No justification for 261% price hike for face masks
JOHANNESBURG - The Competition Commission’s chief economist James Hodge told the Competition Tribunal hearing today that there was no justification for the 261 percent price hike for face masks at several stores owned by Dis-Chem amid the Covid-19 pandemic outbreak.
Hodge told the tribunal that Dis-Chem did not manufacture face masks, and was yet another intermediary in the value chain.
“What we are seeing in South Africa is that every intermediary in the value chain is using the argument of shortage and cost increases to escalate their own margins, and Dis-Chem is one of those.”
“That extra margin that Dis-Chem earns does not go back to the manufacturer, it does not go back to stimulate their production. It is kept by Dis-Chem,” said Hodge.
The commission referred Dis-Chem to the tribunal last month after its investigation found that the company had charged excessive prices on essential hygienic goods to the detriment of customers and in contravention of the Competition Act.
The commission received several complaints from the public against several retail stores owned by Dis-Chem for engaging in excessive pricing of face masks, specifically dusk and surgical masks.
The commission established that, prior to the declaration of a national state of disaster, Dis-Chem had inflated surgical facial masks by 261 percent to R156.95 for a unit containing 50 masks in March from R43.47 for a unit containing 50 masks in February 2020.
Hodge dismissed claims by Dischem that regulations were vague.
“The idea that the regulations are vague and create uncertainty for business is quite frankly far fetched. If anything the regulations are highly specific and as specific as similar laws elsewhere. It is clear in terms of the regulations that price increases that are material will be prosecuted,” said Hodge.