NERSA

The Competition Tribunal has refused an application to dismiss a complaint against companies accused of price-fixing and tender collusion involving an Eskom tender worth R240 million ($17 million).

According to a press statement, the tender was for the supply, installation and dismantling of scaffolding and thermal insulation for 15 Eskom coal-fired power stations and was to run over a period of five years.

Sequence of events

The Competition Commission opened an investigation following a complaint lodged by Eskom in March 2016. It found that Waco Africa, through its division SGB Cape, reached bilateral agreements with Tedoc Industries, Mtsweni Corrosion Control and Superfecta Trading 159 CC to form three joint ventures, namely Tedoc SGV JV, Superfecta SGB JV and Mtsweni SGB JV.

SGB Cape then allegedly submitted bids on its behalf and on behalf of the three joint ventures in which Waco held a stake.

In March 2017, Eskom, for reasons unknown, withdrew its complaint, but the Commission decided to pursue the complaint against all the respondents after it conducted its own investigation. Read more: Eskom warns public of tender scams

In a hearing on 20 June 2018, the respondents raised several objections to the complaint brought by the Commission. The Tribunal in its decision issued [last] week dismissed the application to throw out the complaint but upheld an application by the firms and granted another.

The Commission is consequently required to make available specified non-privileged and unrestricted portions of the Commission’s record to the respondents and to provide a supplementary affidavit outlining whether the joint ventures were incorporated or not, as well as the provisions or facts relied upon to show collusive tendering and/or price fixing agreements involving Tedoc Industries (Pty) Ltd, Mtsweni Corrosion Control (Pty) Ltd and Superfecta Trading 159 CC.

Background

The invitation for the Eskom tender in question was issued on 15 March 2015. Thirty-one suppliers responded to the tender when it closed at the end April 2015 and included SGB Cape, Tedoc SGB Cape Joint Venture, Superfecta SGB Cape Joint Venture and Mtsweni SGB Cape Joint Venture, the respondents in this case.

In March 2016, the Commission received Eskom’s complaint in which it alleged that SGB Cape and the three joint ventures (Tedoc SGB Cape Joint Venture, Superfecta SGB Cape Joint Venture and Mtsweni SGB Cape Joint Venture) may have colluded when bidding for the tender.

The four bids were the subject of a collusive agreement as: the same person signed all the bids; technical, financial and other requirements were identical; the first respondent, SGB Cape’s prices were the lowest, while two of the joint ventures submitted the same prices and the rate differences between the first respondents and the joint ventures were consistent; the terms and conditions of the joint ventures were identical and developed by the same attorney.

SGB Cape as the incumbent interdicted Eskom from disqualifying it and awarding the tender to a new supplier. As a result, SGB Cape continued to render the services to Eskom.