SAPS FACE MASK SUPPLIER FOUND GUILTY OF EXCESSIVE PRICING, FINED R3.4 MILLION BY COMPETITION TRIBUNAL
The Competition Tribunal (“the Tribunal”) has found that Tsutsumani Business Enterprises CC (“Tsutsumani”) charged the South African Police Service (“SAPS”) excessive prices for the urgent supply of 500 000 face masks during the COVID-19 pandemic, in April 2020 – and has ordered the supplier to pay a R3.4 million administrative penalty.
In its order, the Tribunal has found that Tsutsumani contravened section 8(1)(a) of the Competition Act (“the Act”) read with Regulation 4 of the Consumer and Customer Protection and National Disaster Management Regulations and Directions in Government (“the Consumer Protection Regulations”), during the period 5 April 2020 to 29 April 2020.
In addition, the Tribunal has ordered that Tsutsumani must pay the administrative penalty totalling R3 441 689.10 (three million four hundred and forty-one thousand six hundred and eighty-nine Rands and ten cents) within 30 business days.
Tribunal’s determinations
The Tribunal has concluded that Tsutsumani enjoyed market power during the complaint period and was dominant in the market for the emergency procurement of masks by SAPS from suppliers registered on National Treasury’s Central Supplier Database who were able to satisfy the requirements of SAPS’ Request For Quotations (“RFQ’s”), to supply the masks within a very short time period. Tsutsumani accordingly acted in contravention of section 8(1)(a) of the Act, read with Regulation 4 of Consumer Protection Regulations as alleged by the Competition Commission (“the Commission”) in its complaint referral.
The Tribunal’s reasons will be publicly available in due course.
A case of firsts
This case is the first excessive pricing case referred to the Tribunal by the Commission in the context of a tender process during the pandemic.
It is also the first case that falls to be determined under the Consumer Protection Regulations, read with section 8(1)(a) of the Act. This is because while the Tribunal and the Competition Appeal Court previously considered excessive pricing in the context of a national disaster in the Babelegi decisions, the Consumer Protection Regulations were not yet in force at the time of Babelegi’s conduct.
Background
Tsutsumani was accused by the Commission of charging the SAPS excessive prices for the urgent supply of 500 000 3-ply surgical face masks during April 2020. Tsutsumani was responding to a RFQ issued by the SAPS, for the urgent procurement of personal protective equipment (“PPEs”) from various suppliers. This was necessitated by the COVID-19 pandemic and the National State of Disaster which required all SAPS staff to wear masks. SAPS required nine million masks per month for use by its staff in the frontline of combating the coronavirus during the lockdown.
Tsutsumani denied the excessive pricing allegations.
Issued by:
Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib
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