Home South African Competition Commission sees spike in complaints of price gouging

Competition Commission sees spike in complaints of price gouging

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Investigations were completed in 301 (43%) cases and the rest were at various stages of conclusion.

THE COMPETITION Commission has received a total of 1 354 complaints and tip offs from the public on price gouging since the announcement of the state of disaster in March.

Briefing a joint meeting of parliamentary committees yesterday, commission chairperson Tembinkosi Bonakele said the complaints related to the allegations that retailers, traders, suppliers and pharmacies were charging excessive prices for Covid-19 related products. 

“These included masks and sanitisers, personal and certain essential goods and basic food items,” Bonakele said.

Khanyisa Qobo, advocacy divisional manager, said out of 1 354 complaints received, 697 were Covid-19 related. 

Investigations were completed in 301 (43%) cases and the rest were at various stages of conclusion, Qobo said.

Bonakele said they have improved turnaround time to complete investigations which normally take three years to a week.

He ascribed this to less time given to firms to respond to the complaints, among others.

“I’m expecting many to appeal on the basis of the amount of time to respond to some of these,” Bonakele said.

He told the MPs that not all the complaints raised competition issues that the commission could pursue. 

However, three trends were picked up from the complaints which included retailers, traders and suppliers increased prices and margins in response to increase in public demand and panic buying.

Firms also increased prices despite no significant increase in input costs and opportunistic trading where sales to the public that were not previously traded with huge markups, Bonakele said. 

Gauteng, KwaZulu-Natal and Western Cape led with about 70% of the complaints.

The bulk of complaints were in basic food products, sanitisers and wipes as well as masks.

Bonakele said all the Covid-19 related cases were prioritised for expedited investigations and referred to the Competition Tribunal after probing in collaboration with the National Consumer Commission. 

“Where contraventions have been found, respondent firms are approached to reach settlements with the corrective measures to the conduct,” he added.

Dis-Chem was among the culprits found to have hiked its prices between 43% and 261%. 

“A total of 35 firms are in various stages of settlement,” Bonakele said, adding that 15 settlements were confirmed by the Competition Tribunal through consent orders.

“The total value of the settlements finalised was R12 854 694,” he said.

Bonakele also told MPs that they were monitoring food market pricing to understand retail level inflation and enforcement action. 

“Rand depreciation has resulted in price increases for imported crops such as wheat and rice, which is feeding through higher flour/bread/ rice prices among suppliers and retail.

“Domestic maize prices increased due to season end shortage but will drop significantly as a new bumper crop comes in late May,” he said.

Bonakele also said fresh produce was initially impacted by panic buying leasing to.some.price hikes.

“Drop in demand from restaurant and constraint consumers has seen prices steadily fall on most fresh produce since lockdown as supply outstrips demand.”

Responding to questions, deputy commissioner Hardin Ratshisusu said they noted an increase in staple food prices. 

“We are attending to these complaints, ” Ratshisusu said.

“we have to  establish the facts related to each case. With Covid 19 restrictions it takes a little while to.gather evidence for our investigations,” he added. 

Bonakele also said the commission would in collaboration with the National Consumer Commission continue to prioritise Covid-19 cases and refer more for prosecution, including settlement and consent orders with respondent firms.

“Priority will be given to merger regulation and/or block exemption in sectors of the economy which have been adversely impacted by the pandemic.”

Bonakele said they expected an increase in merger activity. 

“We have started seeing some of them.”