A case of collusion against Berg River Textile and Eye Way in the business of supplying fabric used by the Department of Correctional Services, SA Air Force and Military Health Services to manufacture uniforms could land black economic empowerment (BEE) fronters in the firing line of the Competition Commission.
The Commission has imposed a penalty of R6,1 million to fabric manufacturer, Berg River Textiles, for colluding for tenders issued by Treasury for the supply of fabric used by the Department of Correctional Services, SA Air Force and Military Health Services to manufacture uniforms.
In two complaints the Competition Commission said Berg River, a division of Sargas, had agreed to provide Eye Way, a company that specialised in managing state contracts, with its prices which Eye Way would use to price its own tender. Eye Way won both bids and outsourced the manufacture of the fabric to Berg River since it had no manufacturing capabilities. The two colluded on the two tenders in 2011 and 2012.
The Competition Tribunal heard the matter and found both firms had contravened the Competition Act. It was agreed that a penalty would be determined at a separate hearing.
The firms took the decision on appeal to the Competition Appeal Court (CAC). But the (CAC) had yet to be settled when Berg River entered into settlement negotiations with the Commission. The appeal by Eye Way is still to be heard by the CAC.
The modes operandi under focus in this case is largely used for fronting BEE.