South Africa: Wholesalers fined for bicyle price-fixing

The Competition Tribunal on Tuesday announced that it has issued orders against Omnico and Coolheat Cycle.

“It [Tribunal] has awarded an administrative penalty to Omnico of R4‚627‚412 and to Coolheat Cycles a penalty of R4‚250‚612‚” said Lerato Motaung‚ the Tribunal’s Registrar.

The Tribunal has already confirmed six consent orders by wholesalers and 11 retailers in the bicycle sector who were also implicated in a price-fixing investigation by the Competition Commission‚ Motaung said.

The Commission’s case hinged on a meeting in September 2008‚ which about 200 bicycle wholesalers and retailers attended to discuss increasing their mark-up on bicycles to 50% from 35%‚ and the mark-up on cycling accessories to 75% from 50%.

“The wholesalers would give the retailers a higher mark-up by increasing the Recommended Retail Price to consumers. Prices to consumers would be increased so that retailers could make higher margins.

“Prices were set to increase on 1 October 2008‚ as it was the beginning of the new cycling season and new bicycles and accessories were usually launched at this time and new price lists issued‚” said Motaung.

Both Omnico and Coolheat had attended the September meeting and agreement was reached to increase the mark-up on wholesale prices for bicycles and cycling accessories in co-ordination.

Full Content: Business Day

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