CA seeks to tighten screws on cartels
Isaac Pinielo | Thursday July 28, 2016 18:00
Currently, bid-rigging is not a criminal conduct under Botswana laws, according to Duncan Morotsi, director of legal and enforcement. Giving a presentation at the national bid-rigging workshop that was held in Gaborone on Tuesday, he said the law should be amended to punish those officials found to be engaged in aiding or abetting the conduct.
Morotsi noted that the Competition Act prohibits horizontal agreements, directly or indirectly fixing a purchasing or selling price or dividing markets by allocating customers, suppliers territories or specific type of goods. It also prohibits bid-rigging, which the director described as “hardcore cartel behaviour”.
“The Act also prohibits vertical agreements, resale price maintenance or recommending a minimum resale price to the seller,” he said.
Other prohibitions, according to Morotsi, relate to abuse of a dominant position and any other agreement not covered under horizontal or vertical agreements.
He stated that horizontal and vertical agreements are to be investigated once found to have occurred. He said the CA should be given the powers of search and seizure, whereby it can enter premises with a warrant obtained from a Magistrate’s Court and that once investigation is complete, the case be referred to the Competition Commission for hearing.
“Section 43 empowers the commission to issue directions if it has been proved that a prohibition is breached, to bring a prohibition to an end by terminating or modifying the agreement in question,” Morotsi said.
The commission can also impose a 10% financial penalty of the turnover on the enterprise during the breach of the prohibition up to a maximum of three years.
Meanwhile, five cases of alleged cartels in the panel beating industry were referred to the commission for adjudication. The conduct that was the subject of each of the five cases was that the panel beaters engaged in price fixing, collusion and increasing prices for vehicle repairs.
Another case is the one about a tender floated by the Ministry of Local Government and rural development for the supply of 7,530 metric tonnes of sugar beans to various parts of the country. The tender was awarded in two parts to Creative Business Solutions (Pty) Ltd in the sum of P58,047,304 and to Rabbit Group (Pty) Ltd in the sum of P55,956,600. The authority’s investigations revealed a bid-rigging arrangement between the companies, enabling them to outsmart their competitors and win the tender through a market allocation scheme.
There was also another case that involved the same companies in the sugar beans case, who, in response to a tender floated by the Department of HIV/AIDS Prevention and Care under the Ministry of Health, colluded in quoting for the supply of 1.5 million units of infant formula milk in 400 gram cans.
The authority’s investigation disclosed a price fixing arrangement between Creative Business Solutions (Pty) Ltd and Rabbit Group (Pty) Ltd to rig the tender by agreeing on the prices to be quoted for the infant formula milk.
Morotsi said the authority will continue its public and business education programme on the adverse effects of cartels and bid-rigging in the economy. “The authority will work closely with procurement entities to try to combat bid-rigging in public procurement. Procurement law is there to blacklist serial offenders,” he said.