Home South African Competition Commission probing two companies for overcharging SAPS for hand sanitisers

Competition Commission probing two companies for overcharging SAPS for hand sanitisers

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This comes after a tender was issued by SAPS for the procurement of the sanitisers during the period March 21 2020 to April15 2020.

File picture: Mohamed Hassan/Pixabay

Cape Town – The first of a three-day Covid-19 excessive-pricing case involving a SAPS tender for bulk hand sanitisers commenced at a Competition Tribunal hearing on Monday.

BlueCollar Occupational Health (Pty) Ltd is accused by the Competition Commission of charging the SAPS excessive prices for bulk hand sanitisers, and the co-accused in the matter, Ateltico Investments (Pty) Ltd, is said to have provided funding to BlueCollar for the procurement.

This comes after a tender was issued by SAPS for the procurement of the sanitisers during the period March 21 2020 to April15 2020.

The commission wants both firms to be held jointly liable to pay an administrative penalty.

According to a statement by the commission, BlueCollar 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 was excessive.

BlueCollar is described as a small business involved in providing occupational health services, including performing medical screening of customers’ employees and staff.

The company did not respond to questions yesterday.

Attempts to track Ateltico, which is said to provide investment solutions to customers, were unsuccessful as no number or contact details were available.

The hearing is set to continue today and is expected to end tomorrow where the tribunal will hear further evidence from witnesses called by the commission, as well as from Blue Collar.

In a previous statement, commissioner Tembinkosi Bonakele said: “The nature and scale of these investigations and prosecutions is unprecedented. Individual investigations will not address what appears to have been a systematic failure of the public procurement system. We call upon authorities and policy makers to address these systematic failures as individual cases of this nature are complex, expensive and may overwhelm the capacity of institutions. The commission is reprioritising its work to ensure that it is able to deter excessive pricing in the public sector, and to hold the companies involved in the worst price abuses accountable.”

In a matter heard by the tribunal last month, Oak Medical and Laboratory Supplies, situated in Cape Town, was ordered to issue a credit note to the National Health Laboratory Services (NHLS) for R109 772.84 for tongue depressors (spatulas).

Tongue depressors are used to depress the tongue to allow for examination of the throat and mouth. In the context of the Covid-19 pandemic, tongue depressors may be used during the taking of a throat swab.

Oak Medical was accused of charging the government excessive prices for a batch of 200 000 tongue depressors.

The value of the transaction amounted to R180 000, but the company suffered a loss of R33 427.16 when the courier used to ship the stock, lost the shipment. This was seen as a mitigating factor as the shipment was not insured by the courier company or by Oak Medical.

“On 7 May 2020, (Oak Medical) supplied 200 000 tongue depressors once-off to the NHLS at 90c per unit, whereas the cost price for each tongue depressor was 16c, and its competitors charged prices as low as 29c for the same product (a 210% difference),” the tribunal said.