12 dawn raids cost Competition Commission R57m in payments to service providers

Minister of Economic Development Ebrahim Patel. Picture: Leon Sadiki
Minister of Economic Development Ebrahim Patel. Picture: Leon Sadiki

The 12 dawn raids that the Competition Commission has executed with the help of specialised service providers since April 2015 have cost it R57m, according to a reply to a Parliamentary question. 

Economic Development Minister Ebrahim Patel, responding to a question from DA MP Michael Cardo on the details about dawn raids conducted over the past three years, explained that such raids were search actions at the premises of persons who may have information relating to an investigation.

The Competition Commission, as well as the Competition Tribunal and the Competition Appeal Court are functionally-independent institutions that are administratively accountable to the Department of Economic Development.

Patel explained the searches were vital to the work of the commission which seeks to stop cartel activities, price fixing and tender rigging. The commission relies on service providers to gather evidence, a highly specialised activity, said Patel. The results of these search actions are subject to challenge and scrutiny by courts.

According to the minister's submission the 12 search actions - conducted between April 2015 and November 2017 - for investigations which involve furniture removals companies, glass-fitting companies and the fresh produce market have in total cost R57.77m.

"Of the 12 enter and search actions that have been undertaken since 1 April 2015, three have been referred to the [Competition] Tribunal for prosecution," he said. "Nine of the 12 are still under investigation by the commission."

In the case dealing with furniture removals companies, 25 out of 30 respondents have settled with the commission for a total of R15m.

"Since 2008, enter and search actions have contributed to successful cartel investigations which have resulted in R463m in settlements and penalties imposed by the Competition Tribunal," Patel said. 

The most expensive search action - a raid on Automatic Sprinkler Inspection Bureau and its members, took place on August 3, 2017. It cost a total of R12.3m and made use of four services providers. 

The commission has used five forensic service providers since April 2015. These are Century Technical Solutions which participated in all 12 search actions, Exactech which participated in 11 searches, Matlama Consulting which participated in four search actions, eCybersystems which participated in three search actions and Itsamaya Consulting which participated in one.

Patel explained that Century Technical and Exactech are the preferred providers because of their expertise and that other service providers are building their capacity.

"I have been advised that the commission has been trying to increase the number of potential providers and has been bringing in other service providers to ensure that there is adequate expertise," he said.

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