Commission guns for maximum penalty after firm 'charges excessive prices' for masks
A Gauteng company is facing a severe financial penalty after allegedly increasing the price of respiratory masks by more than 700% over a period of three months.
The Competition Commission announced on Tuesday it had referred LevTrade International to the Competition Tribunal for prosecution following allegations of price gouging after the price of a box of 20 respiratory masks rocketed to R670 from R139 between February and May. Both prices exclude value added tax.
The commission said in a media statement it would request the tribunal to slap LevTrade with a maximum penalty of 10% of the company's annual revenue.
"Today, the Competition Commission South Africa referred to the Competition Tribunal [Tribunal] for prosecution a Johannesburg-based wholesale distributor and manufacturer of medical products, LevTrade International (Pty) Ltd t/a Burnshield (LevTrade), for excessive pricing during the state of national disaster as declared by President Cyril Ramaphosa.
"This referral follows an investigation by the commission which found that LevTrade has charged excessive prices on essential hygienic goods to the detriment of customers and consumers in contravention of section 8(1)(a) of the Competition Act read with regulation 4 of the Consumer Protection Regulations.
The commission’s investigation has established that, prior to the declaration of a national state of disaster, LevTrade was selling respiratory masks at far lower prices. A box of 20’s respiratory masks was increased by LevTrade from R139.00 (excl. VAT) on 14 February 2020 to R170.00 (excl. VAT) on 26 February 2020, a price increase of 22%.
"The price of a box of 20’s respiratory masks was further increased from R170.00 (excl. VAT) to R310.00 (excl. VAT) on 05 March 2020, a price increase of 82%.
On 23 March 2020, the price of a box of 20’s respiratory masks was further increased from R310.00 (excl. VAT) to R670.00 (excl VAT), a price increase of 116%.
"This increase constitutes 76% increase in gross mark-ups on 14 February 2020 to 748% on 23 March 2020," said the commission in the media statement.
The watchdog's commissioner Tembinkosi Bonakele said: “Our position on price gouging has consistently been to discourage firms from engaging in price gouging of essential goods during this period of the pandemic.
"The commission will stop at nothing in ensuring that firms that are engaged in price gouging of essential goods are prosecuted. In this matter, the commission has asked the tribunal to impose a maximum penalty against LevTrade."
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