Probe into bicycle price fixing

Johannesburg - The Competition Commission has referred its findings of price fixing against 28 bicycle wholesalers and retailers to the Tribunal for adjudication on June 25.

"The firms face the allegation that they colluded to set the wholesale and retail prices of cycles and accessories," the Commission said in a statement on Monday.

In addition, they allegedly excluded competitors from the market.

"Wholesalers sent retailers a price list with the wholesale price and the recommended retail price on a regular basis."

The recommended retail price included a mark-up of 35% for bicycles and 50% for accessories, the Commission alleged.

In turn, the ceiling on mark-ups also determined the profit that retailers could make on cycles and accessories.

"Bicycle retailers colluded to exclude competitors like internet retailers from the market," the Commission said.

The strategy used was to ask the wholesaler to sell to independent retailers at a higher price.

"This conduct is likely to harm competitors and consumers."

The Commission has asked the Tribunal to levy an administrative penalty of 10% on the annual turnover of each of the firms involved.

The firms facing these allegations include retailers Fritz Pienaar Cycles, Cycle Lab, Hotspot Cycles, Maverick Cycles, Dunkeld Cycles, Summit Cycles, Bester Cycles, Johnson Cycle Works, Salojee’s Cycles, West Rand Cycles, Bowman Cycles and Winners Cycles.

Wholesalers facing the allegations include Thule, The Just Fun Group, Omnico, Cytek Cycle Distributors, Cape Cycle Systems, Silverback Lab, Shimano, Emotion Cycling, International Agencies, J&J Cycling, Le Peleton, Ravx Design, RFA Distributors, Supersport Cycling, Maillot Juine Trading and Bicicletta.

"The Commission initiated this investigation in March 2009 following an anonymous tip-off, a complaint lodged by Yellow Saddle Cycling and admissions by some of the respondents during its investigation process."

During its investigation the commission had discovered that the respondents had met on various occasions in 2008 to discuss and agree on prices.

"The Commission is in possession of minutes of a meeting, which took place in September 2008 in Gauteng between various retailers and wholesalers in the industry."

At the meeting an agreement to increase retailers' prices and to fix prices, discounts and other trading conditions applied by wholesalers was concluded.

The meeting's minutes were posted on an online forum on the cycling website www.thehubsa.co.za.