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Date of release: 20 August 2020
SUPPLIER OF MEDICAL PRODUCTS PAYS R50K FINE FOR ALLEGED EXCESSIVE PRICING DURING COVID-19 PANDEMIC
 
A South African wholesale distributor of various medical products, Levtrade International (Pty) Ltd (Levtrade), has agreed to pay a fine of R50 000 (fifty thousand Rand) for allegedly charging excessive prices for N95 face masks during February and March 2020.
 
Facial masks fall under the protected category of essential “medical and hygiene supplies” in the Consumer Protection Regulations (the Regulations).
 
The Competition Commission (the Commission) concluded the settlement agreement with the firm after having received and investigated numerous complaints from the public as well as having referred the matter.
 
Although Levtrade disputes the Commission’s findings, it has entered into an agreement in order to avoid protracted litigation.
 
The fine, along with separate contributions to the Solidarity Fund and a children’s home, forms part of the settlement agreement between the Commission and Levtrade.
 
The agreement has been confirmed as an order of the Tribunal.
 
Settlement terms
 
Levtrade has agreed to, among others:
 
  • pay the administrative penalty (the fine) of R50 000;
  • contribute an amount of R10 000 (ten thousand Rand) to the Solidarity Fund, which is mandated to support South Africa’s national health response, contribute to humanitarian relief efforts and mobilise South Africans in the fight against Covid-19;
  • donate essential goods, including surgical face masks and hand sanitisers, valued at R25 000 (twenty five thousand Rand) to the Johannesburg Children’s Home;
  • reduce its gross profit margin on its N95 face masks to an agreed maximum percentage for the duration of the state of disaster; and
  • develop and implement a competition law compliance programme.
 
The Commission’s investigation
 
The Commission’s investigation found that:
 
  • Levtrade sequentially and significantly increased its prices for N95 (FFP2) respiratory masks. The first significant price increase was during the period 19 to 27 February 2020. From 28 February to 05 March 2020, Levtrade again significantly increased the price of a box containing 20 N95 (FFP2) respiratory masks;
  • Levtrade’s mark-ups during the period increased materially without any corresponding increase in costs, in contravention of section 8(1)(a) of the Competition Act i.e. excessive pricing, read together with Regulation 4 of the Regulations;
  • As a result of the alleged conduct, Levtrade received an overcharge profit of approximately R37 493 (thirty-seven thousand, four hundred and ninety-three rand).
Background
 
From around March 2020 the Commission received numerous complaints relating to excessive prices being charged for face masks.
 
The Commission’s investigation revealed that Levtrade’s significant price increases on the face masks did not have a corresponding cost justification. On 22 July 2020, the Commission referred a complaint against Levtrade. The above settlement concluded that referral.
 
Levtrade conducts business in, inter alia, wholesale distribution of an all-purpose range of medical products (including N95 face masks) that are distributed to various industries in South Africa including medical and sport professionals, pharmacies, retail, RSA military, hospitals and emergency services.
 
Levtrade largely distributes its products to retail stores and pharmacies.
 
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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