Software company fined for price fixing with firm it helped to set up

A CONTACT centre software services provider has been fined R512 400 for price fixing and market division over a period of three months by allocating products and customers with a partner firm it funded and helped to establish.

The Competition Tribunal yesterday confirmed the settlement agreement entered into between Elingo and the Competition Commission.

Elingo chief executive Ian Goss-Ross said the conduct was not aimed at restricting competition and involved the setting up of another competitive company in the software services arena, but the structure was technically flawed and that led to the contravention.

Goss-Ross believed the penalty was quite heavy but indicated they did not have the financial resources to take it any further.

He said they had set up Elingo Business Solutions with an ex-employee, had put money into it to get it off the ground and it was actually an extension of Elingo.

Goss-Ross said it was run as a separate entity so that if at some stage they wanted to do a merger they would know the values of the two companies.

“The relationship between us and the other partner went bad and it was one of the methods for the partner to get us out of Business Solutions. The business had started making good revenue but they did not want us to share in the success of the business,” he said.

Thandi Nkabinde, appearing for the commission, said yesterday that the commission initiated a complaint in June 2015 after it was alleged that Elingo and Elingo Business Solutions entered into an agreement to fix the selling price of contact centre software services and divide the market by allocating products and customers in contravention of the Competition Act.

In terms of the price-fixing agreement, the two companies agreed they would charge R750 to maintenance customers and R950 to non-maintenance customers.

Nkabinde said the penalty constituted 1.6 percent of the total turnover of Elingo for its 2014 financial year.

Goss-Ross said the fine constituted about 10 percent of Elingo’s affected turnover.