Dis-Chem fined R1.2 million after losing price gouging case for surgical masks

Pharmacy chain Dis-Chem has been found guilty by the Competition Tribunal of price gouging, and fined R1.2 million, for hiking the cost of surgical face masks at the start of the Covid-19 pandemic.

The case was referred to the tribunal by the Competition Commission in April, after the competition watchdog received complaints from the public about excessive pricing for masks.

During a hearing before the tribunal in May, Dis-Chem argued it has been forced to hike prices because of disruptions in supply, as well price increases by suppliers.

It claimed that its competitors had followed suit.

But the tribunal nevertheless ruled that the pharmacy chain contravened the Competition Act by charging excessive prices for three types of surgical face masks  – SFM 50, SFM 5 and Folio50 – which was to the detriment of consumers during March.

The commission managed to demonstrate that Dis-Chem exerted market power by “increasing its prices to significant levels” during the pandemic.

“One such increase took place on the very day that South Africa’s first Covid-19 case was announced,” the tribunal noted.

Dis-Chem had failed to show the price increases were reasonable, it added.

“In our view, Dis-Chem’s massive price increases of surgical masks during the complaint period … are utterly unreasonable and reprehensible,” it said.

“Poorer customers would have been excluded from accessing the masks by such exorbitant increases, other customers would have spent more on these items as a percentage of their disposable income.”

The tribunal said it would publish its comprehensive reasons for its decision in due course.

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