The Competition Commission v. Tourvest and Trigon

South Africa

10.01.2018

MRTP/ Competition Laws

An inference may be drawn in favour of a party who bears the onus if it is the most probable inference to be drawn

Present case concerns two exceptions the Respondents have brought to a case referral from the Competition Commission. The Commission alleges that, in 2015, Parliament issued a tender to the travel industry for the provision of travel services for members of Parliament. The services included, booking of flights and accommodation. Sixteen firms submitted tenders, amongst them the Respondents, Tourvest and Trigon. The Commission's case was that, the Respondents had reached an agreement to fix prices and tender collusively, thus contravening Sections 4(1)(b)(i) and 4(1 )(b)(iii) of the Competition Act, 1998. The Commission concluded that, the Respondents had entered into an agreement based on the following facts; First the similarities in their bids. They had submitted an identical price for their transaction. Secondly, they had the same B-BEE status and thirdly the same procurement level recognition. In addition they had submitted their bids on the same date. The Commission also alleged that the firms were related to one another. Trigon is owned by the Travel Assignment Group (TAG). TAG is alleged to be a franchisee of Tourvest.

Case law exists for the test in civil cases where several inferences may be drawn. In the leading case of Cooper, the Appellate Division, as it was then, held that an inference may be drawn in favour of a party who bears the onus if it is the most probable inference to be drawn. However this test does not apply in a case based on exception, where the respondents, as in this case, have not put up their own facts. The proper test at this stage, is whether the Commission has alleged sufficient facts, from which a reasonable possible inference may be drawn that the respondents had reached a collusive agreement.

Commission's case was that, Respondents had reached an agreement to fix prices and tender collusively, thus contravening Sections 4(1)(b)(i) and 4(1 )(b)(iii) of Act. Commission concluded that, Respondents had entered into an agreement. Commission also alleged that, Respondent firms were related to one another. In first round of exception applications, Respondents-Tourvest and Trigon had filed exception applications on basis that, Commission's complaint referral raised no cause of action, and is thus vague and embarrassing. Present Court provided Commission an opportunity to remedy its complaint referral by ordering that, Commission allege all facts on which it seeks to rely on, to draw inference that Respondents-Tourvest and Trigon have engaged in an agreement to tender collusively. Commission duly filed its supplementary affidavit. It is now clear from supplementary affidavit that, Commission's case is based on inference. The inference sought to be drawn is that Respondents submitted identical bids because they had colluded. The proper test at this stage, is whether Commission has alleged sufficient facts, from which a reasonable possible inference may be drawn that Respondents had reached a collusive agreement.

Commission now alleges that, it is possible, given the size of tender, that both firms could win tender at same price. Existence now of a rational explanation for pricing behaviour, which was lacking in referral as originally pleaded, makes the inference sought to be drawn more reasonable. Commission alleges that, services being put up for tender are the same as those currently provided by Tourvest. Recall that Tigon is a subsidiary company in TAG group. Tourvest is alleged to procure airline and accommodation services on behalf of its affiliates, one of which is TAG. This enhanced bargaining power benefits both groups because they get better discounts. Thus, to the extent that Tigon, a TAG subsidiary wins some of the services from Parliament, would still benefit Tourvest. Third relevant fact about Tourvest being an incumbent means it is aware of what transaction fees Parliament is currently paying. Fourth, the fact that fees had such a wide range and were not clustered around a narrower range makes the coincidence sought to be drawn from similar prices, more probative. Moreover, the incumbent's knowledge of client's current pricing would have been useful to Tigon. On facts of Commission's papers, as now supplemented, a reasonable possible inference can be drawn that, Respondents may have contravened the Act. Respondents may well have an answer to all these points but that is for them to raise in an answering affidavit. Therefore, Respondents must file their answering affidavits to Commission's complaint as supplemented. Exceptions must be dismissed.

Tags : Price fixation Agreement Anti-competitive Contravention

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