Monday, December 6, 2021

Companies implicated in another bid-rigging case

Having been implicated in an ongoing P114 million bid-rigging case involving sugar beans, two companies are alleged to have rigged another P20.4 million bid, this one for the supply of infant formula to the Ministry of Health. Having made such determination, the Competition Authority has referred the matter to the Competition Commission asking it to order each of the two companies (Creative Business Solutions and Rabbit Group) to pay a fine of Ôé¼45 990. The Authority wants such penalty to be paid to the Commission within three months of such order being issued.

The matter relates to a 2012 tender for the supply of 1 500 000 units of infant formula in 400 gram cans which the government awarded to both companies through the Department of HIV/AIDS Prevention and Cure in the Ministry of Health. Some seven months after the tender was awarded and six after the signing of the service level agreements, an informant came forward and spilled the beans on how the two companies had won the tender. The Authority says that it will not disclose the name of the informant in line with what the Competition Act prescribes. A preliminary enquiry revealed that companies had equally shared the Ôé¼1 839 600 (P20.4 million in today’s money) tender between themselves.

Acting on the conviction that “a possible case of bid rigging may have been made out”, the Authority decided to investigate the matter, duly serving both respondents with a notice-of-intention-to-investigate. The subsequent investigation revealed that while the companies had provided free-sale certificates and letters of authorisation from a French company, the milk they supplied was obtained from a different one. It also revealed that while the first consignment was to have been delivered by the second week of March, 2013, a letter from the second company made a commitment to supply the milk by the end of August, 2013. During the course of this investigation, the Authority gained access to copies of email correspondence between the Director of Creative Business Solutions, Mosupi Masomosomo, and a representative of the first company.

One message from the former reads: “We are going to tender with four companies. This will increase our chances of winning some or all the quantities in the tender.” In another message, Masomosomo writes that “two of my companies” have been shortlisted. “There is no doubt that the two companies that [Masomosomo] was referring to are both the respondents herein,” reads the Authority’s founding affidavit which has been deposed to by its Competition and Research Analyst, Goitseone Modungwa. The two companies have just won (on technical points) another case at the Competition Commission in which they were alleged to have rigged a P114-million sugar beans tender. The Authority is appealing the ruling at the High Court.

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