Bicycle price-fixing clampdown - Probe reveals why bike prices shot up!
The Competition Tribunal on Tuesday awarded an administrative penalty of R4‚6 million to Omnico and R4‚2 million to Coolheat Cycles.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.Motaung said the Tribunal could not find any mitigating factors for Coolheat as it elected not to give evidence at the Tribunal. It however‚ found some mitigating factors for Omnico.The Tribunal let 17 companies off the hook after they admitted they contravened Section 4(1)(b) of the Competition Act. In addition‚ “the Commission had withdrawn its case against one of the companies‚ Fritz Pienaar Cycles‚ because the business was liquidated‚” said Motaung.