Blanket manufacturer fined R5 million in price fixing government tender scandal
The Competition Tribunal has fined blanket manufacturer and supplier, Aranda Textile Mills R5 million, and R500 000 for blanket reseller Mzansi Blanket Supplies, respectively, after they were both found guilty of price fixing and collusive tendering in relation to a 2015 National Treasury tender.
The tender, for which both Aranda and Mzansi had submitted bids, provided for the procuring of blankets, among other items, on behalf of multiple state departments including the Department of Correctional Services, South African Police Service, South African Military Health Service and Emergency Medical Services.
This comes after the Competition Commission referred the matter to Tribunal after finding evidence that Aranda and Mzansi discussed and agreed how to bid for the tender, in violation to the Competition Act.
In terms of this agreement Aranda would provide Mzansi with its tender documents including the pricing schedule which Mzansi would use to prepare its own tender including pricing.
However, both Aranda and Mzansi denied that they had contravened the Act.
The Tribunal said that after considering all the evidence and submissions, Aranda and Mzansi contravened section 4(1)(b)(i) and (iii) of the Competition Act which relates to price fixing and collusive tendering.
In determining an appropriate penalty, the Tribunal considered both mitigating and aggravating factors, including that the Commission’s case was limited to the conduct of the respondents in respect of the one tender.
Also considered was that neither of the respondents have been found to have contravened the Act previously, and that
Aranda, while having a long and proud history of manufacturing, also demonstrated that it was committed to promoting local production.
However, the Tribunal said Aranda elected to engage in unfair pricing methods towards potential bidders thus defeating one of the objectives of the tender namely the promotion of small, black-owned businesses.
The Tribunal concluded that the firms manipulated the competitive process.
"We find that the evidence when considered in its totality supports the conclusion that Aranda and Mzansi, as competitors for the 2015 Tender co-ordinated their bids with each other," it said.
"They co-operated with each other to ensure that if Aranda was unsuccessful Mzansi would win the tender."
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