File image: IOL.

CAPE TOWN - Italian domestic appliance company, Smeg brazenly admitted that it enforced a minimum resale price, in conflict with the Competition Commission. 

However, the Competition Tribunal has confirmed a consent agreement entered into between the Competition Commission and the SBS Household Appliances Smeg. 

This comes after a complaint was lodged by KwaZulu Natal-based Save Hardware Wholesalers and Save Wholesalers Cash and Carry. 

The commission found that in 2014, Save sold a specific Smeg gas stove at R14 999 whilst Hirsch, a retailer and also a Smeg customer, sold the same gas stove at R17 999.

A Hirsch customer then complained to Hirsch about the pricing of a specific gas cooker since Save charged a substantial R3 000 cheaper. 

Smeg then intervened by terminating the supply of all of its products to Save. This was an act of sanction for Save’s refusal to succumb to Smeg’s request to increase its price in respect of the product.

The manufacturing company has since agreed to pay a R100 000 penalty. 

Notably, the termination of supply of products by Smeg to Save endured for a period of approximately 15 months.

In this agreement, Smeg admits that it has engaged in the practice of minimum resale price maintenance in contravention of section 5(2) of the Competition Act. 

Tribunal

The Tribunal said that minimum resale price maintenance, as a species of price fixing, is a serious competition offence. While the administrative penalty for this offence is R100 000, the tribunal expressed its understanding. It accepted that the conduct in this case was limited to Save based in Pietermaritzburg, KwaZulu-Natal and was therefore retailer specific and limited in scope.

Prohibited 

The tribunal indicated that minimum resale price maintenance is an offence prohibited in South Africa. They further cautioned all suppliers and manufacturers to adhere to regulations regarding resale pricing of goods. 

Commend

It its reasons, the Tribunal commends Save for standing up to Smeg, despite the threat of possibly losing all supply of product by Smeg. 

The Tribunal noted that the Save Group has acted correctly by standing up to Smeg. 

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- BUSINESS REPORT ONLINE