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Date of release: 2 June 2020
TRIBUNAL APPROVES TWO CONSENT AGREEMENTS
RELATING TO COVID-19 EXCESSIVE PRICING MATTERS
 
 
Boksburg supplier of face masks admits to excessive pricing,
agrees to donate face masks worth R150K
 
The Competition Tribunal (the Tribunal) has confirmed, as an order, a consent agreement whereby TNT Basic Trading (TNT) admits that it significantly increased its mark-up and gross profit margin on FFP2 respiratory face masks from January 2020 to February 2020 in contravention of section 8(1)(a) of the Competition Act.
 
In terms of its agreement with the Competition Commission, the bulk supplier of personal protection and safety equipment products agrees to, among others:
 
  • immediately desist from the excessive pricing conduct; 
  • reduce its mark-up on FFP2 respiratory face masks to an agreed maximum percentage with immediate effect for the duration of the state of national disaster;
  • donate 182 boxes of 3-ply surgical face masks, valued at R150 150 (one hundred and fifty thousand one hundred and fifty Rand); and
  • develop, implement and monitor a competition law compliance programme.
 
TNT will donate the 182 boxes of face masks to the Tsakane Society for the Care of the Aged, the Elethu Daveyton Cheshire Home and the Bophelong Empilweni New Life Community Project in Tembisa.
 
The Commission’s investigation found that since the outbreak of Covid-19, TNT significantly increased prices of its FFP2 respiratory face masks. The Commission found that the increase in mark-up and increase in the gross profit margin by TNT from January to February 2020 is a contravention of section 8(1)(a) of the Competition Act. In assessing the reasonableness of the margins realized by TNT, the Commission said it had regard to its historic margins for the sale of masks.
 
The Commission further found that TNT has market power in the market for the supply of face masks in the Gauteng province, given the current pandemic and national state of disaster, and its ability to significantly escalate its mark-ups.
 
 
Krugersdorp hardware store denies excessive pricing claim but agrees to donate to Solidarity Fund, reduce its gross profit margin on facial masks
 
The Tribunal has also confirmed a consent agreement, as an order, whereby Auction and Salvage Net (Pty) Ltd – a Krugersdorp hardware store that supplies face masks – has agreed to donate R9 521.74 to the Solidarity Fund.
 
In the consent agreement, the Commission states that the gross profit margin earned by Auction and Salvage Net in respect of the sale of face masks during March 2020 is excessive and in contravention of section 8(1)(a) of the Competition Act, read together with Regulation 4 of the Consumer Protection Regulations.
 
Auction and Salvage Net, however, does not admit that the conduct set out above constitutes excessive pricing in terms of section 8(1)(a) of the Act, read with Regulation 4 of the Consumer Protection Regulations. It “nevertheless agrees to resolve the complaint on the terms set out below:”
 
Among others, Auction and Salvage Net agrees to:
 
  • donate R9 521.74 to the Solidarity Fund;
  • reduce its gross profit margin on face masks to an agreed maximum percentage with immediate effect for the duration of the state of national disaster; and
  • develop, implement and monitor a competition law compliance programme.
 
The Commission concluded the respective consent agreements with TNT and Auction and Salvage Net after receiving and investigating complaints from the public.
Issued by:

Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Tel: +27 (0) 12 394 1383
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib
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Our mailing address is:
ctsa@comptrib.co.za

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