PRICE collusion in the furniture removal sector is rife and endemic. Some of the seven firms being investigated by the Competition Commission were previously investigated and found to have acted in contravention of the Competition Act.
Commission spokesman Itumeleng Lesofe said on Friday the commission had concluded settlement agreements with 17 furniture removal firms and had referred complaints against 11 firms to the Competition Tribunal. "The commission has also raided firms in this sector twice. Currently, the commission is conducting an investigation against seven furniture removal firms," Mr Lesofe said.
Collusion in the sector took the form of cover pricing or cover quotes. "A cover quote is a quotation that is meant to disguise as a real quotation."
Mr Lesofe said three quotations from different furniture removal firms are required to relocate a client. When the client approaches a furniture removal firm for a quotation, the firm would volunteer to source other quotations on behalf of the client and would then approach other furniture removal firms and request them to provide quotations that are higher in price.
"The furniture removal firm that is first to be approached by the client would submit a quotation that is slightly lower than the other two to ensure that it wins the tender. This is the most egregious violation of the Competition Act," Mr Lesofe said.
Last Wednesday furniture removal company Key Moves CC reached a settlement agreement with the Competition Tribunal, the last of the agreements rising from the commission’s investigation of prohibited practices in the furniture removal sector ending 2013. It emerged during the first investigation that the prohibited practices involving the parties investigated had continued last year. This has prompted a second investigation.
Key Moves CC was accused of engaging in two instances of collusion in 2007 with a competitor, Afriworld 142. As well as a penalty of 4% of its annual turnover for 2014, the company agreed to cooperate with the commission in its investigations into furniture removal companies.
The commission investigated 69 furniture removal companies between 2010 and 2011 for collusion on tenders issued by various government departments and private sector clients.
The collusion appeared to have started in about 2007 and continued into last year, when the commission launched a new investigation. Some of the alleged culprits were previous offenders.
The commission has also raided companies in the sector twice and is conducting an investigation against seven furniture removal firms