Competition Commission dismisses BEE consultancy’s complaint

Published by SEDA Business Brief Jan 2008.

THE COMPETITION Commission has decided not to refer a Black Economic Empowerment (BEE) consultancy’s complaint of a BEE association’s unfair market practices, to the Competition Tribunal.

Johannesburg-based EconoBEE took the Association of BEE Verification Agencies (Abva) to the Competition Commission in November last year, alleging that they are threatening to shut out other consultancies from issuing BEE ratings for business owners by insisting corporates only accept certificates from suppliers who are rated by Abva members.

Big companies assess the number of black businesses they have procured from by asking for each of their suppliers for a BEE rating.

Levenstein alleged Abva was instructing its member rating agencies to tell corporates not to accept ratings that were not performed by Abva-accredited rating agencies.

He says this was sidelining rating agencies not aligned with Abva, but most importantly he said it was costing small companies huge amounts as Abva was effectively disallowing ratings carried out by businesses themselves.

This is despite the Department of Trade and Industry (DTI) still not having accredited a single rating agency and having allowed businesses to carry out self-ratings.

The Competition Commission stated its reasons for non-referral as follows:

  • That currently, the DTI does not make the use of a verification agency mandatory but the decision whether to accept or reject scorecards produced by independent verification agencies or through self-rating or self assessment rests on the procurer of goods/services

  • Abva recommends that its verification agency members apply to SANAS for accreditation, and is not a prerequisite to use an ABVA member for verification purposes.

  • Abva has undertaken to raise awareness among its members regarding the concerns raised in the complaint to ensure that if the practice exists among its members, it is not condoned.

Levenstein said he believed the commission had received assurances from Abva that the association wouldn’t continue with this policy.

However Abvsa chairperson Theo Lombard told seda Business Brief that the association would continue with their current policy of notifying members to take out verified ratings over self-ratings. He said the association were doing this in reference to the draft document (above story) released by the DTI last year.

The document requires that all businesses other than those with turnovers of below R5 million which were classified as exempt micro-enterprises, will need a scorecard produced by a verification agencies if that scorecard is to be used by their customers in its procurement calculation.

Speaking to seda Business Brief, Keith Levenstein said he agreed with the commission’s decision and said the non-referral was not unexpected, as it followed the recent draft document published by the DTI.

He said the central reason he took the matter to the commission not in an attempt to bring Abva to court, but in the hope that the DTI would provide consultants and business owners assurances that businesses they could go ahead with self-ratings.

However he says while the commission provided clarity, namely that businesses could still pursue self-ratings, the DTI draft document being circulated among BEE consultancies could change all this.

Contact EconoBEE on 0861 11 3094.

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