Waste Company hired by Uganda has been fined sh 2.7 billions over Collusion

A waste services company EnviroServ Waste Management that was hired by Uganda to manage oil environmental issues has been fined millions  sh 2.7 billions by the Competition Tribunal in South Africa over collusion.

EnviroServ has a branch in Uganda doing environment management in the oil-laden Albertine Region of the western part of the country.

EnviroServ’s parent company is facing charges of abusing the environment back home in South Africa after residents complained of how their landfill at Shongwen in Durban emits a hazardous smell.

Four top guns of EnviroServ South Africa including, Dean Thompson, the Group’s Technical director, Esme Gombault, Dr Johan Schoonraaad and Clive Kidd have since been criminally charged over the allegedly stinking landfill.

EnviroServ’s license was subsequently– in April 2017– revoked by the environment department in Durban leading to the closure of the landfill site.

But Justice Ploos Van Amstel in mid this year rejected an application by environmental activists that sought to have the site permanently closed.

The judge said the site was to be managed by the ministry of environment in the meantime.

The R10.2m fine follows the tribunal finding that EnviroServ colluded with Wasteman Holdings, firms that competed with each other in performing waste transportation services, to set the downstream price in the market for waste transportation services.

The tribunal further found that the firms used Vissershok Waste Management Facility, their upstream landfill site joint venture, as a forum to reach agreement.

It found that Vissershok would charge third-party waste transportation companies about 43 percent more to receive their waste than they charged the joint venture partners, EnviroServ and Wasteman.

This meant that third-party waste transportation firms were placed at a significant disadvantage in respect of their competitors, EnviroServ and Wasteman.

The often-acrimonious relationship between EnviroServ and Wasteman partly led to Wasteman’s decision to approach the Competition Commission in November 2012 to seek leniency for its part in the collusion.

The commission referred the complaint to the tribunal in February last year, alleging that EnviroServ and Wasteman fixed prices for waste transportation services from 1998 until November 2013.

The commission also alleged that EnviroServ and Wasteman divided markets by allocating customers between 2005 and 2012, but this complaint was dismissed by the tribunal.

EnviroServ advanced various arguments for the existence of the downstream price, including that it was functional to the joint venture, because it incentivised the firms to compete downstream.

The tribunal disagreed, stating that at all times the decision to fix the downstream price was not the behaviour of firms in a vertical relationship but rather the conduct of two firms competing directly with each other.

The issue is, why hire a company that has criminal issues? Won’t it infect its affiliate with such issues?