Medmart Health and BabyBug, two banned Takelot traders, have been taken to the Competition Tribunal over collusion and price fixing on personal protective equipment (PPE).
The Competition Commission announced on Thursday, January 26 that it had taken the traders to court, demanding “heavy fines”.
“During the height of the Covid-19 pandemic, the Commission found that Medmart Health and BabyBug acted to fix the prices of face masks and target customers in violation of competition law by dividing the market. And BabyBug agreed and/or engaged in concerted practices to fix prices and divide markets by assigning suppliers.” This is an offense under Section 4(1)(b)(i) and (ii) of the Act.” The Competition Commission said in a statement.
Medmart and BabyBug sold PPE products including face masks at Takealot. Competing companies put their products on an online platform, and through an algorithm, variables such as price and stock availability are taken into account, which are then displayed to customers on the platform. For example, a supplier with a cheap product and stock will be more visible to customers entering the Takealot platform than a supplier with a higher priced product and less stock.
Setting prices to increase profits
The commission in 2010 On December 3, 2020, in a telephone conversation between Babybug and Medmart representatives, it was alleged that the two companies agreed to use their respective prices in order to make a profit by selling 3-dimensional. Face masks on stage.
According to the commission, “the two companies have set a date for each of them to fix their own prices and adjust the supply of shares accordingly, which limits the competition between them, and agreed to change the date on which each of them will ask for a higher price than the price.” This means that Babybug and MedMart will each have a higher price one day and a lower price one day. The switchover will be at 5pm each day.
“Medmart and Babybug have agreed to negotiate from time to time what the higher and lower prices will be. The price will be R79 to R90 per pack of 50 packs of 3-facet face masks.”
Takealot banned BabyBug from the platform on 8 December 2022 and MedMart was banned on 14 June 2021 for suspected affiliation.
“This type of collusive behavior is harmful as it deprives consumers of the benefits of competition. As such agreements are inherently anti-competitive, the Commission has asked the court to impose heavy fines,” the commission said.
