Oct 4, 2022

Mawazo Writing Africa

Writing about the main

Esorfranki companies ordered to pay R15.7m for colluding to fix prices

The Competition Court has ordered three Esorfranki companies to pay an administrative penalty of Rs 15.7 million after finding they had worked with competitors on construction projects to set prices and allocate customers and that they had competed with bid-rigging.

The court made this decision in the long-running case involving construction and engineering companies Esor Ltd, Esor Africa (Pty) Ltd and Esor Construction.

The Case against another accused company in this matter, Diabor (Pty) Ltd, has been dismissed from the court.

The matter concerns construction projects in the geotechnical services markets, including piling, cross-bolts, grouting and geotechnical drilling survey services.< /p>

The Competition Commission claimed that from the 1970s until at least 2015, several companies joined various tenders n together. The companies are said to have colluded through “formal agreements” until 2005, after which they engaged in “ad hoc arrangements”.

In his briefings, Esorfranki admitted to have participated in the formal agreements, but said it was dropped in 2005, more than three years before the Commission’s investigation began in 2009.

She argued that the Commission therefore had no complaint against them for the purposes of the Competition Act, which – previously the 2018 amendments – provided that a complaint relating to a prohibited practice may be made no later than three years after the practice ceased.

The Court however, rejected Esorfranki’s argument. It states: “Conduct in relation to projects assigned before September 24, 2005 lasted at least after June 2008”. On that basis alone, Esorfranki’s claim that the Commission’s 2009 initiation was not valid was “rejectable”.

Regarding ad hoc agreements, Esorfranki gave the Involved in collusive behavior in relation to a Sappi/Saiccor project.

After examining all the evidence, the Arbitral Tribunal found that the companies of the Esorfranki Group violated the Competition Law by colluding with their competitors to set prices, allocate customers and participate in bid-fixing by cover pricing from at least 1999 to 2008.

In the case of Diabor, the Commission had alleged that the company was involved in at least three ad hoc agreements

Diabor denied being involved in the collusion and said the Commission’s case against it should be dismissed.

After reviewing all the evidence, the court said it was evidence from the hearsay. The chief of the commission and sole witness acknowledged that all of his evidence regarding Diabor’s involvement in the collusion was based either on what he was told by others or on what he assumed.< /p>

The Arbitral tribunal found that, in a probable assessment, the Commission had failed in its burden of proof to show that Diabor was involved in collusion.

“Accordingly, the lawsuit against Diabor Dismissed.”

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