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S.African mask firm accused of price fixing amid COVID-19 to go to trial

The Competition Commission appeals to patriotism to stop misuse of market power as it cracks down on a dominant firm accused of hiking the prices of masks in the advent of the COVID-19 crisis.

The commission is keeping its promise to fast track price hikes for essential products to ensure that firms exploiting consumers during the state of national disaster are quickly prosecuted and brought to book.

The commission today revealed it has referred its first case to the Competition Tribunal for prosecution.

The case was filed by complainants with the commission on March 24, 2020, before it was referred to the Competition Tribunal on April 9. 

The case, which involves Babelegi Workwear Overall Manufacturers & Industrial Supplies CC (Babelegi) for increasing its prices of facial masks, will appear before the Tribunal on April 24.

The commission investigated complaints and found that between January 31, 2020 and March 5, Babelegi gouged its prices of facial masks from R41 per box up to the highest price of R500 per box, earning mark-ups in excess of 500%.

It further found that Babelegi increased its prices for facial masks by at least 888% when comparing the prices charged between December 9, 2019 and March 5, 2020.

Mark ups (and not prices) were found to have significantly dropped after March 18, 2020, allegedly after the supplier increased input prices.

More firms to be charged for COVID-19 price hikes

Other matters that have been concluded, but are yet to be referred to the Tribunal include the following:

• An investigation of a hardware that allegedly increased the price of surgical gloves over a period of a week from R99.99 to R170, with no cost increase justifications.
• A pharmacy that earned more than 300% mark-up on face masks and hand sanitiser.
• A wholesaler of chicken that increased mark ups for chicken pieces by up to 50%, with nocost increase justifications.
• A supplier of face masks that earned over 665% mark-ups.

Tembinkosi Bonakele, commissioner of the Competition Commission said they have “now gone past moral suasion stages (persuasive processes)”, adding that we will see a wave of prosecution of firms in the next coming days.

Lockdown pricing regulation

On March 15, President Cyril Ramaphosa declared coronavirus outbreak a national disaster, along with a ban on international travels – just days before enforcing of a nationwide lockdown. 

The Competition Commission has since received a hundreds of complaints, majority of which relates to hand sanitizers and face masks, followed by toilet paper. 

Priority, however, is given towards cases involving national retailers and suppliers, as well as cases from complainants who are essential services professionals, such as doctors. 

In accordance with section 120 of the Consumer Protection Act, dominant firms are required to show that their prices are not unreasonable. If found to have contravened this prohibition, dominant firms face a fine of up to 10% of turnover, even for a first-time offence.

These restrictions regarding pricing apply to:

  • critical medical equipment, such as hand sanitisers and surgical gloves and masks, but are also applicable to private medical COVID-19 testing, prevention and treatment services; and
  • a wide range of basic consumer goods, such as cooking oil, rice, pasta, canned and frozen vegetables, meat, chicken, fish and bottled water. The complete list of prescribed goods and services is available here.

Tankiso Komane
Tankiso Komane
A Tshwane University of Technology journalism graduate, Tankiso Komane has a vast experience in print & broadcast media business and has worked for some of the country’s biggest daily newspapers, including The Sowetan, The Citizen, The Times, and The New Age. Through her varied work as a journalist, notably as a copywriter for SABC1 (On-Air promotions) and as a publicist for Onyx Communications, she has developed an in-depth understanding of the nature of the media business and how to use it for the purpose of exposure. Her expertise in journalism across various disciplines, coupled with a good reputation, has laid the foundation of a new kind "trust in Journalism" as the media ecosystem continues to digitally evolve.
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