Removals cartel bust
Representative blows lid on cover pricing in furniture sector
A REPRESENTATIVE of one of the six furniture removals firms appearing before the Competition Tribunal yesterday about settlement agreements the businesses had entered into for collusion offences reported that he had been approached “by a fool” last week wanting a cover quote.
Peter Brauteseth from Joel Transport said he had been involved in the industry for 25 years and cover tendering in the removals industry was “sort of a normal practice”.
Cover pricing involves creating the illusion of competition by getting some firms to submit non-competitive bids to enable a fellow cartel member to win a tender.
The tribunal was hearing settlement agreements related to collusion by Matthee Furniture Removals; De Wet Human Transport, trading as Viking Transport; Superdoc Thirteen, trading as Low Line Furniture Removals; Transfreight International; JH Retief Transport; and Joel Transport.
This follows the tribunal last month confirming settlement agreements entered into by Cape Express and Propack Removals.
Cape Express agreed to pay a fine of R645 710 while Propack Removals paid R454 127.60.
This followed a commission investigation into 69 companies offering furniture removal services for colluding on tenders issued by various government departments, including the SA National Defence Force and SA Police Service plus tenders issued by large corporates such as Eskom and PPC.
It revealed more than 3 500 relocations tenders were subjected to collusion by the 69 companies between 2007 and 2012. The commission investigation established that:
Matthee Furniture Removals was involved in 192 incidents of collusion and recom- mended a fine of R159 205.
Viking Transport was involved in 24 instances of cover pricing and recommended a fine of R188 064.48.
Low Line Furniture Removals was involved in 113 cases of cover pricing and recommended a fine of R249 616.
Transfreight International was involved in 59 instances of cover pricing and recommended a fine of R607 492.27.
JH Retief Transport was involved in 3 487 instances of cover pricing and recommended a fine of R4 273 060.80.
Joel Transport was involved in 12 instances of cover pricing and recommended a fine of R150 582.45.
Anthony Ndzabandzaba, who has headed the commission’s investigation, said yesterday they had not been able to establish which companies had been the instigators or ring leaders of the cartel.
Ndzabandzaba said that the offices of JH Retief Transport in Pretoria and Cape Town had been raided by the commission, which helped to explain the high number of cases involving that company.
JH Retief told the tribunal they were able to identify tenders that involved cover quotes because they drew a circle at the corner of the page but there was not any business reason for doing this and denied was to identify a company they owed a favour.
Brauteseth said the client would have to consent to companies doing cover quotes.
“Not anybody can quote on this work. Whoever does this has to solicit it and make sure all his cover quote companies names are on the documentation. So the groundwork is done right at the beginning.
“I had some fool ask me last week to cover quote him. Our company does not actively solicit cover quoting and we have been beaten with a big stick.”
The tribunal by late yesterday confirmed the six settlement agreements.