Tribunal rules on excessive pricing

An industrial clothing supplier has become the first company to be found guilty of excessive pricing under the 2019 amendments to the Competition Act and since the start of the global coronavirus pandemic. The Competition Tribunal announced on Monday that Babelegi Workwear and Industrial Supplies was fined R76,040 for inflating prices of dust masks.

An industrial clothing supplier has become the first company to be found guilty of excessive pricing under the 2019 amendments to the Competition Act and since the start of the global coronavirus pandemic.

The Competition Tribunal said on Monday that Babelegi Workwear and Industrial Supplies was fined R76,040 for inflating prices of dust masks.

The Pretoria-based company sold 75 boxes of dust masks in February to 20 customers, some at more than 500% mark-up.

Pharmacy chain Dis-Chem has also been charged with excessive pricing for increasing mask prices in March by more than 200%. The case has not been finalised.

The Competition Commission accused Babelegi of price gouging and “egregious” behaviour because it increased its profit margin at least fivefold with no increase in input prices.

The commission investigates abuse of dominant positions by companies and mergers. Once an investigation is done, cases are referred to the tribunal, which can make an order.

The tribunal found “Babelegi knew full well that there was a significant increase in demand for masks ... and took advantage of customers and consumers amid the international Covid-19 health crisis. This leads us to conclude that Babelegi’s prices charged during the complaint period were to the detriment of consumers and customers.”

Acting for Babelegi, advocate Greta Engelbrecht had argued section 8 of the Competition Act requires that a firm accused of excessive pricing is shown to be dominant with market power significant enough to set prices independently of competitors.

The tribunal found that because it was able to increase its profit margin more than fivefold, it was a dominant firm. “It behaved to an appreciable extent independently of its competitors, customers or suppliers. Babelegi is therefore a dominant firm,” it said.

Babelegi can go to the competition appeal court where the tribunal has never won an excessive pricing case.

500% The mark-up of some of the 75 boxes of dust masks Babelegi sold in February