JOHANNESBURG - Motseng Trading, a subsidiary Motseng Investment Holdings (MIH), has acceded to pay a fine of R200 000 for agreeing with Da Gama Textiles to fix prices for tenders issued by National Treasury and state arms procurement company Armscor.
Matodzi Sivhaga, appearing for the competition commission, told a Competition Tribunal hearing on Wednesday that an investigation initiated by the commission in September 2013 found that Da Gama Textiles and Motseng Trading discussed tenders and agreed on prices that each of them would quote in their bids.
Sivhaga said the bids were submitted in response to tenders issued by National Treasury and Armscor and were for the supply of fabric used in the manufacture of uniforms for the Department of Correctional Services, the South African Air Force, South African Military Health Services and South African Army.
He said Motseng Trading admitted contravening the Competition Act.
Sivhaga said Motseng Trading agreed to pay a penalty of R200 000, which amounted to 3.2 percent of the company’s turnover for the financial year to February 28 2015.
He said the Motseng Trading settlement agreement placed before the tribunal on September 2015 for confirmation, which related to only one complaint, was withdrawn in
December last year and replaced by this all-in-one settlement.
An agreement between the commission and Da Gama Textiles in terms of which it agreed to pay a fine of R2 113 335.45, representing 0.4 percent of its annual turnover for the financial year to December 2013, was confirmed by the tribunal in January this year.
Sivhaga said the commission had taken a number of factors into account in accepting the penalty imposed on Motseng Trading.
He said Motseng Trading had not marketed itself for any new business or conducted any activities post March 21 2015, apart from the collection of debtors and payment of trade creditors; the company had previously contravened any provisions of the Competition Act; and Da Gama Textiles was the leader of this collusive arrangement.
“Even though this conduct involved multiple tenders, it is in essence is just one arrangement with Da Gama on how to deal with tenders in situations where Da Gama was a supplier.
“The relationship with Da Gama ended as soon as both firms became aware that their conduct was under investigation, which was in 2013,” he said.
Sivhaga added that Motseng Trading was a small firm that did not have any manufacturing capacity and, as a result, sourced fabric from manufacturers, such as Da Gama Textiles.
He said Da Gama Textiles, as one of the manufacturers of fabric, was not black economic empowerment (BEE) compliant and divided their business into Motseng Trading to benefit from tenders issued by National Treasury and Armscor despite not being compliant with BEE requirements.
Ipeleng Mkhari, the founder and chief executive of Motseng Investment Holdings (MIH), confirmed that Motseng Trading was a subsidiary that operated as part of MIH but had been wound up.
Mkhari said the MIH group would have to pick up the cost of the fine.
The tribunal has not yet confirmed the settlement agreement.