Waco bid to stop Eskom price fixing case fails
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.
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.