In the matter between: The Competition Commission of South Africa And Geometry global (pty) ltd vaxiprox (pty) ltd

South Africa

03.10.2018

MRTP/ Competition Laws

Tender process is designed to induce competition in a very structured way by facilitating independent conduct of potential service providers

Present matter concerned a complaint referral by Competition Commission against two firms active in provision of brand activation services: Geometry Global (Pty) Ltd ("Geometry") and Vaxiprox (Pty) Ltd ("Vaxiprox"). Commission alleged that, Respondents contravened Sections 4(1)(b)(i) and (iii) of Competition Act,1998 by rigging bidding process for a tender issued by South African Tourism ("SAT") for brand activation services in a section of SAT's annual Indaba conference called "TechZone". The question raised in present case is whether conduct of Respondent firms amounted to per se prohibited conduct.

Once an institution like SAT has issued a tender and work required in terms of that tender had already been performed then, unless an agreement to fix price and to tender collusively had been reached between parties prior to tender having been awarded, Section 4 of Act, did not apply. Legislature did not intend that, Section 4 should apply retrospectively to a tender which had already been awarded in accordance with a tender procedure and where work envisaged in tender award had already been completed.

Section 4(1)(b) of Act delimited conduct which was deemed per se prohibited; conduct deemed so inimical to competition that, no pro-competitive justification for such conduct might be considered by this Tribunal. In absence of an opportunity to justify per se prohibited conduct, it was necessary for Tribunal to closely scrutinise actions of a Respondent firm/s and satisfy itself that such conduct amounted to per se prohibited conduct.

It was trite that, an essential feature of a conventional tender process was expectation on part of client that it would receive, as a response to its request, a number of independently articulated bids formulated by contractors independent of each other. Tender process was thus designed to induce competition in a very structured way by facilitating independent conduct of potential service providers. It followed then that conduct should amount to collusive tendering when it amounted to an agreement or communication between competitors that undermined expectations of client for independently articulated bids.

In present matter, on evidence provided, SAT and its agents never formed expectation of a competitive tender process and never considered submission of Geometry's bid as a component. Seemingly, purpose of Geometry's bids were to create impression of a competitive process to third parties. This then differentiated facts in present case from conventional collusive tendering actions where there was an agreement to create impression of a competitive process to client. Commission had burden to prove, on balance of probabilities, that actions of the Respondents amounted to conduct prohibited by Section 4(1)(b) of Act. On basis of facts and analysis, it was found that, Commission had failed to discharge its onus. Conduct of SAT, Geometry and Vaxiprox, in this particular factual complex could not have amounted to that prohibited by Act. Case dismissed.

Tags : Anti-Competitive Agreement Contravention Provisions

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