The Competition Commission has referred two cases which highlighted excessive pricing models related to Covid-19 public procurement to the Competition Tribunal for prosecution.
The first is against Gauteng-based BlueCollar Occupational Health (Pty) Ltd (“BlueCollar”) and KZN-based Ateltico Investments (Pty) Ltd (“Ateltico”). The second is against Tsutsumani Business Enterprises CC (“Tsutsumani”), based in Gauteng.
In each of the cases, the commission found that procurement transactions contravened sections 8(1)(a) of the Competition Act of the Consumer and Customer Protection regulations during the national state of disaster.
Both cases were a result of complaints lodged by the South African Police Service.
“In the BlueCollar and Ateltico matter, in March 2020, BlueCollar responded to the SAPS Request For Quotation for the supply of bulk hand sanitiser in 25Lt containers. BlueCollar was appointed and subsequently approached Ateltico for funding. BlueCollar and Ateltico entered into a memorandum of understanding in terms of which they agreed to share the profits earned from the transaction. BlueCollar then supplied SAPS with 10 000 25Lt containers of hand sanitisers at the price of R3,550 per 25Lt container with a gross mark-up of 123%, a price that the Commission found to be excessive.”
In the second case, Saps procured 500,000 surgical face masks from Tsutsumani at R 32.50 per mask. This led to Tsutsumani walking away with a gross mark-up of 87% from the transaction, which the commission found to be excessive.
The commission will now engage with National Treasury on how to tackle awarded contracts, including cases where goods were supplied and services rendered at excessive prices.
The Competition Commission’s Tembinkosi Bonakele says it will now be reprioritising its work to ensure that it deters excessive pricing in the public sector.