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Dis-Chem, which is currently responding to a price increase case, accused the Competition Commission of “scapegoating” the pharmaceutical retailer to show the public that it can prosecute excessive prices as the country struggles with the coronavirus pandemic. .
The retail group appeared before the Competition Court on Monday after the Commission accused it of abusing its domain and of charging excessive prices for surgical masks to the detriment of customers and consumers.
The Commission accused Dis-Chem of driving two price increases, on February 14 and 26, 2020, while its average cost of supplying each mask decreased during that period. The company made four more price increases in March, according to the commission’s chief argument.
The competition regulator wants the Court to fine Dis-Chem with 10% of the group’s total turnover.
Penalty ‘you must send a clear message’
“The Commission’s approach is that the sanction must coincide with the conduct, and this has been reprehensible conduct. It must establish an indication. A clear message must be sent that discourages all other companies and Dis-Chem from participating again. in the same behavior, “he said. Commission Litigation Manager Candice Slump.
However, attorney Michelle le Roux, who represented Dis-Chem, said a fine equal to 10% of her earnings would be “surprisingly inappropriate.” She said it would amount to “inexplicable enthusiasm for scapegoating Dis-Chem” and finding “good company to lead by example.”
Demand and supply shocks
Le Roux said Dis-Chem was forced to temporarily increase mask prices due to a shortage of products and inflated quotes it was receiving from suppliers. Demand for face masks increased 12-fold in January 2020 and exceeded 500,000 in February for that month alone, while Dis-Chem only received about half of the masks it ordered. The quotes he received from the suppliers were highly inflated, he added.
Le Roux argued that the retailer followed in the footsteps of competitors such as Clicks and Takealot, who also reacted to this supply shock by increasing their prices, but that Dis-Chem kept its price adjustment lower than that of other retailers.
“The Commission clearly wants to give an example with this case. But, again, the facts of this case are not a good example,” he said before accusing the Competition Commission of “evidencing” evidence that would justify his case.
“This case actually tells the story of the competition and the markets that are working. We are dealing here with markets that have been disrupted to a level never seen before. We see spikes in demand. We see complete collapses in supply,” he said.
She said the Commission has chosen to ignore price movements before the enactment of the National Consumer and Customer Protection and Disaster Management Regulations on March 19. The Regulation sought to avoid unjustified price increases and the storage of goods to protect consumers.
Dis-Chem is not the first company to be indicted by the Commission, but Le Roux said the retailer has cut its mask prices twice since global supply stabilized, and the first cut was before the Commission approached. to the group about complaints of price increases.
But the retail group is contesting that it unreasonably increased its prices or that it has market dominance or a temporary monopoly caused by Covid-19. Le Roux said Dis-Chem’s direct competitors, other pharmacies and online retailers also sold surgical masks, and the retailer only had a 35% market share.
The hearing will continue on Wednesday, May 6.
