Act (12 of 2004).

Firms are therefore urged to ensure that their employees are aware of the provisions of the Competition Act, especially when submitting ‘joint tenders’ (i.e where a firm provides certain products or services to a competitor for purposes of a tender bid and also submit an individual tender bid) or tendering through a joint venture. Furthermore, should there be any uncertainty as to whether or not a current practice falls foul of the Competition Act, firms should seek legal advice.

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