On Tuesday, 07 July 2020 – The Competition Tribunal has found Dis-Chem Pharmacies guilty of charging excessive prices for surgical face masks during the Covid-19 pandemic.
The Tribunal has also ordered that Dis-Chem is liable to pay an administrative penalty (a fine) of R1 200 000 (one million two hundred thousand rands).
According to the Tribunal, the Competition Commission (the Commission) has established that Dis-Chem exerted market power in its pricing of the face masks by increasing its prices to significant levels in the context of the Covid-19 pandemic. One such increase took place on the very day that South Africa’s first Covid-19 case was announced:
“We find that in the context of a global health crisis, with excess demand of surgical masks, considered to be essential in the fight against Covid-19, Dis-Chem has demonstrated that it enjoyed and exerted market power by materially increasing its prices, without a significant increase in costs, and significant increase in margins. But for the economic conditions brought about by the outbreak of Covid-19, it would not have been able to implement such material price increases in surgical masks…”
The Tribunal has found that Dis-chem failed to show that its price increases were reasonable:
“In our view, Dis-Chem’s massive price increases of surgical masks during the complaint period, which constitute an essential component of life saving first line protection in a pandemic of seismic proportions, without any significant increases in costs, are utterly unreasonable and reprehensible. Accordingly, we find that Dis-Chem has failed to show that its price increases for SFM50 and SFM5 and Folio50 were reasonable in the circumstances of the Covid-19 pandemic.”