TWO SA AIRFORCE SUPPLIERS AGREE TO PAY PENALTIES FOR ALLEGED TENDER COLLUSION

 13 December 2021


Two network maintenance firms, K.F Computers CC (“K.F Computers”) and SAAB Grintek Defence (Pty) Ltd (“SAAB”) have separately agreed to pay penalties for allegedly colluding with each other in relation to a South African Air Force (“SAAF”) tender.

 

The tender was issued by the State Information Technology Agency in December 2015 for the provision of network maintenance and support services for the SAAF’s ground command and control systems (“GCCS”) and current intelligence system (“CURIS”).

 

K.F Computers and SAAB deny contravening the Act but have concluded separate settlement agreements with the Competition Commission (“the Commission”), wherein K.F Computers agrees to pay a penalty of R32 135 and SAAB agrees to pay a R2 000 000 penalty. SAAB has also made additional commitments which will benefit supplier development. The respective settlement agreements have been confirmed as orders by the Tribunal.

 


K.F Computers

 

In addition to agreeing to pay the R32 135 penalty, K.F Computers undertakes to refrain from any anti-competitive conduct in contravention of the Competition Act (“the Act”) in future. It will also develop, implement and monitor a competition law compliance programme.  

 

Although K.F Computers has agreed to the terms of the settlement agreement, it does not admit that it contravened the Act, as alleged by the Commission. The Commission, in turn, has agreed to enter into the settlement agreement with K.F Computers without an admission of liability, based on, among others, the following factors, read with the remedies contained in the consent agreement:

 

  • K.F Computers has never contravened the Competition Act before;
  • It is a small firm; and
  • Given the small size of K.F Computers as well as the small size of the tender, the Commission does not consider it worthwhile to engage in protracted and costly litigation with K.F Computers.

 


SAAB

 

SAAB does not admit that it has acted in contravention of the Act, as described in the settlement agreement. However, the Commission has agreed to enter into the settlement agreement with SAAB, without an admission of liability by SAAB, based on, among others, the following factors, read with the remedies contained in the consent agreement:

 

  • SAAB has never contravened the Act before;
  • Its business is now mainly focussed on exports; and
  • SAAB has undertaken to substantially increase its Enterprise and Supplier Development Programme.

 

In terms of the settlement agreement, and in addition to the R2 000 000 penalty, SAAB undertakes to refrain from any anti-competitive conduct in contravention of the Act in future. It will also continue to implement and monitor a competition law compliance programme.

 

Furthermore, in relation to its current Broad-Based Black Economic Empowerment (“B-BBEE”) commitments, SAAB will increase its Enterprise and Supplier Development Programme by a minimum specified amount in the next financial year. This increase will be used to procure goods or services from additional firms owned by historically disadvantaged individuals. SAAB also undertakes not to reduce its Enterprise and Supplier Development expenditure for a specified period.

 


Case background

 

The Commission’s investigation found that on or about January 2016, SAAB assisted K.F Computers in completing its tender documents and, in turn, SAAB’s pricing for the tender was higher to ensure that K.F Computers would win the tender. The Commission concluded that the conduct between K.F Computers and SAAB amounted to collusive tendering in contravention of section 4(1)(b)(iii) of the Act.

 


 

Issued by:

Gillian de Gouveia, Communications Officer

On behalf of the Competition Tribunal of South Africa

Cell: +27 (0) 82 410 1195

E-Mail: GillianD@comptrib.co.za

Twitter: @comptrib


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