Johannesburg - Two bicycle wholesalers, Omnico and Coolheat Cycles, have each been fined more than R4 million by the Competition Tribunal for price-fixing.
The tribunal previously confirmed consent orders between the Competition Commission and six wholesalers and 11 retailers in the bicycle sector who were implicated in a price-fixing in an investigation by the commission.
These 17 companies that settled early with the commission were not fined for contravening the Competition Act and the case against Fritz Pienaar Cycles was because the business was liquidated.
However, Omnico and Coolheat elected to oppose the charges against them.
Their cases were heard last year by the tribunal, which yesterday released its order and reasons for its decisions.
Omnico was fined R4 627 412 and Coolheat Cycles R4 250 612.
The commission said about 200 bicycle wholesalers and retailers attended a meeting at the Midrand Conference Centre in Gauteng in September 2008 to discuss increasing their mark-up on bicycles from 35 percent to 50 percent and the mark-up on cycling accessories from 50 percent to 75 percent.
The wholesalers would give the retailers a higher mark-up by increasing the recommended retail price to consumers and prices to consumers would be increased so retailers could make higher margins.
Prices were set to increase on October 1 2008 and new price lists were issued because it was the beginning of the new cycling season and new bicycles and accessories were launched at this time of the year.
Details of these discussions were posted on an online discussion forum called The Hub and were brought to the attention of the commission.
Evidence presented at the hearing revealed that both Omnico and Coolheat had attended the September meeting where agreement was reached among wholesalers to increase in co-ordination the mark-up on wholesale prices for bicycles and cycling accessories.
In determining the penalties, the tribunal took into account some mitigating factors raised by Omnico. No mitigating factors were raised by Coolheat, which elected not to give evidence at the tribunal hearing and to explain its subsequent price increases.
The tribunal previously confirmed settlement agreements with Cytek Cycle Distributors, DBS Distributing trading as Thule Car Rack Systems, New Just Fun Group, Tridirect SA, Le Peloton, Mailot Jaune Trading, West Rand Cycles, Bowman Cycles, Pedaling Dynamics trading as Dunkeld Cycles, Moneymine 88 trading as Hotspot Cycles, Salojee’s Cycles, Summit Cycles, Dynamic Choices Two trading as Bester Cycles, Johnson Cycle Works, Melody Street 18, Pedal-On-Marketing trading as Maverick Cycles and Albatros Fishing and Cycling, previously named Winners Cycles.
Ngoako Moropene, legal counsel at the commission, previously told Business Report that in settling these cases without the payment of an administrative penalty, the commission took into account that it had already settled cases with other firms without imposing a fine.
The commission also took into account the views of the tribunal in a meeting prior to the commencement of a hearing into an exception application by some of the implicated firms, including that the continued prosecution of 20 firms was a waste of public funds given that they were all small businesses.
An administrative penalty could drive firms out of business or to downsize, resulting in a loss of employment.
BUSINESS REPORT