Johannesburg - Edcon Holdings, the retailer controlled by US private-equity firm Bain Capital Partners, faces a fine and other penalties after a South African regulator found it had breached the National Credit Act.
Edcon, which operates outlets such as Jet and Edgars, has been wrongly charging consumers a fee for clubs linked to store cards that shoppers use at its franchises, the Johannesburg-based National Credit Regulator said in an e-mailed statement on Friday.
The regulator has referred Edcon to the National Consumer Tribunal and recommended that the retailer be fined, refund affected shoppers and prevented from continuing with the practice, the NCR said.
Losses at Edcon, bought by Bain in 2007, widened to R828 million ($60 million) in its first quarter ended June from R499 million a year earlier.
The retailer, burdened with more than R20 billion in debt, appointed Bernard Brookes to replace CEO Jurgen Schreiber at the end of September.
Edon is the second retailer to be referred to the tribunal in less than a month, with the NCR recommending on October 14 that Shoprite Holdings, South Africa’s largest food retailer and an operator of furniture stores, be fined for reckless lending.
Debbie Millar, a spokeswoman for Edcon, wasn’t able to comment immediately.
- With assistance from Janice Kew in Johannesburg.