THE COMPETITION TRIBUNAL CONFIRMS FIRST CONSENT ORDER IN EXCESSIVE PRICING COMPLAINT REFERRAL

On 20 April 2020 the Competition Tribunal (“the Tribunal”) heard an application in respect of a complaint referral brought against a Boksburg pharmacy for alleged excessive pricing of face masks.  Following the application being heard in chambers, the Tribunal confirmed the Consent Agreement between the Competition Commission (“the Commission”) and the Boksburg pharmacy on the same day.

On 20 March 2020, the Competition Commission received complaints that the Boksburg pharmacy had inflated the prices of face masks (which fall under the category of “medical and hygiene supplies” in the essential goods required for the prevention and minimisation of the COVID-19 pandemic).  The complaint referral on excessive pricing emanated from the Lockdown Regulations, published on 18 March 2020 and the Consumer Protection Regulations, published on 19 March 2020 which provided the steps necessary to prevent an escalation of the disaster or to alleviate, contain and minimize the effects of the COVID-19 pandemic.

Following the Commission’s receipt of information, and upon conducting the investigation into the Boksburg pharmacy’s alleged conduct, Commission found that (1) the Boksburg pharmacy did not sell face masks prior to March 2020; (2) due to the sudden demand and panic-buying brought on by the State of National Disaster, the Boksburg pharmacy had to source facial masks from various suppliers; and (3) the Boksburg pharmacy’s average mark-up in respect of facial masks for March 2020 was approximately 150%. 

The Commission found that the increase in the average mark-up of approximately 150% in respect of facial masks for March 2020 by the Boksburg pharmacy is a contravention of section 8(1)(a) of the Competition Act, as amended (“the Act”), read together with Regulation 4 of the Consumer Protection Regulations.

The Boksburg pharmacy agreed to the following in respect of its future conduct:

  1. immediately desist from the excessive pricing conduct described above;
  2. donate the following essential goods amounting to a total value of R25 410,00, namely –
    • – 500 hand sanitisers (100ml each);
    • 320 items of 3 ply face masks; and
    • 7 boxes of gloves (1 box contains 100 gloves each);
  3. within 7 calendar days of confirmation of the Consent Agreement as an order of the Tribunal, donate the above-listed essential goods to two old age homes situated in Boksburg; and
  4. develop, implement and monitor a competition law compliance programme incorporating corporate governance designed to ensure that its employees, management, directors and agents do not engage in future contraventions of the Act.  In particular, such compliance programme must include a mechanism for the monitoring and detection of any contravention of the Act.

Nortons is currently advising a number of clients on excessive pricing cases. Should you require additional information, please contact Anthony Norton on 082 452 7336 or by email on anthony@nortonsinc.com; or Leago Mathabathe on 082 400 6805 or by email on leago@nortonsinc.com.