Cape Town - The Competition Tribunal has found the supplier of hand sanitiser to SAPS guilty of excessive pricing during the pandemic.
The supplier, BlueCollar Occupational Health (Pty) Ltd (“BlueCollar”) – acting on behalf of and/or within the ambit of its partnership with Ateltico Investments (Pty) Ltd (“Ateltico”) was fined R3.5 million.
The supplier was found guilty of excessive pricing for the urgent supply of 10 000 25l containers of hand sanitiser during the pandemic in 2020.
The tribunal described BlueCollar’s conduct as “particularly egregious” as it “exploited a pandemic by charging excessively for hand sanitiser that was crucial for the combating of the pandemic”.
The Competition Commission, in its referral of the matter to the tribunal, alleged that BlueCollar supplied SAPS with 10 000 25l containers of hand sanitiser at a price of R3 550 (including VAT) per container.
The commission ultimately argued that BlueCollar added a mark-up of 120% per 25l container of hand sanitiser and earned a gross margin of more than 50%.
In a statement, the tribunal said: “Even on a best-case scenario for BlueCollar, in terms of what cost items should be included under its ‘costs of sales’, its actual gross margin (as determined by BlueCollar’s financial expert) for the supply of the hand sanitiser to SAPS is more than 40% and its mark-up is more than 70%. This is substantially higher than the competitive gross margin for resellers of between 10% to 15% previously determined by the tribunal in a similar case.
“Furthermore, a comparison of BlueCollar’s price of R3 550 (VAT incl) to National Treasury’s list price of April 15, 2020 of R1 635.45 (VAT incl) reveals that BlueCollar’s price is more than double the national treasury list price. Having established a prima facie excessive price, the onus shifts to BlueCollar, but it was not able to provide any cost justifications to show that its price charged to SAPS is reasonable,” the tribunal noted.
Although BlueCollar is a first-time offender of the Act, the tribunal found that the aggravating factors, specifically the exploitative conduct of BlueCollar, far outweighed any mitigation.
“BlueCollar’s conduct is particularly egregious when one considers its social consequences.”
The tribunal notes that the act places a cap on the maximum penalty that may be imposed on a firm, and that in this case the penalty amount is significantly lower than the excess profit (ie, the overcharge to SAPS) and noted further in its reasons: “… in terms of section 65(6) of the Competition Act, a person who has suffered loss as a result of a prohibited practice (in this case SAPS), may commence action in a civil court for damages arising out of a prohibited practice.”
Cape Times