Dis-Chem has withdrawn its appeal at the Competition Appeal Court after being found guilty of excessive mask pricing. Business Day reports the Competition Commission said that it welcomes the withdrawal.
“I am pleased that Dis-Chem has made this decision,” said competition commissioner Tembinkosi Bonakele. “The price increases that occurred during the state of national disaster were regrettable. We believe that the tribunal made the right call by condemning the conduct.”
Dis-Chem will pay a R1.2m fine, though the commission had asked that it be fined 10% of annual turnover, which would have amounted to a penalty of more than R2bn.
Dis-Chem is quoted in Business Day as saying it withdrew the appeal due to the bad publicity it was receiving, in which it was being compared to the personal protective equipment (PPE) corruption scandal that has embroiled some politicians.
During the investigation, Skills Portal reports, the Commission found that Dis-Chem had increased its prices on essential hygienic goods such as surgical face masks blue (50PC), surgical face masks (5PC) and surgical face masks folio dress blue to excessive prices which violates Section 8(1)(a) of the Competition Act read together with Regulation 4 of the Consumer Protection Regulations.
From at least 28 March 2020, the Commission received several complaints from the public against several retail stores owned by Dis-Chem for engaging in excessive pricing of face masks.
The Commission’s investigation revealed that, prior to the declaration of a national state of disaster, Dis-Chem was selling the three types of masks, namely, surgical face masks blue 50PC, surgical face masks 5PC and surgical face masks folio dress blue at far lower prices.
For surgical face mask blue 50PC, the average price was inflated from R43.47 (excl. VAT) per unit (50 masks) in February 2020 to R156.95 (excl. VAT) per unit (50 masks) in March 2020, a price increase of 261%.
The surgical face masks 5PC, the average price increased from R13.27 (excl. VAT) per unit (5 masks) in February 2020 to R19.03 (excl. VAT) per mask (1 mask) in March 2020, a price increase of 43%.
Dis-Chem’s surgical face masks folio dress blue prices increased by 25% while costs declined by 0.1%.
[link url="https://www.businesslive.co.za/bd/companies/retail-and-consumer/dis-chem-withdraws-appeal-over-masks-due-to-reputational-fallout/"]Full Business Day report[/link]
[link url="https://www.skillsportal.co.za/content/dis-chem-withdraws-appeal-price-gouging-guilty-verdict"]Full Skills Portal report[/link]