At the height of the Covid-19 pandemic, two face mask suppliers allegedly colluded to exploit Takealot’s listing algorithm to maximise profits.
That’s what the Competition Commission alleges and it has referred the two competing companies – Medmart Health and BabyBug – to the Competition Tribunal on collusion allegations, asking it to impose the maximum penalty – 10% of annual turnover.
It is alleged that in or around December 2020, Medmart and BabyBug entered into an agreement “and/or engaged in concerted practice to fix prices and divide markets by allocating suppliers” – an offence in terms of the Act.
The commission said on Thursday competing companies place their products on Takealot which become visible to consumers based on an algorithm which takes variables such as price and stock availability into account.
“For example, 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.
“So, during a phone conversation in early December, the companies allegedly came up with a scheme to manipulate the algorithm to their benefit.
“It is alleged the two companies allocated days to each other on which each company would adjust its respective prices and stock availability accordingly, limiting competition between themselves.
“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.
“The prices ranged from R79 to R90 per pack of 50 three-ply face masks. Medmart was suspended from the platform by Takealot in June 2021 on suspicion of collusion and BabyBug for the same reason in early December 2022.
“This type of collusive conduct is harmful to consumers as it deprives them of the benefits which arise from competition,” the commission said.
“Such agreements are inimical to competition and the commission has asked the tribunal to impose a maximum penalty.”
TimesLIVE
Competition Commission unmasks alleged mask price collusion at the height of Covid-19
Two firms face maximum penalty of 10% of annual turnover
Image: 123RF/Oksana Smyshliaeva
At the height of the Covid-19 pandemic, two face mask suppliers allegedly colluded to exploit Takealot’s listing algorithm to maximise profits.
That’s what the Competition Commission alleges and it has referred the two competing companies – Medmart Health and BabyBug – to the Competition Tribunal on collusion allegations, asking it to impose the maximum penalty – 10% of annual turnover.
It is alleged that in or around December 2020, Medmart and BabyBug entered into an agreement “and/or engaged in concerted practice to fix prices and divide markets by allocating suppliers” – an offence in terms of the Act.
The commission said on Thursday competing companies place their products on Takealot which become visible to consumers based on an algorithm which takes variables such as price and stock availability into account.
“For example, 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.
“So, during a phone conversation in early December, the companies allegedly came up with a scheme to manipulate the algorithm to their benefit.
“It is alleged the two companies allocated days to each other on which each company would adjust its respective prices and stock availability accordingly, limiting competition between themselves.
“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.
“The prices ranged from R79 to R90 per pack of 50 three-ply face masks. Medmart was suspended from the platform by Takealot in June 2021 on suspicion of collusion and BabyBug for the same reason in early December 2022.
“This type of collusive conduct is harmful to consumers as it deprives them of the benefits which arise from competition,” the commission said.
“Such agreements are inimical to competition and the commission has asked the tribunal to impose a maximum penalty.”
TimesLIVE
SAPS hand sanitiser supplier referred to Competition Tribunal for excessive pricing
Hand sanitiser rip-off companies slapped with hefty fine
Food price increases ‘unjustified’, says Competition Commission
Rising fresh produce prices spark concern
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Trending
Related articles
Latest Videos