Tribunal fines EnviroServ R10.2m for collusion
roy.cokayne@inl.co.za
WASTE services company EnviroServ Waste Management has been fined R10.2 million by the Competition Tribunal for collusion.
This follows the tribunal finding that EnviroServ colluded with Wasteman Holdings, firms that competed with each other in performing waste transportation services, to set the downstream price in the market for waste transportation services.
The tribunal further found that the firms used Vissershok Waste Management Facility, their upstream landfill site joint venture, as a forum to reach agreement. It found that Vissershok would charge third-party waste transportation companies about 43 percent more to receive their waste than they charged the joint venture partners, EnviroServ and Wasteman.
This meant that third-party waste transportation firms were placed at a significant disadvantage in respect of their competitors, EnviroServ and Wasteman.
The often-acrimonious relationship between EnviroServ and Wasteman partly led to Wasteman’s decision to approach the Competition Commission in November 2012 to seek leniency for its part in the collusion.
The commission referred the complaint to the tribunal in February last year, alleging that EnviroServ and Wasteman fixed prices for waste transportation services from 1998 until November 2013.
The commission also alleged that EnviroServ and Wasteman divided markets by allocating customers between 2005 and 2012, but this complaint was dismissed by the tribunal.
EnviroServ advanced various arguments for the existence of the downstream price, including that it was functional to the joint venture, because it incentivised the firms to compete downstream.
The tribunal disagreed, stating that at all times the decision to fix the downstream price was not the behaviour of firms in a vertical relationship but rather the conduct of two firms competing directly with each other.
In an unrelated case, the tribunal yesterday found that A’Africa Pest Prevention CC and Mosebetsi Mmoho Professional Services CC colluded when submitting their bids for a 2015 fumigation tender issued by the Department of Public Works following a bee invasion at the Hertzogville Magistrate’s Court in the Free State.
The commission launched its investigation into the two firms after the department informed it about suspicions of collusion.
It revealed that A’Africa Pest Prevention and Mosebetsi Mmoho Professional Services submitted almost identical pricing schedules in their tenders, which were both signed by the same person, a Ms Labuschagne.
The commission concluded this was evidence of an unlawful agreement between competitors to fix prices and rig the tender and referred the case to the tribunal.
Mosebetsi’s bid initially won the tender, but the department chose not to award it the tender because of its concerns about collusion.
The two firms argued that they were not competitors but in fact part of a single economic entity.
The tribunal found that although the firms had common membership, they were not part of a single economic entity and neither did they submit their bids as a single economic entity.
The tribunal said it was the deceptive nature in which the tenders were completed that led the department to consider their conduct as that of competing firms.