Waco bid to stop Eskom price fix­ing case fails

Cape Times - - FRONT PAGE - Roy Cokayne

AN AP­PLI­CA­TION by seven com­pa­nies or joint ven­tures, in­clud­ing Waco Africa, to dis­miss a price fix­ing and tender col­lu­sion complaint against them re­lated to a R240 mil­lion Eskom tender has been re­fused by the Com­pe­ti­tion Tri­bunal.

The tender, is­sued in March 2015, was for the sup­ply, in­stal­la­tion and dis­man­tling of scaf­fold­ing and ther­mal in­su­la­tion for 15 Eskom coal-fired power sta­tions and was to run over a pe­riod of five years. Eskom said 31 sup­pli­ers re­sponded to the in­vi­ta­tion, of which four sep­a­rate bids were sub­mit­ted by the seven com­pa­nies.

They were Waco Africa ten­der­ing on its own through its SGB Cape divi­sion, Waco ten­der­ing with Te­doc SGB Cape joint ven­ture (JV), Waco ten­der­ing with Su­per­fecta SGB Cape JV and Waco ten­der­ing with Mtsweni SGB Cape JV.

Eskom sub­mit­ted a complaint against Waco and the three joint ven­tures. The com­mis­sion ini­ti­ated a complaint against Waco’s part­ners in th­ese joint ven­tures. When the bids closed, Eskom sus­pected th­ese four bids were the sub­ject of a col­lu­sive agree­ment.

It al­leged that Waco direc­tor John Fal­coner was re­spon­si­ble for sign­ing and pre­par­ing all four bids. The tech­ni­cal, fi­nan­cial and other re­quire­ments in the bids were iden­ti­cal, and the terms and con­di­tions of the joint ven­tures were iden­ti­cal and de­vel­oped by the same at­tor­ney.

In ad­di­tion, Waco’s bid price was the low­est, but two of the joint ven­tures sub­mit­ted the same prices and the rate of dif­fer­ences be­tween the bids of Waco and the joint ven­tures was con­sis­tent.

Ap­pli­ca­tions

Four sep­a­rate ap­pli­ca­tions, two of which were to dis­miss the com­mis­sion’s re­fer­ral to the tri­bunal, be­cause the complaint had not been validly ini­ti­ated and that did not make out a cause of ac­tion, were lodged by Waco and the joint ven­tures.

The ap­pli­ca­tion re­lated to the ini­ti­a­tion of the complaint re­lated to the com­mis­sion con­tin­u­ing to in­ves­ti­gate the complaint af­ter Eskom for un­known rea­sons with­drew its complaint. The two other ap­pli­ca­tions were to strike out two para­graphs in the complaint re­fer­ral and to com­pel the pro­duc­tion of the com­mis­sion’s record.

Waco al­leged two para­graphs in the com­mis­sion’s complaint re­fer­ral were “scan­dalous, ir­rel­e­vant and vex­a­tious” and “ir­rel­e­vant to the is­sue at hand”.

The tri­bunal found th­ese facts were rel­e­vant and dis­missed this ap­pli­ca­tion.

The com­mis­sion al­leged Waco wanted to bet­ter its chances of win­ning the bid on its own by sub­mit­ting the low­est of the four bids and, if it was un­suc­cess­ful, it ben­e­fited from hav­ing a ma­jor­ity stake in each of the other bids. It al­leged that if the tender was can­celled on the ba­sis of ir­reg­u­lar­i­ties, Waco would ben­e­fit as it was the ex­ist­ing sup­plier at the time of the tender.

The com­mis­sion also al­leged Waco in­ter­dicted Eskom from dis­qual­i­fy­ing Waco, and the joint ven­tures in which Waco was the ma­jor­ity share­holder, from the tender and award­ing it to an­other firm. This re­sulted in Waco con­tin­u­ing to ben­e­fit by sup­ply­ing the ser­vices to Eskom. Waco was sold to a spe­cial pur­pose com­pany ear­lier this year.

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