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Pharmacy group to pay R30,000 settlement for excessive markups on face masks

07 May 2020 - 14:52 By Ernest Mabuza
The Van Heerden Group will pay a R30,000 settlement for charging excessively for face masks.
The Van Heerden Group will pay a R30,000 settlement for charging excessively for face masks.
Image: 123RF / maridav

A pharmacy group accused of charging excessive prices for face masks and hand sanitisers at its Nelspruit and Pretoria branches has agreed to pay a R30,000 fine and make a donation to the solidarity fund for Covid-19.

The agreement to pay a R30,000 fine and the R3,875 donation are two consent agreements that the Van Heerden Group reached with the Competition Commission.

The settlement of R30,000, which is applicable to the Nelspruit branch, and the solidarity fund donation, which is applicable to the Pretoria branch, form part of two separate consent agreements that the pharmacy group reached with the commission.

These consent agreements have since been confirmed as orders of the Competition Tribunal.

In terms of the consent agreements, the pharmacy group has also agreed to reduce its gross profit margins for these essential products for the duration of the national state of disaster.

On March 24, the Competition Commission received a complaint that the company's Nelspruit branch was charging excessive prices for face masks.

The commission investigated and concluded that there was no justification for significant price increases for face masks effected between February and March 2020.

In the case of the Pretoria branch, the commission concluded after investigating that the group has market power in the market for the supply of hand sanitisers, given the current pandemic and state of national disaster.

The commission said the Pretoria branch sold two types of hand sanitiser before the pandemic but later started selling an additional eight types.

The commission said the gross profit margin in March 2020 was unreasonably high for an essential product during a national state of disaster.

The tribunal said these two respective agreements are the fifth and sixth consent agreements — relating to alleged excessive pricing in the context of Covid-19 — which have been approved as orders of the tribunal since the lockdown began.