The Competition Authority (CA) has removed a barrier to entry in the machining/line boring services market putting a stop to the dominance that has all along been enjoyed by Barloworld Equipment Botswana and Komatsu Botswana.
Line boring services is a term used for enlarging a hole that has already been drilled or cast, using one or more cutting tools held within a boring head. It is a specialised small component of the larger process of servicing, repairing, replacing machines or equipment used in mines.
The CA intervened upon receipt of information that Komatsu and Barloworld were engaged in conduct of abuse of dominance therefore enjoyed monopoly of their space. The duo reportedly refused to register or list suppliers on their vendors list for the provision of machinery/line boring services, therefore limiting other anticipating entrants.
The authority’s CEO, Tebelelo Pule said an investigation was conducted to ascertain if Barloworld and Komatsu indeed might have abused their dominance. The CA’s probe engaged both respondents to establish their listing process and to establish if it was open for competition.
Pule said it was revealed that since its inception in the 1980s, Komatsu Botswana has never changed its contracted suppliers. Barloworld on the other hand revealed that one site manager who recommended to its headquarters in Gaborone, where an appointment was made, did the listing.
“It was established that Barloworld and Komatsu are the only two enterprises responsible for the supply of heavy equipment for the Botswana market and utilisation of line boring services,” she said.
Following the investigation, both parties were sensitised of the anti-competitive conduct and they acknowledged that their supplier appointment processes were flawed.
“Komatsu and Barloworld made a declaration through a submission
Komatsu has undertaken to amend its requirements in order to allow for more machinery/line boring suppliers and has also committed to developing a new policy of appointing potential contractors. This will allow for equal opportunity for potential new market entrants in the machining/line boring market.
Abuse of dominant position is prohibited under Section 30 (i) of the Competition Act which states that “any conduct on the part of one or more enterprises is subject to prohibition by the authority if following an investigation by the authority such conduct is determined to amount to an abuse of a dominant position in any market”.
According to the competition regulations, an enterprise is considered to be dominant if it supplies or acquires at least 25% percent of the goods or services in the market or three or fewer enterprises supply or acquire at least 50% of the goods or services in the market.
Barloworld Equipment constitutes an estimated 39% of the market while Komatsu Botswana constitutes 61% and therefore are considered dominant players in the local market.