R8.9m fine for bike price-fixing
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