Dis-Chem appeals excessive pricing conviction and R1.2m fine

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Dis-Chem is appealing its excessive-pricing conviction and its R1.2m fine by the Competition Tribunal, arguing that it does not have dominance in the face masks retail market and that it had to increase prices due to global shortages in February. Business Day reports that the tribunal, which acts as a court on competition matters, found the pharmaceutical retailer guilty of overcharging for masks in late February and early March. Some of the mask prices increased up to 261% with the maximum price charged for a pack of masks being R175.

The report says the Competition Commission had asked for a fine equalling 10% of turnover, which would have amounted to about R2.4bn as Dis-Chem’s annual turnover in 2019 was R24bn. Instead the fine equals 0.005% of yearly revenue.

The tribunal rejected the reasons given for hiking prices of old stock, with no input cost increase and called Dis-Chem’s conduct “utterly unreasonable and reprehensible”. Dis-Chem was found guilty under section 8 of the Competition Act that requires a firm must be found to be dominant, meaning it can set prices independently of competitors’ prices.

The report says Dis-Chem argued its dominance was not proven in court.

 

The tribunal also confirmed three settlement agreements in relation to companies accused of charging excessive prices for hand sanitisers and face masks. TimesLIVE says the latest settlements bring to 23 the number of agreements that have been confirmed as orders of the Competition Tribunal since April.

In the latest case, Caprichem has agreed to pay a R500,000 fine after it was accused by the Competition Commission of charging excessive prices for hand sanitisers. In terms of its settlement with the commission, Caprichem also undertook to donate R100 000 to the Solidarity Fund. In addition, the manufacturer and supplier of chemicals in Cape Town agreed that its gross profit margin on five-litre hand sanitisers will not exceed an agreed to maximum percentage for the duration of the national State of Disaster. According to the settlement agreement, Caprichem is entering into the agreement “in order to avoid protracted litigation, and nothing in the agreement should be construed as an admission of liability.”

Another company, West Coast Hardware, agreed to donate R6,000 to the Solidarity Fund after the commission accused it of excessively pricing face masks. West Coast Hardware did not admit its conduct contravened the Competition Act.

Another agreement was reached between the commission and Farpoint Trading 31 CC, trading as Mica Durban North, for excessive pricing of hand sanitisers.

 

Full Business Day report

 

Full TimesLIVE report

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