Removal firm collusion inquiry revived

A new complaint into collusion in the furniture removal industry has been initiated by the Competition Commission after uncovering evidence that removal firms continued to collude despite cases being referred to the Competition Tribunal for adjudication. Anthony Ndzabandzaba, who headed the commission’s first investigation, confirmed this to the tribunal yesterday when presenting the commission’s case against Key Moves CC. It follows commission investigators in October raiding the premises of four furniture removal firms, one for the second time in five years, in a co-ordinated operation. The commission confirmed last year that it had conducted a search and seizure operation at the premises of Stuttaford Van Lines in Port Elizabeth and Bloemfontein, Pickfords Removals in Port Elizabeth and Bloemfontein, Afriworld in Bloemfontein and Cape Express Removals in Cape Town.

It previously investigated all four firms for collusive tendering for furniture removal tenders to a wide range of customers, including the SA National Defence Force, government departments, state-owned entities, private and public companies and private individuals. The inquiry formed part of a probe into 69 companies offering furniture removal services for colluding on tenders that revealed more than 3 500 relocation tenders were subjected to collusion by these companies between 2007 and 2012. This resulted in 16 furniture removal firms since 2012 reaching settlement agreements with the commission and 13 firms not having settled cases against them. Ndzabandzaba said yesterday that the consent agreement reached between the commission and Key Moves was one of the last consent agreements that would come before the tribunal under the old settlement regime, following the tribunal directive to penalise those firms settling later at a higher level.

He said the period covered by Key Moves’ consent agreement was from 2007 up to 2015, which was a departure from the consent agreements the tribunal had previously considered that were confined to the period from 2007 to 2012. Ndzabandzaba said this was because the key evidence implicating Key Moves only emerged for the period from 2013 on. He said Key Moves had admitted to engaging in two instances of cover pricing in contravention of the Competition Act, and offered to co-operate with the commission’s old and new investigations. Key Moves colluded with a rival on tenders issued by the SA National Defence Force. In terms of an agreement, a firm that was contacted first about a request for a quotation for furniture removal services would offer to source two or more quotations on behalf of the customer and would then contact two or more of its competitors and request them to submit cover prices.

A cover price was not intended to win the tender and was sufficiently high and/or contained conditions that would be unacceptable to the client to ensure the firm providing the cover price did not win the tender. In terms of the consent agreement reached with the commission, Key Moves agreed to pay a fine of R216 249, which amounted to 4 percent of the firm’s annual turnover for its 2014 financial year. Ndzabandzaba said Key Moves was the first firm to bring to the attention of the commission collusion and cover pricing in the industry post-2012 and other firms would obviously have to take the fall.