South African drugstore chain Dis-Chem Pharmacies Ltd reported a 39% drop in interim profit on Thursday, hurt by strike-related costs and lower demand from suppliers. African News Agency (ANA)
South African drugstore chain Dis-Chem Pharmacies Ltd reported a 39% drop in interim profit on Thursday, hurt by strike-related costs and lower demand from suppliers. African News Agency (ANA)

Mask price increase disconnected consumers from essential goods

By Dineo Faku Time of article published May 6, 2020

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JOHANNESBURG - Bukhosibakhe Majenge, the legal counsel for the Competition Commission has blamed pharmacy retail giant Dis-Chem for excessively pricing surgical masks to the detriment of consumers during the Covid-19 pandemic crisis.

Speaking during a virtual Competition Tribunal public hearing earlier today, Majenge argued price gouging within the context of a pandemic disconnected consumers from essential goods which were necessary or required to protect their health. 

“That is why we find it curious that our learned colleagues argue with audacity in this matter to say there is no detriment to consumers in this matter. When clearly we have demonstrated that the higher price disconnects consumers from equitable access to essential goods,” Majenge said.

The commission referred Dis-Chem to the tribunal after accusing it of abusing its dominance and charging excessive prices for surgical masks to the detriment of customers and consumers. Dis-Chem has denied the commission’s claims arguing that the pandemic had resulted in a shock to the demand and supply of essential goods.

Independent economist Patrick Smith, an expert witness on behalf of Dis-Chem, argued it was not possible to establish an excessive price in the short period of the allegation as the market was likely to self-correct.

“I do not think there is such a thing as a competitive price that exists for a day that is not how market competition works. Competition can happen over the short term, but a long term competitive equilibrium simply cannot be defined over a week or even a month,” he said. 

Dis-Chem has previously argued that prices for the surgical masks were below its competitors.

The JSE-listed pharmacy giant faces a penalty of 10% of its turnover if found guilty by the tribunal of contravening the Competition Act.

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