By Thato Mahlangu

Pharmaceutical retailer Dis-Chem has been found guilty by the Competition Tribunal for opportunistically hiking prices for some of its products.

The tribunal asked Dis-Chem to pay R1.2-million in administrative penalties for having increased prices of face masks which have been classified as essential products during the outbreak of the Covid-19 pandemic.

But the retailer has been reported saying it will approach the Competition Appeals Court in a bid to have the tribunal’s decision overturned.

Eyewitness News (EWN) reported on Tuesday that Dis-Chem has maintained that it is not guilty throughout the Competition Commission’s (Commission) investigation.

“The retailer said the Competition Tribunal failed to take into consideration the challenge it faced to find supply because of the unprecedented global scale of the disaster and the rapid rise in demand for masks,” EWN reported.

What the commission’s investigation found

In a press statement, the commission said its investigation proved that Dis-Chem had contravened Section 8(1)(a) of the Competition Act read together with Regulation 4 of the Consumer Protection Regulations, which doesn’t allow for a dominant firm to charge an excessive price to the detriment of consumers or customers.

Several complaints which were registered with the commission prompted an investigation to establish if indeed the retailer had excessively increased prices of masks prior to the declaration of a national state of disaster.

“It was discovered that Dis-Chem had increased the prices of masks, namely surgical face masks blue 50PC, surgical face masks 5PC and surgical face masks folio dress blue which they had sold at far lower prices prior to the declaration by President Cyril Ramaphosa,” said the commission.

The commission explained that prices for surgical blue 50PC masks were inflated from R43.47 per unit (excl VAT) in February 2020 to R156.95 per unit in March, a price increase of 261%. The price of 5PC masks in February 2020 rose from R13.27 (excl VAT) per unit (five masks) to R19.03 in March, a price increase of 43%. Folio dress blue masks prices increased by 25%.

Judgment welcomed by the commission

Commissioner Tembinkosi Bonakele said the commission welcomes the judgment.

“This judgment reaffirms our work as the commission on price gouging. It sends a strong message that the commission will spare no efforts to protect the South African consumers against abusive pricing behaviour by firms whether small or large.”

In a previous article, we published an article where we made an error and said Dis-Chem had been found guilty for price-fixing when in fact the case was still in progress. Dis-Chem asked us to remove the information at the time.

Corruption Watch’s head of Legal and Investigations Karam Singh said the organisation welcomes the judgment.

“We applaud that we have competition legal framework in place that can make these findings. It is concerning that private sector actors such as Dis-Chem would take advantage of the public health pandemic in its short-term interest for profit maximization. This is yet another form of corruption that plagues South African society. And for which the private sector must be held accountable. In this, we applaud the tribunal for its finding in this important matter,” Singh said.

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