Dis-Chem fined R1.2m for overpricing masks

According to the Competition Tribunal, Dis-Chem increased their surgical masks prices three times in March with one of the increases on the same day South Africa recorded its first Covid-19 case.
According to the Competition Tribunal, Dis-Chem increased their surgical masks prices three times in March with one of the increases on the same day South Africa recorded its first Covid-19 case.
Image: Gallo Images/Charles Gallo

Dis-Chem has been ordered to pay a fine of R1,2m after being found guilty of charging excessive prices for face masks.

According to the Competition Tribunal, Dis-Chem increased their surgical masks prices three times in March with one of the increases on the same day South Africa recorded its first Covid-19 case.

“Fears of infection already started to influence consumer behaviour in January and February,” Competition Tribunal said.

“It is common knowledge that the Covid-19 outbreak has led to an increase in global demand for personal protective equipment (PPE) of which surgical masks constitute an essential component.  This increase in demand is reflected in the massive increases in Dis-Chem’s own sales volumes from January onward.”

Dis-Chem, according to the Tribunal, failed to prove that its prices increases were reasonable.The Competition Tribunal and the Competition Commission have been investigating and holding accountable companies accused of taking advantage of the novel coronavirus pandemic by excessively increasing their prices.

They have so far charged 25 companies for excessive pricing of goods essential goods such as face masks and sanitisers during the pandemic to a tune of R14m.

Caprichem, a Cape Town company, was recently charged R600,000 for excessive pricing of its five-litre hand sanitisers.

It was found that the excessive prices had increased Caprichem’s gross profit margin by a whooping 91% and its net profit margin by a staggering 1,918%.

In the case of Dis-Chem, the Tribunal found that its excessive increase in prices was at the detriment of consumers, especially the poor.

Material price increases of surgical masks, without corresponding costs justifications, in the context of Covid-19 for which there is no discernible cure and where health services are skewed towards the wealthy, would seriously impact vulnerable and poorer consumers even more.

“Poorer customers would have been excluded from accessing the masks by such exorbitant increases, other customers would have spent more on these items as a percentage of their disposable income,” the Tribunal said.  

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