Distributor of protective gear could cough up R11m for price gouging as crackdown continues | Fin24
 
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Distributor of protective gear could cough up R11m for price gouging as crackdown continues

Apr 24 2020 17:52
Marelise van der Merwe

The Competition Commission has referred a consent agreement with a distributor of personal protective equipment to the Competition Tribunal after its probe found the company inflated prices of essential items. 

The Competition Tribunal has been asked to confirm the agreement as an order. 

In terms of the agreement, MATUS, a company with offices in Johannesburg, Cape Town, Durban, Port Elizabeth and Mbombela, agreed to pay a penalty of R5.9 million after admitting to inflating gross profit margins on essential hygienic products, the Competition Commission said in a statement on Wednesday. 

MATUS is also set to pay R5 million to the Solidarity Fund to support efforts to fight the coronavirus, and will immediately reduce its gross profit margin on dust masks for the duration of the national disaster. 

Probe

The agreement follows a probe by the Commission regarding inflated prices of dust masks. MATUS is a supplier of various PPE items such as dust masks, sanitisers, first aid kits and others, the statement said.  

The Commission said it had concluded "numerous" consent settlements with independent retailers and pharmacies over excessive pricing. "Most of these shops did not sell these products before March this year," it said. 

Last week, a Gauteng hardware store found to have charged excessive prices for surgical gloves during the coronavirus outbreak was ordered to refund its customers for the overcharge.

Johannesburg-based Main Hardware was also ordered to reduce its mark-up on surgical gloves to 10% for the remainder of the pandemic period and for six months after that, the Competition Tribunal said on Friday.

'Unreasonable' markups

Main Hardware was referred to the Tribunal after the Competition Commission launched a probe into the store based on a tip-off that it was allegedly charging excessive prices.

According to the Commission, it found that Main Hardware had ordered extra supplies of surgical gloves after the announcement of the state of national disaster and added an "unreasonable" markup in March 2020, which the Commission said amounted to an abuse of dominance.

In terms of a settlement between the Tribunal and Main Hardware, the store will have to immediately stop price gouging; reduce its markup and cap it at 10%; and all customers who were overcharged must be refunded for the higher price. If they can't be traced, the refundable amount will be donated to the Solidarity Fund.

On Monday, meanwhile, the Tribunal ordered a Boksburg pharmacy to donate over R25 000 worth of hand sanitisers, surgical gloves and face masks to two old age homes in its area.

This was after the Competition Commission found it had overcharged for face masks.

Crackdown

The Competition Commission has vowed to crack down on excessive pricing on essential products during the coronavirus pandemic, with Commissioner saying no effort would be spared to protect consumers against exploitative practices.

Shortly before the lockdown, government gazetted regulations aimed at preventing price gouging, announcing strict regulations governing pricing on essential prices. Companies were warned not to hike prices on specific goods by more than the increases in the cost to produce these products, or to above the average mark-ups during the three months to 1 March 2020.

The list of products included toilet paper, hand sanitiser, face masks, surgical gloves, antiseptic liquids, all-purpose cleaner, surgical masks, and various staple foods.

On Thursday, Fin24 reported that Dis-Chem had been charged for excessive pricing on some face masks. The Competition Commission called on the Tribunal to impose the maximum penalty.

coronavirus  |  price gouging
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