Johannesburg - A complaint of price-fixing in the bicycle
industry was withdrawn because of technicalities, the Competition Commission
said on Monday.
"We are not withdrawing the case because we didn't
think there was a case," said spokesperson Oupa Bodibe.
However, a number of objections had been raised to the
manner in which the case was initiated and the way in which the investigation
was conducted, he said.
The commission has been accused of not following legitimate
procedures.
Bodibe said the commission felt the case could be challenged
on these technicalities.
Several Competition Tribunal judgments have also been made
in recent months which were critical of the commission's investigations.
"So, we decided to take the safer road and withdraw the
case rather than face the humiliation," he said.
The commission notified 28 cycle retailers and wholesalers
the day before the Cape Argus Pick n Pay Cycle Tour in March 2009 that it was
investigating them for alleged collusion and intent to adjust prices across the
industry.
In a statement on Friday, Cycle Lab said the complaint had
been withdrawn.
"Notification was sent in writing on Friday that the
Competition Commission has withdrawn its complaint referral dated June 25
2010... against all respondents in this matter in terms of... the rules for the
conduct of proceedings in the Competition Tribunal," it said.
Cycle Lab was one of the retailers against which the inquiry
was launched.
On Monday, Bodibe said the commission was "going back
to the drawing board".
It would reassess the evidence, the issues raised by the
retailers and whether any offending conduct took place less than three years
ago.
Once a decision had been made, the commission would make the
necessary announcement, he said.
Cycle Lab director and founder Andrew McLean said on Friday
that the withdrawal of the complaint did not come as a surprise.
"As far as Cycle Lab is concerned, there isn't and has
never been any attempt at collusion to fix prices in the South African cycle
industry," he said.
"Right from the beginning our attorneys examined this
complaint and said there was no case to pursue.
"It's just a pity it had to drag on so long and create
an atmosphere of negativity."
McLean estimated that it had cost the industry more than R3m
in legal fees "just to prove that there was no case in the first
place".
In a statement in 2010, the commission said the 28 were
accused of colluding to set the wholesale and retail prices of cycles and
accessories, and of excluding competitors from the market.
It alleged that the recommended retail price included a 35%
mark-up for bicycles and 50% for accessories.
The ceiling on mark-ups was also said to determine the
profit retailers could make on cycles and accessories.
"Bicycle retailers colluded to exclude competitors like
internet retailers from the market," the commission alleged.
It claimed the strategy used was to ask the wholesaler to
sell to independent retailers at a higher price, and said this conduct was
likely to harm competitors and consumers.
At the time, the commission asked the Competition Tribunal
to levy an administrative penalty of 10% on the annual turnover of each of the
firms involved.