A South African face mask distributor has been fined R11m for inflating prices. 

The Competition Commission announced that it has referred this to the Competition Tribunal for confirmation as an order after a consent agreement with a distributor of face masks and personal protection gear, among others, after the company inflated prices of essential hygienic items during the Covid-19 disaster.  

The commission's spokesperson Sipho Ngwema said in terms of the agreement reached with MATUS, a company with offices in Johannesburg, Cape Town and Durban, and satellite branches in Port Elizabeth and Mbombela, an administrative penalty of R5.9m will be paid after it admitted to the inflation of its gross profit margins with regards to essential hygienic products.

"The company will also contribute R5-million to the Solidarity Fund for Covid-19. Further, it will, with immediate effect, reduce its gross profit margin on dust masks to acceptable levels for the duration of the state of national disaster," Ngwema said. 

He said the company also undertook that "for the duration of the state of national disaster, to ensure that its gross profit margins for essential products will not be increased above what was applicable on 16 February 2020, for as long as such products remain as essential in terms of the consumer protection regulations or any subsequent amendment or replacement of these regulations".

The agreement follows an investigation conducted by the commission after it obtained information against MATUS in relation to the inflated prices of dust masks, namely the FFP1 and FFP2 masks, Ngwema said. 

"Subsequently, the commission found that MATUS unreasonably increased the prices of dust masks resulting in excessively inflated gross profit margins in contravention of the Competition Act and regulation 4 of the consumer protection regulations," he said. 

The company supplies and distributes personal protection equipment such as dust masks and hand sanitisers among others. 

Ngwema said the commission also  concluded numerous other consent settlements with small independent retailers and pharmacies with regards to Covid-19 cases emanating from contraventions of Competition Act and regulation 4 of the consumer protection regulations.

"The small companies, largely pharmacies and hardware stores, excessively inflated their prices of essential hygienic products like sanitisers and face dust masks who only sold in March 2020 with excessive mark-ups or gross profit margins. Most of these shops did not sell these products before March this year," Ngwema said

"These retailers, as part of the settlement, will reduce prices to appropriate levels and will contribute various amounts or essential hygienic items, based on the merits of each case, to charity organisations nominated or approved by the commission, including the Solidarity Fund for Covid-19. In some cases, some retailers have agreed to freeze price increases and/or run specials."