Saturday, December 2, 2023

Komatsu, Barloworld confess market dominance  

The Competition and Consumer Authority (CCA)’s latest annual report appears to confirm long-held suspicions that the arbiter is a toothless watchdog.

The report revealed that Komatsu Botswana (Pty) Ltd and Barloworld Equipment Botswana (Pty) Ltd engage in a slew of abuses that border on dominance by systematically excluding and refusing to register or list suppliers on their vendors list – a charge not limited to both companies in the broader scheme of things though.

Both companies have enjoyed decades of uninterrupted unique and huge business support in the form of tenders to supply machinery for diamond operations owned by Debswana Mining Company – a partnership between Botswana Government and De Beers.

The CCA report proffers the Authority sprang into action after information emerged that Komatsu Botswana (Pty) Ltd and Barloworld Equipment Botswana (Pty) Ltd may have engaged in the conduct of abuse of dominance “by way of refusing to register or list suppliers on their vendors list for the provision of machining/line boring services.”

Investigations by the Authority revealed: “Since its inception in the 1980’s, Komatsu Botswana (Pty) Ltd had not considered appointing new suppliers or at least reviewing its initial list of the supplier database for the provision of machining/line boring services.”

“The company only contracts suppliers who were on the suppliers’ database that had been drawn up since inception. This practice raised a number of competition hurdles because, by relying only on the existing supplier list which was drawn at inception of the business, meant that no supplier could enter the supplier list database of Komatsu Botswana (Pty) Ltd,” the CCA observed.

The scathing observation by the Authority duly stipulates “the arrangement in effect created a barrier to entry for potential market entrants.”

The same finding was arrived at with Barloworld Equipment Botswana (Pty) Ltd.

“The business arrangement by both Komatsu Botswana (Pty) Ltd and Barloworld Equipment Botswana (Pty) Ltd created a market structure that made it impossible for any new potential entrant to access the market. This affected the level of competition in the provision of machining/line boring services.”

Pitifully, the report says as a result of the intervention of the Authority, both Barloworld Equipment Botswana (Pty) Ltd and Komatsu Botswana (Pty) Ltd indicated that “they did not realise that the business arrangement they had in place affected the level of competition in the downstream market.”

“They immediately committed to implementing a supplier recruitment drive methodology that will allow for competition from the available suppliers that provide the service of machining/line boring. This was an individual commitment from each of the respondents. They also committed to putting in place a fair and transparent system that would allow every eligible competitor to have an equal chance of being part of the supplier list database,” the report says.

Unbelievably shocking is that the Authority submits to the dominance with a line that says: “The commitment from both respondents led to the closing of the investigation against both Komatsu Botswana (Pty) Ltd and Barloworld Equipment Botswana (Pty) Ltd on the matter.”

The Authority’s feeble excuse comes in the form that “the commitment meant that both Komatsu Botswana (Pty) Ltd and Barloworld Equipment Botswana (Pty) Ltd now allow competition to take place in the downstream market.”

Related to this is another case involving the Authority and Allied Investments.

The CCA received a complaint from an anonymous complainant against Allied Investment alleging possible abuse of market dominance and market allocation.

Investigations revealed that a new tenant at Grand Plaza Mall was instructed by the landlord through a restricting clause in the lease agreement on the products that it will not be allowed to trade in, regardless of the listed products as per the tenant’s trade license. Allied Investments did not deny the allegation as it indicated that the instruction was made in order to avoid having tenants that sell similar items. Upon realisation that the restrictive clause in the lease agreement leads to anti-competitive business conduct as it dictates the competition landscape, the company committed to rephrasing the problematic clause.

“The commitment from the respondent led to the closure of the investigation. Going forward, the Authority will be monitoring the situation and to ensure that there are no Annual Report 2019/20 similar situations in other shopping malls across the country. Competition Authority Against Some Bidders to Supply Diagnostics Medical Equipment to Government Hospitals.”

And it does not end there. “The Authority initiated an investigation upon receiving a complaint from the Public Procurement and Public Asset Disposal Board (PPADB) alleging possible collusive behaviour by two bidders (names withheld because the bidders were not aware of the investigation).

The allegation was that although the two bidders submitted two separate bids, their bids were identical on certain items and this raised suspicion of possible bid-rigging. The PPADB referred the matter to the Authority to consider carrying out an investigation. The investigation revealed that one bidder was dependent on the other bidder for the supply of equipment and technical support and service on some items as required by the tender.

In response to the tender, the two bidders’ methodology for supplying the same item, that is, preparation of the radiology room, turned out to be similar. This was because one bidder was to engage a service provider for supply and fitting (which happened to have also bid for the same tender).

The investigation was closed as there was no evidence of collusive behaviour by the two bidders.


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