Enforcing the Competition Law in Namibia A Toolkit - cuts ccier

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• Agreeing with competitors that theywill not enter into a market in whichthe other is a potential or actualrival. 39Collusive tendering, as all other carteltypebehaviours, can be difficult todetect and prosecute. However, as mostcompetition laws broadly prohibitanticompetitive agreements andconcerted practices betweencompetitors, there need be no legallybinding or formal agreement or any punishment or other enforcementmechanisms envisaged for a collusive tendering offence to be established. Asin the case of other cartel types,Collusive tendering, as allother cartel-typebehaviours, can be difficultto detect and prosecute.http://palawson.comcircumstantial, rather than directevidence is often enough to inferviolations. 40Authorities are increasinglyrecognising the market conditionsthat make collusive tendering more likely to occur. These include, for instance:(i) the presence of a few sellers or of a small leading group of sellers thatcontrol most of the market; (ii) lack of ready substitution with other products;and (iii) standardised products. This is also quite similar to the case of othercartel types, as discussed above. While recent research shows that the buildingand civil engineering sector is at most risk of cartel activity, collusive tenderingcases have also been found in numerous other industries.RESTRICTIVE BUSINESS PRACTICESEnforcing the Competition Law in Namibia: A Toolkit 33
RESTRICTIVE BUSINESS PRACTICESBox 9: Alleged Bid-rigging in Namibian StateFood Supply ContractsThe Namibian Government annually spends about Rs 40–50mn on variousfood supply contracts to service, among others, school hostels, prisonsand annual drought relief programmes. Although these contracts aresupposed to be given out on a competitive tender basis, the industry isdominated by two companies. Available information shows that there is alarge degree of collusion between these two companies, namely GlobalFoods and Independence Caterers, who appear to share the businessbetween them.These two companies work closely in conjunction with a non-governmentalorganisation that operates more like a private company. It seems that thetwo principals of Independence Caterers and Global Foods essentially actas a cartel by ensuring that they do not make competing bids on the samecontract. For example, the hostel food contracts are divided by region (ofwhich there are 13 in Namibia) in order to encourage rural-based companiesto also bid on these contracts. Global and Independence then findthemselves willing partners in these regions to act as ‘nameplates’ for bidsessentially compiled by themselves, for which the ‘nameplate’ companyreceives a commission of 10 percent.To ensure that they do not bid against each other, each region is allocatedto one of the two companies. While both may enter bids, prices arecompared in advance to ensure that the contract is awarded to the rightone. Bids are literally rigged to ensure, for example, that Global gets theKavango contracts, and Independence gets the Ohangwena contracts.Although the bids appear competitive on paper, both companies refuse toallow the receiving parties (e.g. the hostel superintendent) to keep deliverynotes against which to check their supplies against the original bids; bothcompanies appear to short-change the system by then supplying inferiorfoodstuffs to what was asked for originally: for example, instead ofsupplying fresh fruit, dried fruit is supplied, or instead of meatballs ingravy, a soya-based product is supplied.Source: Penetrating State and Business Organised Crime in Southern Africa, Volume 1,CHAPTER 2 NAMIBIA by John Grobler, published in Monograph No 86, September 2003,edited by Peter GastrowInstitute for Security Studies: http://www.iss.co.za/pubs/Monographs/No86/Chap2.htm4.5.5 Boycott or Joint Refusal to DealAn illegal boycott or joint refusal to deal is a joint action by competitors thathas the purpose of using the combined market power of those competitors toforce a supplier, a competitor or a customer to agree to an action that harmscompetition, which would not be agreed to, absent the joint action. Forexample, by threatening to stop buying from a supplier, two very large retailing34 Enforcing the Competition Law in Namibia: A Toolkit
Page 4 and 5: CONTENTSPreface ...................
Page 6 and 7: LIST OF BOXESBox 1: An Overview of
Page 8 and 9: PREFACEI am pleased to write this p
Page 10: y the Korean Fair Trade Commission
Page 13 and 14: RBPs : Restrictive Business Practic
Page 15 and 16: INTRODUCTIONOver time, the Governme
Page 17 and 18: Section 26 of the Act defines abuse
Page 19 and 20: INTRODUCTION1.3 Country BackgroundN
Page 21 and 22: ABOUT THE MARKET ECONOMYsales and p
Page 23 and 24: 3. MARKET AND COMPETITION3.1 Compet
Page 25 and 26: MARKET AND COMPETITIONare able to s
Page 27 and 28: MARKET AND COMPETITION3.3 Market Sh
Page 29 and 30: MARKET AND COMPETITIONCompetition p
Page 31 and 32: RESTRICTIVE BUSINESS PRACTICESmarke
Page 33 and 34: RESTRICTIVE BUSINESS PRACTICESAccor
Page 35 and 36: RESTRICTIVE BUSINESS PRACTICES4.3 E
Page 37: RESTRICTIVE BUSINESS PRACTICESappli
Page 42 and 43: for fixing prices, will refrain fro
Page 44 and 45: Any agreement, decision and concert
Page 48 and 49: customers might be able to force a
Page 50 and 51: 4.6 Vertical AgreementsVertical ant
Page 52 and 53: Box 12: Hungarian Book Publishers i
Page 54 and 55: RESTRICTIVE BUSINESS PRACTICESfor e
Page 56 and 57: Box 15. Manufacturer vs Manufacture
Page 58 and 59: Box 16: Tie-up Sales of Gas Stoves
Page 60 and 61: • directly or indirectly imposing
Page 62 and 63: Box 18: The Conduct of MTN of Charg
Page 64 and 65: Box 20: Predatory Practices in the
Page 66 and 67: Refusal to deal/supply is not expli
Page 68 and 69: A complaint file must include evide
Page 70 and 71: suppliers he tried said that they h
Page 72 and 73: information relating to the affairs
Page 74 and 75: A leniency policy describes the wri
Page 76 and 77: manufacturers regarding their respo
Page 78 and 79: (c) is able to appoint, or to veto
Page 80 and 81: 6.4 Control of MergersThe control o
Page 82 and 83: it may, within 30 days of the date
Page 84 and 85: The initial information filing typi
Page 86 and 87: Box 27: South African Pharma Merger
Page 88 and 89: The reasons for this recognition ma
Page 90 and 91: Box 30: The Graphite Electrodes Car
Page 92 and 93: Boeing convinced the EC to declare
Page 94 and 95: In India, for instance, in 1994, Hi
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7.5 Dealing with Cross-border Issue
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In this regard, it is important to
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The following sections will set out
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Box 34: Microsoft’s Abuse of Domi
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through payment of remuneration. Co
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Box 36: Importation and Retailing o
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Table 1: Different Stages of Instit
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power in a fully integrated competi
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investigate managers and employees
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COMPETITION VS INTELLECTUAL PROPERT
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Namibian Consumer’s Association (
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In addition to the above-mentioned,
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staff while gaining practical exper
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To conclude, the Competition Act is
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ENDNOTES1 Available at www.cuts-int
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50 Mehta, Pradeep S., Competition a
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Enforcing the Competition Law in Na
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