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The Tribunal has confirmed four consent agreements relating to excessive pricing in the context of Covid-19. It has also approved one large merger transaction, without conditions.
The factors that the Tribunal considers in consent agreement matters include the level of cooperation by the firm in question with the competition authorities as well as how timely it has settled the complaint against it.
The Tribunal took these factors into account when considering the four consent agreements, as summarised below. Non-confidential copies of the agreements will be made available on the Tribunal’s website in due course.
Tribunal confirms consent agreement between Commission and Food Lover’s Market re- raw ginger excessive pricing during Covid-19
The Tribunal has confirmed a consent agreement between the Competition Commission (the Commission) and Food Lover’s Holdings (Pty) Ltd, after the Commission found that Food Lover’s Market in Westgate, in May 2020, charged excessive prices for raw ginger – a basic food viewed as essential in terms of the Consumer Protection Regulations (the Regulations).
In terms of the consent agreement between the Commission and Food Lover's Market, the company has agreed to, among others:
- immediately stop the excessive pricing conduct as described in the agreement;
- immediately reduce the Food Lover’s Market (Westgate) gross profit margin on raw ginger to an agreed maximum percentage for the duration of the state of national disaster;
- donate essential goods worth R18 579 (at cost price) to the Mohlakeng Old Age Home in Randfontein. This amount is based on, among others, the additional income derived by Food Lovers Market as a result of the significant increase in margins on raw ginger in May 2020; and
- develop and implement a competition law compliance programme.
Background
Around 14 May 2020, the Commission received information relating to alleged excessive prices being charged per kilogram of raw ginger at the Food Lover’s Market Hillfox and Westgate branches.
The Commission found, and Food Lover’s Market admits, that the average mark-up and gross profit margins for raw ginger, in May 2020 by Food Lover’s Market (in Westgate), were unreasonably high for an essential product during the state of national disaster when compared to the mark-up and gross profit margin in the preceding period - and may amount to a contravention of section 8(1)(a) of the Competition Act (the Act) read together with Regulation 4 of the Regulations.
The Commission also found that there was no cost increase to justify the higher margin.
Boksburg company agrees to donate to Solidarity Fund after Commission accuses it of excessively pricing dust face masks
The Tribunal has approved a consent agreement between the Commission and a Boksburg company accused of charging excessive prices for FFP1 dust face masks during the period March-May 2020.
The Commission investigated Steelmate (Pty) Ltd and concluded that the company’s average gross profit margin during March, April and May 2020 (for FFP1 dust face masks) is a contravention of the Act read together with the Regulations.
Although Steelmate does not admit that its conduct constitutes excessive pricing, it has agreed to settle the matter by committing to, among others:
- donate R5 662 to the Solidarity Fund;
- reduce its gross profit margin on the sale of dust face masks to an agreed maximum percentage for the duration of the state of national disaster; and
- develop and implement a competition law compliance programme.
KZN pharmacy to donate R20 000 worth of hand sanitisers to a child support charity after admitting to charging excessive prices for face masks and hand sanitisers
The Tribunal has confirmed a consent agreement between the Commission and Umhlanga Medisport Pharmacy (Medisport), in terms of which the pharmacy will donate hand sanitisers worth R20 000 to a child support charity in the area.
The Commission found that Medisport’s mark-ups on face masks and hand sanitisers for March and April 2020 are unreasonable and therefore a contravention of the Act read together with the Regulations.
The pharmacy has also admitted that it has “engaged in conduct which could be seen as unreasonable pricing of face masks and hand sanitisers … which conduct amounts to a contravention of section 8(1)(a) of the Act.”
In terms of the consent agreement, Medisport also agrees to, among others, immediately stop the excessive pricing conduct described in the agreement; reduce its mark-ups on all face masks and hand sanitisers for the duration of the state of national disaster; and develop and implement a competition law compliance programme.
Stellenbosch pharmacy, accused of face mask excessive pricing, to donate “overcharge amount” to Solidarity Fund
The Tribunal has confirmed a consent agreement between the Commission and a Stellenbosch pharmacy accused of charging excessive prices for face masks during April 2020.
Stelkor Pharmacy (Stelkor) is a community pharmacy and operates as a franchise of The Local Choice (Pty) Ltd. The Commission investigated Stelkor after receiving information relating to inflated prices it had allegedly been charging customers in respect of 3-ply tie back surgical face masks in April 2020.
The Commission concluded that its mark-up on these face masks during April 2020 is a contravention of section 8(1)(a) of the Act read together with Regulation 4 of the Regulations.
In terms of the consent agreement, Stelkor agrees to pay R12 500 to the Solidarity Fund.
Stelkor also agrees to immediately stop the excessive pricing conduct as described in the consent agreement – as well as to reduce its mark-up on face masks to an agreed maximum percentage for the duration of the state of national disaster.
Tribunal approves merger in the market for the development and sale of residential properties
The Tribunal has approved, without conditions, the proposed transaction whereby Investec Bank Ltd (Investec Bank) intends to acquire Omwieco (Pty) Ltd (Omwieco). Post-merger Investec will have sole control of Omwieco.
Investec Bank is a wholly owned subsidiary of Investec Ltd, which is listed on the JSE and is not controlled by any single shareholder. It focuses on investment banking, treasury and specialised finance, private client activities and asset management.
Omwieco does not control any firm. Omwieco is a property development company engaged in the development of freehold and sectional title unit residential properties in the Somerset Lakes Lifestyle Estate in Somerset Lakes, Somerset West in the Western Cape.
The Commission, which assesses large mergers before referring them to the Tribunal for a decision, concluded that the merger is unlikely to result in a substantial prevention or lessening of competition in the market for the development and sale of residential property. In addition, the transaction does not raise any public interest concerns. The Tribunal concurs with the Commission’s finding that the proposed transaction does not raise competition or public interest concerns.
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