Dis-Chem ordered to pay R1.2m fine for ‘reprehensible’ mask price hikes

The Competition Tribunal says Dis-Chem’s massive price increases of surgical masks were “utterly unreasonable and reprehensible.”
Image: Picture: FINANCIAL MAIL

The Competition Tribunal has fined Dis-Chem Pharmacies R1.2m after finding the company guilty of charging excessive prices for surgical face masks during the Covid-19 pandemic.

In its order and reasons, the tribunal found that Dis-Chem contravened the Competition Act in that it charged an excessive price for three types of surgical face masks (SFM 50, SFM 5 and Folio50) to the detriment of consumers during March 2020.

The tribunal’s reasons will be available publicly in due course.

On April 23, the Competition Commission referred a complaint against Dis-Chem to the tribunal.

The complaint alleged that Dis-Chem had contravened section 8(1)(a) of the Competition Act, read with regulation 4 of the Consumer and Customer Protection and National Disaster Management Regulations and Directions.

The commission claimed that in March 2020, Dis-Chem engaged in excessive pricing of surgical masks which are essential items in the fight against Covid-19.

Dis-Chem denied the commission’s claims. The tribunal heard the matter on an urgent basis via video conferencing in early May this year.

In its findings, the tribunal said the commission had established that Dis-Chem exerted market power in its pricing of the face masks by increasing its prices to significant levels in the context of the Covid-19 pandemic.

One such increase took place on the very day that SA’s first Covid-19 case was announced in March.

The tribunal also found the commission has shown a case of excessive pricing in relation to the three types of face masks.

It found that Dis-Chem failed to show that its price increases were reasonable.

“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.

“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,” the tribunal said.

BY ERNEST MABUZA

TimesLIve

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