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Gauteng PPE supplier, accused of excessive pricing of face masks, agrees to donate essential goods to charity
and contribute to Solidarity Fund
A Gauteng-based online supplier of personal protective clothing and safety equipment has agreed to donate essential goods to a charity and contribute to the Solidarity Fund, after the Competition Commission (“the Commission”) accused it of allegedly charging excessive prices for FFP1 and FFP2 face masks in February and March 2020.
The donation and contribution form part of the terms of a consent agreement concluded between Mine Africa Safety Solutions (Pty) Ltd (“Mine Africa Safety Solutions”) and the Commission. The Tribunal has confirmed the consent agreement as an order.
Mine Africa Safety Solutions does not admit that its conduct constitutes excessive pricing. However, it has agreed to resolve the matter with the Commission on the terms set out in the consent agreement. Among others, it agrees to:
- immediately stop the excessive pricing conduct as described in the consent agreement;
- reduce its gross profit margin on face masks to an agreed maximum percentage with immediate effect and for the duration of the state of national disaster;
- donate essential goods (totalling a cost price value of R116 672.02) to Empilweni, New Life Community Project which is a non-profit organisation based in Tembisa; and
- donate R116 672.02 to the Solidarity Fund.
Background
In March 2020, the Commission received information relating to alleged inflated prices being charged by Mine Africa Safety Solutions for FFP1 and FFP2 face masks.
Masks fall under the category of “medical and hygiene supplies”, deemed essential in the combatting of Covid during the period of national disaster, in the Consumer Protection Regulations (“the Regulations”). The purpose of the Regulations is to, among others, protect consumers and customers from “unconscionable, unfair, unreasonable, unjust or improper commercial practices during the state of national disaster”.
The Commission investigated the allegations and found, among others, that Mine Africa Safety Solutions did not sell FFP1 and FFP2 masks to retailers and end-users before February 2020. It started selling the masks to retailers during March 2020 and to end-users during February 2020. In addition, the Commission found that since the outbreak of Covid-19, the firm significantly increased prices of the face masks in respect of sales to end users and retailers.
The Commission concluded that Mine Africa Safety Solutions’ gross profit margins did not appear to correspond with the increase in cost; was unreasonably high; and was significantly higher than the industry benchmark previously relied on by the Commission. The Commission found that this constituted a contravention of section (8)(1)(a) of the Competition Act read together with Regulation 4 of the Regulations.
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