Company accused of excessive pricing agrees to donate surgical face masks

A medical equipment supplier accused of charging excessive prices for examination gloves has supplied a government department — at no charge — with 49,400 surgical face masks to the same value as the estimated “excessive profits” it generated.

This arrangement forms part of the terms of a consent agreement between the Competition Commission and Supra Healthcare Cape Town.

Supra Healthcare is accused of having charged the Western Cape department of health excessive prices for gloves between May and June 2020 during the Covid-19 pandemic.

In June 2020, the commission received information about alleged inflated prices being charged by Supra Healthcare for medical examination gloves.

The department alleged the prices charged were higher than the regulatory pricing guideline provided by the National Treasury.

The commission investigated Supra Healthcare and found that during the pandemic the department attempted to procure personal protective equipment (PPE) from suppliers by way of an open invitation to quote.

Supra Healthcare responded to the invitation on May 15 2020 and the department subsequently accepted the quote for 130,000 medium examination gloves and 130,000 large examination gloves.

The commission’s analysis revealed Supra Healthcare derived a mark-up and gross profit margin on the gloves at an “unreasonably high margin” compared to the benchmark applicable to the public procurement of PPE.

The commission concluded that the company's conduct amounted to excessive pricing in contravention of the Competition Act.

The commission said Supra Healthcare did not admit that its conduct, as set out in the consent agreement, constituted excessive pricing.

However, to avoid protracted litigation and costs, the company agreed to resolve the complaint on the terms set out in the consent agreement.

These were confirmed as an order of the Competition Tribunal.

In terms of the consent agreement, the company agreed with the commission to provide the department, at no charge, 49,400 surgical masks at a cost price value of R304,135.

The masks were delivered to the department in December 2020.

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