Competition Commission waves big stick over price markups

Face masks, hand sanitisers and other products are in demand now, but South African consumers have been assured prices will not skyrocket.
Face masks, hand sanitisers and other products are in demand now, but South African consumers have been assured prices will not skyrocket.

Companies and suppliers that inflate prices amid the rush for hand sanitisers, toilet paper, gloves and other products during the Covid-19 crisis risk being “shopped” by retailers and prosecuted.

The Competition Commission said on Friday it “has noted several complaints from the public about rising prices for essential products, in particular some food, health care and hygiene products”.

There are also concerns about suppliers inflating prices as government, retailers and private health care companies embark on emergency procurement of products related to  curbing and managing the spread of Covid-19, it said.

A dedicated team has been established to respond and investigate complaints, and to fast-track these through referral and prosecution before the Competition Tribunal.

The government and the commission have also made contact with SA's major retailers and pharmacy CEOs to address concerns around price increases.

“All the retailers are supportive of government and regulators’ efforts to protect consumers at this critical time. We have agreed that in the event of any unusual increases of prices by suppliers, the retailers will bring these to the attention of the regulators,” said the commission.

“The cases will be screened and referred to the relevant regulator for swift action. During this period of the state of national disaster, the commission will specifically prioritise such complaints to ensure firms exploiting consumers are quickly prosecuted and penalised.”

The Competition Act prohibits various acts of excessive pricing and collusive behaviour by suppliers and retailers artificially inflating prices and exploiting consumers. The penalties for such offences are severe, including a fine of 10% of the firm’s annual turnover for a first time offence and 25% of annual turnover for a repeat offence.

For collusive behaviour, the directors of companies that engage in such acts face potential imprisonment for a period of up to 10 years.

On Thursday, trade and industry minister Ebrahim Patel gazetted regulations in terms of the Competition Act and Disaster Management Act that aim to strengthen the ability of the commission and the National Consumer Commission to respond to incidences of exploitive pricing.

Patel told a news conference that the new regulations were to ensure there were no unjustified price hikes or stockpiling of goods. “We are doing this to protect consumers and to ensure fairness and promote social solidarity in this period,” he said.

In Friday's statement, the Competition Commission said the new regulations empower it “to prosecute cases where prices have increased materially without any cost justifications for the increase”.

Patel also addressed the issue of stock-outs, gazetting regulations that enable the private health care system “to co-operate on ensuring there is adequate capacity and stocks at health care facilities throughout the country to respond to the Covid-19 national disaster”.

The commission said: “This will assist in ensuring  the private and public health care system can provide the necessary care to citizens without fear of falling foul of the Competition Act. However, these regulations are limited to ensuring an adequate supply of health care to citizens and do not give the private health care industry the right to co-operate on pricing to the public.”

Consumers can contact this toll-free number: 0800 014 880.

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