R8.9m fine for bike price-fix­ing

CityPress - - Business -

The Com­pe­ti­tion Tri­bunal this week fined two lo­cal bi­cy­cle whole­salers al­most R9 mil­lion for par­tic­i­pat­ing in a car­tel that agreed to fix prices.

The watchdog fined Om­nico R4.6 mil­lion and Cool­heat Cy­cles got a penalty of R4.3 mil­lion.

Cool­heat Cy­cles owner Stephen Meltzer said he was re­view­ing the tri­bunal’s rul­ing with his le­gal ad­vis­ers and wasn’t able to com­ment fur­ther.

Om­nico CEO Vin­cent Stevens was not avail­able for com­ment.

The tri­bunal pre­vi­ously con­firmed con­sent or­ders be­tween the Com­pe­ti­tion Com­mis­sion and six whole­salers and 11 re­tail­ers in the bi­cy­cle sec­tor that were im­pli­cated in a price-fix­ing investigation.

How­ever, Om­nico and Cool­heat Cy­cles chose to op­pose the charges and the mat­ter was heard last year by the tri­bunal.

For its case, the com­mis­sion re­lied on a meet­ing held on Septem­ber 10 in 2008, which took place in Midrand. About 200 bi­cy­cle whole­salers came to­gether to dis­cuss in­creas­ing the markup price of bi­cy­cles from 35% to 50%, and the mark-up price on cy­cling ac­ces­sories from 50% to 75%.

“The whole­salers would give the re­tail­ers a higher mark-up by in­creas­ing the rec­om­mended re­tail price to con­sumers,” the tri­bunal said.

“Prices to con­sumers would be in­creased so that re­tail­ers could make higher mar­gins.”

How­ever, de­tails of the dis­cus­sions were posted on an on­line dis­cus­sion fo­rum called the Hub and were sub­se­quently brought to the at­ten­tion of the com­mis­sion.

“Ev­i­dence pre­sented at the hear­ing re­vealed that both Om­nico and Cool­heat had at­tended the Septem­ber meet­ing, and that there was agree­ment among whole­salers to in­crease the mark-up of whole­sale prices for bi­cy­cles and cy­cling ac­ces­sories in co­or­di­na­tion,” the tri­bunal said.

“In de­ter­min­ing the penal­ties, the tri­bunal took into ac­count some mit­i­gat­ing fac­tors for Om­nico.

“How­ever, it found no such mit­i­gat­ing fac­tors for Cool­heat, which elected not to give ev­i­dence at the tri­bunal and to ex­plain its sub­se­quent price in­creases,” the watchdog said.

The other com­pa­nies that set­tled early with the com­mis­sion were not fined for the of­fence be­cause they ad­mit­ted that they had con­tra­vened com­pe­ti­tion law.

– Justin Brown

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