Competition Commission probe finds Dis-Chem inflated face mask prices
A Competition Commission probe has found that pharmaceutical giant Dis-Chem charged excessive prices on essential goods, with costs on some products skyrocketing by up to 200%.
The finding has seen the commission referring the case to the Competition Tribunal for prosecution for excessive pricing during the State of National Disaster as declared by President Cyril Ramaphosa.
The commission said the excessive prices of essential hygienic goods have been to the detriment of customers and in contravention of Section 8(1)(a) of the Competition Act.
In a statement, the commission indicated that "the essential items are surgical face masks blue 50PC, surgical face masks 5PC and surgical face masks folio dress blue".
"For surgical face mask blue 50PC, the average price was inflated from R43.47 (excl VAT) per unit (50 masks) in February 2020 to R156.95 (excl VAT) per unit (50 masks) in March 2020, a price increase of 261%," stated the commission's statement.
"The surgical face masks 5PC, the average price increased from R13.27 (excl VAT) per unit (5 masks) in February 2020 to R19.03 (excl VAT) per unit (5 masks) in March 2020, a price increase of 43%."
Trade and industry minister Ebrahim Patel announced last month that government would be cracking the whip over price manipulation and unfair increases in the cost of basic goods and anti-competitive behaviour, with the National Consumer Commission (NCC) and the Competition Commission tasked to look into unfair pricing of essential items.
The commission stated that it had from at least March 28, 2020 received several complaints from the public against several retail stores owned by Dis-Chem for engaging in excessive pricing of face masks, specifically dusk and surgical masks.
"Subsequently, the commission established that, prior to the declaration of a National State of Disaster, Dis-Chem was selling the three types of masks, namely, surgical face masks blue 50PC, surgical face masks 5PC and surgical face masks foliodress blue at far lower prices," the commission stated.
The investigation found that Dis-Chem’s input costs with regards to the other surgical face masks known as foliodress blue did not increase but their gross profit margins inflated from 20% in February 2020 to 45% in March 2020.
“People who sell these essential products ought to appreciate that these are literally life-saving items right now. They shouldn’t be exploitative and take advantage of cash-strapped consumers during the worst time in our history. We will spare no effort in protecting the consumer,” said the Competition Commission's head Tembinkosi Bonakele.
The commission has indicated that it has already asked the Competition Tribunal to impose a maximum penalty against Dis-Chem.
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