Two companies that are selling personal protective equipment (PPE) on Takealot have been referred to the Competition Tribunal for prosecution on allegations of colluding to fix prices.
According to the Competition Commission, at the height of the Covid-19 pandemic Medmart Health (Pty) Ltd and BabyBug allegedly colluded to fix prices of face masks and divided the market by allocating customers in contravention of the Competition Act.
Medmart and BabyBug sell PPE products, including face masks on the online platform, Takealot. Competing companies place their products on the platform, and through an algorithm, that takes variables such as price and stock availability into account, are then visible to customers on the platform.
A supplier that has a cheaper product and available stock is likely to have its product more visible to customers who enter the Takealot platform than a supplier with a higher price and less stock.
The commission alleged that on December 3 2020 during a telephone conversation between representatives of BabyBug and Medmart, the two companies agreed to manipulate their respective prices in such a manner that they would be able to make a profit selling three-ply disposable face masks on the platform.
It also alleged that the two companies allocated days to each other on which each company would adjust its respective prices and stock availability accordingly. This would limit competition between themselves.
Companies suspended from Takealot platform
Medmart, BabyBug face music on claims of PPE price collusion
Two companies that are selling personal protective equipment (PPE) on Takealot have been referred to the Competition Tribunal for prosecution on allegations of colluding to fix prices.
According to the Competition Commission, at the height of the Covid-19 pandemic Medmart Health (Pty) Ltd and BabyBug allegedly colluded to fix prices of face masks and divided the market by allocating customers in contravention of the Competition Act.
Medmart and BabyBug sell PPE products, including face masks on the online platform, Takealot. Competing companies place their products on the platform, and through an algorithm, that takes variables such as price and stock availability into account, are then visible to customers on the platform.
A supplier that has a cheaper product and available stock is likely to have its product more visible to customers who enter the Takealot platform than a supplier with a higher price and less stock.
The commission alleged that on December 3 2020 during a telephone conversation between representatives of BabyBug and Medmart, the two companies agreed to manipulate their respective prices in such a manner that they would be able to make a profit selling three-ply disposable face masks on the platform.
It also alleged that the two companies allocated days to each other on which each company would adjust its respective prices and stock availability accordingly. This would limit competition between themselves.
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They also agreed to alternate the days each would price higher than the other. This meant BabyBug and Medmart would each have a day to charge a higher price followed by a day to charge a lower price. The switching would be at 5pm each day.
Medmart and BabyBug agreed to communicate from time to time regarding what would be the higher and lower prices. The prices ranged from R79 to R90 per pack of 50 three-ply face masks. Takealot suspended BabyBug from its platform on December 8 2022 and Medmart was suspended on 14 June 2021 on suspicion of collusion.
“This type of collusive conduct is harmful to consumers as it deprives them of the benefits which arise from competition. Such agreements are inherently inimical to competition and the Commission has asked the Tribunal to impose a maximum penalty,” said Competition Commission spokesperson Sipho Ngwema.
dlaminip@sowetan.co.za
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They also agreed to alternate the days each would price higher than the other. This meant BabyBug and Medmart would each have a day to charge a higher price followed by a day to charge a lower price. The switching would be at 5pm each day.
Medmart and BabyBug agreed to communicate from time to time regarding what would be the higher and lower prices. The prices ranged from R79 to R90 per pack of 50 three-ply face masks. Takealot suspended BabyBug from its platform on December 8 2022 and Medmart was suspended on 14 June 2021 on suspicion of collusion.
“This type of collusive conduct is harmful to consumers as it deprives them of the benefits which arise from competition. Such agreements are inherently inimical to competition and the Commission has asked the Tribunal to impose a maximum penalty,” said Competition Commission spokesperson Sipho Ngwema.
dlaminip@sowetan.co.za
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