COVID-19: EXCESSIVE PRICING – A TOTAL OF 23 CONSENT AGREEMENTS CONFIRMED BY THE SOUTH AFRICAN COMPETITION TRIBUNAL
The South African Competition Tribunal (Tribunal) has confirmed a further five consent agreements relating to COVID-19 excessive pricing as orders. The consent agreements represent settlements reached between the South African Competition Commission (Commission) and firms alleged to have engaged in COVID-19 unlawful pricing conduct.
This brings the total number of consent agreements confirmed by the Tribunal thus far to 23 (see our earlier newsflashes accessible here, here, here and here). The Tribunal’s orders represent full and final settlement of these matters.
- Vasilis Cleaning Supplies
In April 2020, the Commission received information regarding alleged excessive prices charged by Bloemfontein-based Vasilis, for various types of surgical gloves, surgical masks and dust masks. Following an investigation, the Commission concluded that Vasilis escalated its margin on these items significantly without any corresponding increases in cost.
Vasilis, without admitting a contravention of the Competition Act 89 of 1998, as amended, and the Consumer and Customer Protection and National Disaster Management Regulations and Directions 2020, concluded a settlement agreement with the Commission in terms of which Vasilis undertook, inter alia, to donate essential goods to the value of ZAR 243 148.70 to three community benefit organizations and a further ZAR 44 128.51 to the COVID-19 Solidarity Fund.
Vasilis also undertook to immediately desist from pricing excessively by reducing its gross profit margin on the relevant items to an agreed maximum for the duration of the national disaster.
The Commission found that Sanitech, a nationwide supplier of sanitation facilities, had charged excessive prices for its 5lt hand sanitisers during March and April 2020. Sanitech did not admit liability, but resolved to remedy the complaint by agreeing settlement terms with the Commission.
In terms of the consent agreement concluded, Sanitech undertook, inter alia, to donate ZAR 65 028 to the COVID-19 Solidarity Fund, immediately desist from excessive pricing conduct and reduce its gross profit margin on hand sanitisers to an agreed maximum percentage with immediate effect, and for the duration of the national disaster.
Following an investigation, the Commission – having regard to historic profit margins - concluded that Cape-based chemical firm Caprichem, charged excessive prices for its 5lt variant of hand sanitisers during the period of national disaster.
Without admitting liability and, ‘in order to avoid protracted litigation’, Caprichem concluded a settlement agreement with the Commission in terms of which it undertook, inter alia, to pay an administrative penalty of ZAR 500 000, and an additional ZAR 100 000 to the COVID-19 Solidarity Fund. Caprichem also undertook to limit its gross profit margin to an agreed maximum percentage for the duration of the national disaster.
- West Coast Hardware t/a Brights Hardware
Without admitting liability, Brights Hardware, which operates in the Western Cape, concluded a consent agreement with the Commission agreeing, inter alia, to donate ZAR 6 074.63 to the COVID-19 Solidarity Fund, and reduce its gross margin on FFP1 dust face masks to an agreed maximum percentage with immediate effect, for the duration of the national state of disaster.
The agreement follows an investigation by the Commission in which it found that Brights Hardware had allegedly charged excessive prices for FFP1 face masks during March 2020.
- Farpoint Trading t/a Mica Durban North
Following an investigation, the Commission – having regard to historic profit margins – found that the Mica’s franchise store in Durban North, had been charging excessive prices for hand sanitisers.
Without admitting liability, Mica Durban North concluded a settlement agreement with the Commission in terms of which it agreed, inter alia, to desist from excessive pricing conduct, reduce its mark-up on hand sanitisers to an agreed maximum percentage for the duration of the national disaster, and to donate 772 units of 50ml hand sanitisers, and
50 units of 5lt hand sanitisers, to a cumulative the value of ZAR 33 900 to four identified non-profit organisations.
Most recently, and following contested proceedings before the Tribunal, the Tribunal found Dischem guilty of charging excessive prices for surgical face masks and levied a penalty of ZAR 1.2 million against it.