Dis-Chem, like many other retailers during the COVID-19 pandemic, looked to take advantage of much of the panic buying that occurred locally when the national lockdown was first announced.
While there is scope for supply and demand, and the adjustments to pricing that result thereof, the Competition Tribunal has found that Dis-Chem excessively overpriced its surgical masks during March this year, without proper justification.
The result is that the retailer has been issued a fine of R1.2 million by the Tribunal. The Tribunal considered the background to the COVID-19 pandemic as part of its decision, with Dis-Chem increasing its pricing on three specific occasions. Added to the considerations, was the fact that COVID-19 was spreading globally and at an alarming rate.
“We find that in the context of a global health crisis, with excess demand of surgical masks considered to be essential in the fight against COVID-19, Dis-Chem has demonstrated that it enjoyed and exerted market power by materially increasing its prices, without a significant increase in costs, and significant increase in margins. But for the economic conditions brought about by the outbreak of COVID-19, it would not have been able to implement such material price increases in surgical masks,” the Tribunal explained in a statement regarding its decision.
The Tribunal cited three masks in particular during March which saw their prices increase substantially without a reasonable rise in costs for said masks.
“In our view, Dis-Chem’s massive price increases of surgical masks during the complaint period, which constitute an essential component of life saving first-line protection in a pandemic of seismic proportions, without any significant increases in costs, are utterly unreasonable and reprehensible,” the Tribunal pointed out.
“Accordingly, we find that Dis-Chem has failed to show that its price increases for SFM50 and SFM5 and Folio50 were reasonable in the circumstances of the COVID-19 pandemic,” it adds.
At the time of writing it remains to be seen how this fine will be paid by Dis-Chem, or indeed whether the retailer plans to dispute the decision, but either way, it has dented consumer confidence somewhat.
The presidency has on a number of previous occasions said that government will not look favourably on any sought of price gouging during the COVID-19 pandemic and lockdown, so it is at least heartening to see that it is following through on its position.[Image – Photo by Macau Photo Agency on Unsplash]