Johannesburg – Pharmaceutical retailer Dis-Chem has accused the Competition Commission of deliberately trying to humiliate it as it appeared before the Competition Tribunal on Monday to answer allegations that it inflated prices for Covid-19 essential items by more than 250%.
Dis-Chem’s referral for prosecution comes after the commission’s investigation had found it had hiked its 50-piece surgical face masks from R43.47 in February to R156.95 in March, a price jump of 261%.
The commission is pushing for Dis-Chem to be forced to forfeit 10% of its turnover for the period concerned, among other proposed administrative penalties.
Advocate Michelle le Roux, for Dis-Chem, said the penalty would be “be shockingly inappropriate” as the group did not believe it was in the wrong by increasing the prices, which it maintained had decreased before compulsion.
“Clearly the commission is feeling some blood-lust and seems to have forgotten some sense of perspective and proportion. It is trying to find a good company to humiliate and make an example of for everybody else,” she said.
Le Roux further argued that the company was justified to increase its prices as it was dealing with ballooning price quotations from suppliers and delays in delivery while demand was increasing.
“The timeline that is relevant here is that forever until before February, Dis-Chem was charging at the margin it was charging and then the Covid-19 hit and increased prices but to be below its competitors and to match what it was being told in terms of quotes,” said Le Roux.
She further stated: “If it (Dis-Chem) wanted to continue trading in this product line out of the many thousands of items that it sells, it charges that price for a mere number of days and before the Commission comes knocking, it drops its price for the first time because it managed to secure some stock.”
According to the Covid-91 price regulations gazetted for the state of disaster declared on March 15 and the Competition Act, a dominant firm was barred from charging an excessive price to the detriment of customers.
Le Roux insisted that the commission had failed to establish the competitive price for the masks before charging Dis-Chem for price inflation. “The onus is on the commission to show what the competitive price is. It has not even started that exercise.”
Le Roux added that the retailer had no choice but to hike prices as it dealt with unprecedented demand in January and February. “Due to the incredible spike in demand it was unable to satisfy that demand from its suppliers and had to go around the globe to find reliable suppliers and clearly as you can tell that was a very challenging part of its job.”
Competition Commission acting deputy commissioner James Hodge said there had been a significant surge in prices by Dis-Chem in response to the increase in demand which resulted in complaints by customers.
Hodge said Dis-Chem had also failed to quantify its claimed higher cost of sourcing new suppliers. “If these substantial costs are within the knowledge of Dis-Chem and they are capable of putting them up, they haven’t. There are also vague references to distribution costs because of volume but in January they sold more volume than in March,” Hodge said.
Among proposals supported by the commission as part of the administrative penalty were a donation to the Solidarity Fund and pricing remedy, which the retailer is also rejecting. The hearing continues.
By Siviwe Feketha