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Supplier accused of charging WC Health Dept. excessive prices
for medical examination gloves during Covid-19
agrees to donate 49 400 face masks
A Cape Town medical equipment supplier, accused of charging the Western Cape Department of Health (“the Department”) excessive prices for medical examination gloves, has supplied the Department, at no charge, with 49 400 surgical masks to the same value (at cost) as the estimated “excessive profits” it generated.
This arrangement forms part of the terms of a consent agreement between the Competition Commission (“the Commission”) and Supra Healthcare Cape Town (Pty) Ltd (“Supra Healthcare”), which is accused of having charged the Department excessive prices for medical examination gloves around May-June 2020, during the Covid-19 pandemic.
Supra Healthcare does not admit that its conduct, as set out in the consent agreement, constitutes excessive pricing. However, in order to avoid protracted litigation and costs, the company has agreed to resolve the complaint on the terms set out in the consent agreement, which has been confirmed as an order of the Tribunal.
In terms of the consent agreement:
- Supra Healthcare will immediately desist from the conduct as described in the consent agreement; and
- It will develop, implement and monitor a competition law compliance programme incorporating corporate governance. This is designed to ensure that Supra Healthcare’s employees, management, directors and agents do not contravene the Competition Act (“the Act”) in future.
In addition, the company agreed with the Commission to provide the Department, at no charge, with 49 400 surgical masks, with a cost price value of R304 135 . The masks were delivered to the Department in December 2020, in light of the alarming increase in the number of Covid-19 cases in the Western Cape and the correlating increased need for personal protective equipment (“PPE”).
Background
In June 2020, the Commission received information relating to alleged inflated prices being charged by Supra Healthcare for medical examination gloves. The Department alleged that the prices being charged were higher than the regulatory pricing guideline provided by the National Treasury. Examination gloves fall under the category of medical and hygiene supplies in the Consumer Protection Regulations (“the Regulations”).
The Commission investigated Supra Healthcare and found the following:
- During the Covid-19 disaster, the Department attempted to procure PPE from various suppliers by way of an open invitation to quote;
- Supra Healthcare responded to the invitation on 15 May 2020 and the Department subsequently accepted the quote for 130 000 medium examination gloves and 130 000 large examination gloves; and
- The Commission’s analysis revealed that Supra Healthcare derived a mark-up and gross profit margin on the gloves at an “unreasonably high margin” compared to the benchmark applicable to the public procurement of PPE.
The Commission concluded that Supra Healthcare’s conduct amounts to excessive pricing in contravention of section 8(1)(a) of the Act read with regulation 4 of the Regulations. The excessive profit made by Supra Healthcare as a result of this conduct was calculated by the Commission as R304 135.
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