TRIBUNAL APPROVES 5th AND 6th CONSENT AGREEMENTS RELATING TO COVID-19 EXCESSIVE PRICING MATTERS
The Van Heerden Pharmacy Group – accused of charging excessive prices for face masks and hand sanitizers at its Nelspruit and Pretoria branches respectively – has agreed to pay a R30-thousand settlement and to make a donation to the Solidarity Fund for COVID-19.
The settlement (applicable to the Nelspruit branch) and the Solidarity Fund donation (applicable to the Pretoria branch) form part of two separate consent agreements with the Commission, which have been confirmed as orders of the Tribunal.
The Pharmacy Group has also agreed to reduce its gross profit margins for these essential products for the duration of the state of national disaster.
Nelspruit branch
The Commission says on 24 March 2020 it received a complaint against the Pharmacy Group’s Nelspruit branch for excessive prices allegedly being charged for face masks.
The Commission investigated and concluded that there was no justification for significant price increases for face masks effected between February and March 2020. The Commission also found that the increase in the gross profit margin in March 2020 amounted to excessive pricing (in contravention of section 8(1)(a) of the Competition Act read together with Regulation 4 of the Consumer Protection Act).
In terms of the consent agreement, the Pharmacy will pay a R30 000.00 (thirty thousand rand) settlement and reduce its gross profit margin on all masks for the duration of the state of national disaster. The settlement is based on the “importance of the products during the period and the extra income Van Heerden Pharmacy made as a result of the contravention.”
Pretoria branch
Following a complaint received on 3 April 2020 and a subsequent investigation, the Commission concluded that Van Heerden Pharmacy has market power in the market for the supply of hand sanitizers, given the current pandemic and state of national disaster.
The Commission maintains that the Pretoria branch only sold two types of hand sanitizers prior to the pandemic whereas it subsequently started selling an additional eight types of hand sanitizers. The Commission says the gross profit margin in March 2020 was unreasonably high for an essential product during a state of national disaster.
In terms of the agreement, Van Heerden Pharmacy agrees to, among others:
- immediately desist from excessive pricing conduct;
- reduce its gross profit margin on all essential products;
- pay an amount of R3 875 (three thousand eight hundred and seventy-five rand) to the Solidarity Fund for COVID-19; and
- develop, implement and monitor a competition law compliance programme.
Background
The Van Heerden Pharmacy Group comprises Van Heerden Pharmacy Rosslyn (Pty) Ltd; Van Heerden Pharmacy Lyttleton (Pty) Ltd; and Van Heerden Pharmacy Phalaborwa (Pty) Ltd. It includes several branch pharmacies including the branches in Lynwood, in Pretoria and Sonpark, in Nelspruit.
These two respective agreements are the fifth and sixth consent agreements – relating to alleged excessive pricing in the context of COVID-19 – approved as orders of the Tribunal.
Issued by:
Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Tel: +27 (0) 12 394 1383
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib
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