South Africa’s Second Price Gouging Case: Dis-Chem Penalised for Excessive Pricing re: Face Masks

On 14 July 2020, the South African Competition Tribunal published its written reasons in relation to its decision to penalize Dis-Chem (a large pharmaceutical chain in South Africa) for contravening section 8(1)(a) of the Competition Act by charging excessive prices for a variety of surgical face-mask products.

The Tribunal’ latest price gouging decision follows closely on the heels of the Tribunal’s decision in Babelegi, which was the first decision price gouging decision in South Africa during the Covid-19 pandemic (in terms of which the Tribunal also imposed a penalty on Babelegi based on a finding that Babelegi charged excessive prices for face masks during the pandemic). Babelegi was a firm which -pre-Covid 19 had a market share of less than 5%.

Turning to the Dis-Chem case, the price increases at play for three different face-masks were 261%, 43% and 25% respectively, on 9 March 2020 as the Covid-19 pandemic gripped South Africa, but before the Minister of Trade and Industry published the commonly referred to ‘Price Gouging Regulations’ (Regulations). The Regulations, promulgated, on 19 March 2020, essentially place a reverse onus on dominant firms (in relation to a defined list of “essential goods”) to demonstrate why any price increases post the proclamation of the Regulations, which were not directly and proportionally linked to a corresponding cost increase, are not “excessive”…

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