In its biggest bid-rigging case yet, the Competition Authority has taken two Gaborone companies to the Competition Commission for colluding on a P114 million tender to supply schools across the country with sugar beans from China. The companies, Creative Business Solutions (trading as Bread and Butter Foods) and Rabbit Group, are charged with dividing markets and rigging a bid to supply beans to primary schools across the country.
The Authority’s case is that “while the two bids were submitted by two different companies, in fact and in truth, the supply was a collaborative effort between the respondents.” At a National Conference on Competition that was hosted by the Authority in Gaborone last year, Dr. Collin Monkge from the Vision 2016 Council asked whether the Authority had “teeth to bite.” The answer from the Chief Executive Officer of the Authority, Thula Kaira, was in the affirmative. Indeed it turns out that the Authority has long, sharp teeth.
Acting on intelligence provided by an informer, the Authority’s investigators scrambled into action. In the morning of July 10, this year, four teams fanned out across town, simultaneously swooping down on as many business premises. During the search at the Rabbit Group, the Managing Director, Rabbie Tshosa, is described as having been at once “nervous, angry and agitated.” In her affidavit, Goitseone Modungwa of the Authority says, “He wanted to know from the inspectors who had lodged a complaint against the [Rabbit Group]. When he didn’t get an answer from the inspectors, he retorted that he knows it was some disgruntled bad loser who was actuated by malice and jealousy.”
The inspectors made away with a treasure trove that is now being offered as evidence before the Competition Commission. Bread and Butter Foods was awarded tenders for Palapye, Selebi Phikwe, Francistown and Maun while Rabbit Group was awarded tenders for Lobatse, Gaborone and Mahalapye. The total price for the former was P58 047 304 and P55 956 600 for the latter. Modungwa, who is a research analyst, has deposed to the Authority’s founding affidavit. In it, she states that the analysis she conducted revealed evidence of collusion between Creative Solutions and Rabbit Group to rig the sugar beans tender. She alleges that both respondents had agreed to divide the tender amongst themselves along geographic lines where one party would supply predominantly the depots in the northern side of the country and the other in the south.
“There is further evidence that the two companies had, subsequent to the award of the tender, jointly approached the First National Bank of Botswana Limited and Stanbic Bank Botswana Limited to apply for performance bond for the project as well as letters of credit for supply of the product from abroad,” Modungwa’s affidavit says. The Authority contends that by engaging in collusive tendering, the respondents “have frustrated government policy of improving competitive method of procuring goods and services from the private sector as a means of ensuring optimal use of national resources.”
The case has yet to start in earnest. Both respondents have yet to respond to the allegations, having raised legal points which have to be argued before the actual case. The matter comes before the Commission a little over two weeks from now (December 3) when both sides will argue the legal points. The Authority is represented by Abel Modimo and Duncan Morotsi, Otto Itumeleng represents Creative Business Solutions while Mboki Chilisa represents Rabbit Group.