File photo: Siphiwe Sibeko.

Johannesburg - Cape Town-based furniture removals firm H&M Removals has been fined R196 364.15 for collusion on tenders issued by the SA National Defence Force.

This followed a Competition Commission probe into 69 companies offering furniture removal services for colluding on tenders issued by various government departments, including the SA National Defence Force and SA Police Service and tenders issued by large corporates such as Eskom and PPC.

This investigation revealed that more than 3 500 relocations tenders were subjected to collusion by the companies between 2007 and 2012.

Anthony Ndzabandzaba, who has headed the commission’s investigation, told the tribunal during a settlement agreement hearing in February that in excess of 10 firms had reached settlement agreements with the commission out of a total of 43 firms the commission had determined were engaged in prohibited practices.

H&M Removals agreed to pay the penalty in terms of a settlement agreement with the commission that was confirmed by the Competition Tribunal last week. The penalty represents 4 percent of H&M Removals’ household local and long distance division’s turnover for the financial year to February 2013.

The settlement agreement revealed that H&M Removals colluded with Cape Express Removals and Propack Removals on tenders issued by the SA National Defence Force by engaging in about nine instances of cover pricing. Cover pricing involves creating the illusion of competition by getting some firms to submit non-competitive bids to enable a fellow cartel member to win a tender.

The commission said between about 2007 and at least December 2012, the furniture removal firms that were part of the cartel had agreed to tender collusively.

In terms of this agreement between the competing firms, a firm that was contacted first regarding a request for quotation for furniture removal services would offer to source two or more quotations on behalf of the customer and would then contact two or more of its competitors and request these competitors to submit cover prices.

The cover prices would either be sent directly to the customer or to the competitor wishing to win the tender for onward submission to the customer.

The tribunal in November confirmed settlement agreements related to collusion by six furniture removal firms.

Matthee Furniture Removals was involved in 192 incidents of collusion and was fined R159 205; Viking Transport was involved in 24 instances of cover pricing and fined R188 064.48; Low Line Furniture Removals was involved in 113 cases of cover pricing and fined R249 616; Transfreight International was involved in 59 instances of cover pricing and fined R607 492.27; JH Retief Transport was involved in 3 487 instances of cover pricing and fined R4 273 060.80; and Joel Transport was involved in 12 instances of cover pricing and fined R150 582.45.

In October last year, the tribunal confirmed settlement agreements entered into by Cape Express and Propack Removals. Cape Express was fined R645 710 and Propack Removals R454 127.60.

Ndzabandzaba told the tribunal in November that the commission had not been able to establish which companies had been the instigators or ring leaders of the cartel.

BUSINESS REPORT