The Competition Tribunal (“Tribunal”) has dismissed a case of collusive tendering through price fixing, involving a 2015 Eskom tender worth R240 million, against four firms and three joint ventures (“JVs”). The tender was for the supply, transportation, delivery, installation and dismantling of scaffolding and thermal insulation at Eskom’s 15 coal-fired power stations.
 
The Tribunal has found that the facts of the case do not support the Competition Commission’s (“the Commission”) argument that by submitting four separate tenders, SGB-Cape and the three JVs were in a “horizontal relationship” and thus competitors.
 
Section 4(1)(b)(i) and (iii) of the Competition Act (“the Act”) prohibits firms that are in a horizontal relationship from entering into or participating in agreements or concerted practices which involve conduct such as price fixing, dividing markets or collusive tendering.
 
The Tribunal has ruled that the Commission failed to prove that the firms were competitors. The bids were submitted by SGB-Cape, as the controlling mind, on behalf of all the JVs. If SGB Cape is the single controlling mind it follows that it could not compete with itself. Furthermore, because the JVs would not exist in the absence of this tender, they could not compete with each other or with SGB-Cape, absent the tender. Consequently, the Tribunal has found that there has not been a contravention of section 4(1)(b)(i) and (iii) of the Act.
 
The Tribunal’s full reasons for its decision are available on the Tribunal’s website at: https://www.comptrib.co.za/case-detail/8068
 
The parties
 
The respondents to this complaint are SGB-Cape, a division of WACO International; the three firms with which SGB-Cape partnered i.e. Tedoc Industries (Pty) Ltd (“Tedoc”), Superfecta Trading 159 CC (“Superfecta”), and Mtsweni Corrosion Control (Pty) Ltd (“Mtsweni”) and the three JVs between them, namely Tedoc SGB-Cape JV; Superfecta SGB-Cape JV; and Mtsweni SGB-Cape JV.
 
SGB-Cape is focused on the rental and sale of products and services related to scaffolding, thermal insulation, corrosion protection and asbestos removal. Tedoc, Mtsweni and Superfecta are human resource companies. Mtsweni has also engaged in some small-scale construction and scaffolding work. The JVs between SGB-Cape and each joint venture partner (i.e., Tedoc, Superfecta and Mtsweni) were established specifically for the purpose of bidding for this tender.
 
Background
 
Eskom lodged a complaint against SGB-Cape with the Commission for investigation in March 2016. Eskom later withdrew its complaint. The Commission, however, continued its investigation and subsequently initiated its own complaint against Tedoc, Superfecta and Mtsweni. The Commission later referred the complaint to the Tribunal for adjudication. The Commission alleged that the firms had engaged in collusive tendering through price fixing, in contravention of section 4(1)(b)(i) and (iii) of the Act. The firms denied the Commission’s allegations against them.