Furniture removal companies Stuttaford Van Lines and Pickfords Removals SA have admitted to involvement in a furniture-removal cartel and have agreed to pay an administrative penalty totalling R40 million.
According to a statement on Wednesday, the Competition Tribunal said this formed part of the terms of a settlement agreement, following a hearing during which it had heard submissions on various aspects of the settlement agreement.
The settlement agreement concluded all complaints, investigations and prosecutions relating to Stuttaford Van Lines and Pickfords.
In 2010 the Competition Commission launched investigations into several furniture removal companies, including Stuttaford Van Lines, Pickfords and AGS Fraser International, operating subsidiaries of Laser Transport Group.
The investigations revealed that furniture removal companies had tendered collusively in the provision of furniture removal services to government departments, big corporations and private individuals.
The collusion, which was alleged to have occurred from 2007 to at least 2012, involved the exchange of cover prices/quotes.
Cover pricing was a practice whereby one or more firms agreed that they would submit tenders in such a way that the designated winner would submit the lowest or most favourable bid and the other(s) would submit artificially high bids so as not to win the contract.
Stuttaford Van Lines was charged with 649 instances of collusive tendering involving the exchange of cover quotes, Pickfords with 37 and AGS with three.
The Competition Tribunal of South Africa said the terms of the settlement were that Stuttaford Van Lines and Pickfords were jointly and severally liable to pay the R40 million penalty – the one paying and the other to be absolved.
It said they agreed, among other things, to refrain from engaging in cartel conduct in the future and continue to implement and monitor a competition law compliance programme.
The Commission had agreed as part of the settlement to withdraw the complaint referral against AGS.
Price-fixing and collusion explained:
According to an article published by Jamie-Lee Payne of SchoemanLaw Attorneys, the Competition Act 89 of 1998 prohibited price-fixing and collusion between competitors. She wrote that this was commonly referred to as “anti-competitive conduct or behaviour”.
“The Act encompasses certain aspects, such as public interest and socio-economic upliftment. This is to ensure that customers have options regarding their purchases and to ensure competition exists in the market,” she said.
Payne wrote that the collusion and price-fixing in a sector could lead to many injustices for the average South African consumer. She used a 2006 case as an example, where a group of local bread producers were found guilty of price-fixing and collusion. This led to a decline in consumer surplus and resulted in prices increasing above marginal costs, she said.
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