Government blanket tender winner fined R5m for collusion

A blanket manufacturer that won a lucrative government tender been fined R5m for collusion.

The Competition Tribunal said on Wednesday that Aranda Textile Mills (Pty) Ltd and blanket reseller Mzansi Blanket Supplies (Pty) Ltd were found guilty of price fixing and collusive tendering in relation to a 2015 National Treasury tender.

An investigation was launched in 2016.

“The tender, for which both Aranda and Mzansi had submitted bids, provided for the procuring of blankets, among other items, on behalf of multiple state departments including the department of correctional services, the police, the South African Military Health Service and Emergency Medical Services,” said the tribunal.

It said that after an investigation it was found that both companies had “engaged in collusive bidding”.

“They adopted a pricing strategy through which they could hedge their bets and ensure that only either or both won the tender, and not the other bidders. For this strategy to be successful, which it was in the 2015 tender, both Aranda and Mzansi would need to be active participants in co-ordinating their bids,” the tribunal said.

It ruled that Aranda must pay an administrative penalty of R5m and Mzansi R500,000.

In summary, the tribunal said Aranda and Mzansi both submitted bids for the tender, but they had already had a “close commercial relationship”. Aranda, said the tribunal, was a supplier of blankets to Mzansi and the other bidders for the tender.

“However, the prices Aranda quoted other bidders were significantly higher in comparison to the quote offered to Mzansi — and the financial terms extended to Mzansi were more favourable than those afforded to the other bidders. Therefore, other interested bidders’ input price for the blankets (cost price) was significantly higher than Mzansi’s.

“When we stand back from the evidence and consider it in its totality, the only reasonable inference that can be drawn in relation to the 2015 tender is that the respondents co-ordinated their bids,” the tribunal said.

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