COVID-19: EXCESSIVE PRICING – SOUTH AFRICAN COMPETITION COMMISSION CONTINUES TO PURSUE CONTRAVENING FIRMS, SOUTH AFRICA

Monday, May 25, 2020
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As discussed in our  recent newsflash (accessible here), as at mid-May 2020, the South African Competition Commission (Commission) had concluded settlement agreements with seven firms and had referred three others to the Competition Tribunal (Tribunal) for alleged excessive pricing. The Commission has continued to pursue contravening firms since then:

  • Sicuro and Hennox

Following the Commission’s referral of sister-companies Sicuro and Hennox to the Tribunal for allegedly charging excessive prices for FFP1 face masks, Sicuro and Hennox reached a settlement with the Commission. In terms of the settlement agreement, both companies admitted to excessive pricing and agreed to pay an administrative penalty of ZAR 1.5 million and to contribute ZAR 200 000 towards the COVID-19 Solidarity Fund.  The companies also agreed to reduce their gross profit margins on FFP1 face masks and to reduce their margins on similar face masks to a mutually agreed maximum.  The consent agreement was made an order of the Tribunal on 22 May 2020.  

  • Domoney Brothers   

The Tribunal confirmed as an order, a consent agreement between the Commission and Domoney Bothers, in terms of which the latter undertook to pay an amount of ZAR 30 040 to the COVID-19 Solidarity Fund and to donate face shields worth ZAR 30 040 to three public interest organisations. Domoney Brothers also agreed to desist from excessive pricing and to reduce its mark-up on dust masks to an agreed maximum, for the duration of the national disaster.

  • Sanua CC t/a Naturally Yours Weleda Pharmacies

The Commission concluded a consent agreement with Naturally Yours Welda Pharmacies in terms of which the latter undertook, inter alia, to donate ZAR 18 750 to the COVID-19 Solidarity Fund and to reduce its gross profit margin on the sale of hand sanitisers to an agreed maximum for the duration of the national disaster.

  • Seaside Pharmacy and Merlot Pharmacy

Consent agreements were concluded between the Commission and two related pharmacies, namely Seaside Pharmacy and Merlot Pharmacy. In terms of the consent agreements, which the Tribunal has made on order, the pharmacies will, inter alia, make donations to the COVID-19 Solidarity Fund to the cumulative value of ZAR 21 000.      

  • Babelegi and Dischem

The Babelegi and Dischem contested excessive pricing cases were heard by the Tribunal more than three weeks ago.  The Tribunal is yet to issue its decisions in these matters.

Commission’s briefing to the Portfolio Committee of Trade and Industry

Last week, the Commission briefed the Portfolio Committee of Trade and Industry (Portfolio Committee) on the Commission’s contribution to Government’s response to COVID-19.  Since the lockdown, the Commission has received 1 354 complaints and tip-offs, the majority of which were related to excessively priced basic food items, face masks and hand santisers.

The Commission confirmed that the monetary value of settlements concluded to date was ZAR 12 854 694, comprising administrative penalties totaling ZAR 7.5 million, donations to the COVID-19 Solidarity Fund of ZAR 5.3 million, and contributions of ZAR 58 162 to public interest organizations.

The Commission noted that a further 35 cases are in various stages of settlement. The Commission is encouraging firms to reach settlement agreements in order to speed up the processing of these matters.

The National Consumer Commission addressed the Portfolio Committee during the same briefing. It appears that in circumstances where the Commission has settled excessing pricing complaints against respondent firms, the National Consumer Commission is not prosecuting these firms separately in respect of the same conduct.