Competition Commission prosecutes four firms for Eskom tender price fixing

7 Feb 2018

PBM

Four South African companies; Waco Africa (SGB Cape, Tedoc Industries, Mtsweni Corrosion Control, and Superfecta Trading; have landed in hot water with the competition authorities for allegedly masterminding a price fixing and tender collusion scheme around a R4.5 billion Eskom tender.

The Competition Commission released a statement saying the companies have been referred for prosecution in the Competition Tribunal for price fixing and tender collusion.

This follows a complaint lodged by Eskom and a subsequent Commission investigation into collusive tendering for the supply, installation and dismantling of scaffolding and thermal insulation for all of the 15 Eskom coal-fired power stations.

The Commission said its investigation found evidence of price fixing and collusive tendering on the part of Waco Africa, acting through its division, SGB Cape, Tedoc Industries, Mtsweni Corrosion Control and Superfecta Trading 159 CC and three joint ventures which SGB Cape formed with each of the aforementioned companies through bilateral agreements.

The investigation found, among others, the following:

  • SGB Cape concluded bilateral agreements with each of Tedoc Industries, Mtsweni Corrosion Control and Superfecta Trading to form three separate joint ventures to be used to tender collusively;
  • SGB Cape submitted bids on its behalf and on behalf of the three joint ventures; and
  • SGB Cape priced the bids in such a way that it manipulated prices quoted by itself and the respective joint ventures.

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.

The following led to Eskom suspecting collusion in relation to the bids:

  • SGB Cape submitted multiple tenders. One was its own and the other three were as a member of joint ventures;
  • The same person signed all four tender submissions; and
  • Safety, financial, technical and quality documents in all four bids were identical.

On 13 March 2017, Eskom withdrew its complaint and on 16 March 2017, the Commissioner decided to continue with the investigation of the withdrawn complaint in terms of Rule 16(2) of the Commission Rules.

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.

info@probonomatters.co.za

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