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The Competition Commission, Tiger Brands Limited (Tiger) and Adcock Ingram Critical Care (AICC) today signed a consent agreement in which AICC admits its involvement in the cartel.

The consent agreement follows an investigation into a cartel operating in the market for the supply of intravenous medical products to public and private hospitals.

This matter was referred to the Competition Tribunal on 11 February 2008.

Settling the matter
Tiger Brands Limited, the parent company of AICC, subsequently approached the Commission with a view to settling the matter. This led to the consent agreement in terms of section 49D of the Competition Act.

AICC admits that it has contravened various sections of the Competition Act in that:

• AICC and its competitors were involved in collusive tendering in respect of Contract RT 299, the state tender for intravenous medical products; and
• AICC and Fresenius Kabi South Africa (Pty) Ltd (FKSA) divided the private hospital market by allocating customers and specific types of goods or services among themselves.

In terms of the consent agreement, Tiger Brands has agreed to implement compliance programmes in all its businesses to prevent further contraventions of the Competition Act.

The Commission will refer the consent agreement to the Competition Tribunal and request that it be confirmed as an order of the Tribunal. The Tribunal will conduct a public hearing before making its order.

Commissioner Shan Ramburuth said: “This is a good outcome. We would have achieved a similar result had we prosecuted the case, but that would have been costly. An agreement like this frees up our resources and enables us to pursue other cases.

However, Ramburuth warned that the Commission will continue to be vigilant in detecting and prosecuting bid rigging cases.

“Collusive tendering for public contracts raises costs to public institutions and limits the quantity and quality of the goods and services they provide. Ultimately the taxpayer is being cheated.”

Background
The Commission received information regarding collusive tendering and the division of the private hospital market by AICC, FKSA, Dismed and Thusanong in the South African healthcare market.

The Commission initiated an investigation and shortly thereafter FKSA confessed its involvement in collusive tendering and market allocation; and sought indemnity from prosecution in terms of the Commission’s Corporate Leniency Policy.

FKSA subsequently provided the Commission with detailed information about its role and the role of AICC, Thusanong and Dismed in the collusive tendering and market allocation and was granted conditional leniency after agreeing to assist the Commission in its investigations and in proceedings before the Tribunal.

The investigation established that at various stages during the period 1993 to 2007, AICC, FKSA, Dismed and Thusanong were involved in collusive tendering, holding discussions and meetings where they collaborated on their respective responses to the invitation to tender for Contract RT 299 and discussed and agreed on prices prior to the submission of their respective tenders. Furthermore, the parties agreed that whenever tenders were not awarded as agreed or arranged between them, the winning firms would cede portions of their business (i.e. the business which formed part of Contract RT 299) to one or other of the losing firm(s) in certain proportions.

The investigation also established that during the period 2001 to 2002 AICC and FKSA had divided the private hospital market by allocating customers and specific types of goods or services among themselves.

Source: Press statement from the Competition Commission.

 

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