Tourvest holdings (pty) ltd excipient and ors. V. Competition commission - (10 Jan 2018)

A case for collusion can be based on inference

MRTP/ Competition Laws

In instant case, the two Respondents, Tourvest Holdings (Pty) Ltd ("Tourvest") and Trigon Travel (Pty) Ltd ("Trigon"), have filed exceptions to the Competition Commission's complaint referral. The Commission alleges that, in 2015, Parliament issued a tender to the travel industry for the provision of travel services for members of Parliament. The services included, booking of flights and accommodation. Sixteen firms submitted tenders, amongst them the respondents, Tourvest and Trigon.

The Commission's case was that the Respondents had reached an agreement to fix prices and tender collusively, thus contravening sections 4(1)(b)(i) and 4(1 )(b)(iii) of the Competition Act,1998. In the first round of exception applications, Tourvest and Trigon had filed exception applications on the basis that the Commission's complaint referral raised no cause of action, and is thus vague and embarrassing. The nub of the Respondents' criticism was that the facts on which the Commission relied, did not constitute a sufficient basis on which to conclude the existence of an agreement. The Respondents argued that based on the facts in the Commission's referral and supplementary affidavit, no inference can be drawn that, the Respondents agreed to tender collusively.

The Commission's case is based on inference. The inference sought to be drawn is that the Respondents submitted identical bids because they had colluded. It is common cause that, a case for collusion can be based on inference. Case law exists for the test in civil cases where several inferences may be drawn. In the leading case of Cooper,3 the Appellate Division, held that, an inference may be drawn in favour of a party who bears the onus if it is the most probable inference to be drawn.

The new facts alleged by the Commission. First, the tender envisaged that more than one firm might win the tender. The Commission now alleges that it is possible, given the size of the tender, that both firms could win the tender at the same price. The existence now of a rational explanation for the pricing behaviour, which was lacking in the referral as originally pleaded, makes the inference sought to be drawn more reasonable. Second, it is now alleged that Tourvest is the incumbent supplier. The Commission alleges that, the services being put up for tender are the same as those currently provided by Tourvest. It is thus possible that Tourvest as the incumbent, knowing that it might have to lose some share of the revenue to a rival, would have an incentive to ensure it could do so in circumstances where it would still have some economic gain. The third relevant fact about Tourvest being an incumbent means it is aware of what transaction fees Parliament is currently paying. In the referral, it is alleged that the bidders transaction fees ranged from Rs. 75.00 to Rs. 1700.50 per transaction compared to the Rs. 150.00 offered by both the Respondents. This wide range suggests that, at least some bidders lacked any information as to what Parliament was likely to accept. Fourth, the fact that fees had such a wide range and were not clustered around a narrower range makes the coincidence sought to be drawn from the similar prices, more probative. Moreover the incumbent's knowledge of the client's current pricing would have been useful to Tigon. The exceptions must be dismissed, because on the facts of the Commission's papers, as now supplemented, a reasonable possible inference can be drawn that the Respondents may have contravened the Act.

Tags : TENDER ISSUANCE PRICES FIXATION COLLUSION