At the height of the Covid-19 pandemic two face mask suppliers allegedly colluded to exploit Takealot’s listing algorithm to maximise profits.
That’s what the Competition Commission alleges and it has referred the two competing companies — Medmart Health and BabyBug — to the Competition Tribunal on collusion allegations, asking it to impose the maximum penalty — 10% of annual turnover.
It is alleged that in or around December 2020 Medmart and BabyBug entered into an agreement “and/or engaged in concerted practice to fix prices and divide markets by allocating suppliers” — an offence in terms of the Act.
The commission said on Thursday competing companies place their products on Takealot which become visible to consumers based on an algorithm which takes variables such as price and stock availability into account.
“For example, a supplier that has a cheaper product and available stock is likely to have its product more visible to customers who enter the Takealot platform than a supplier with a higher price and less stock.
“So during a phone conversation in early December, the companies allegedly came up with a scheme to manipulate the algorithm to their benefit.
“It is alleged the two companies allocated days to each other on which each company would adjust its respective prices and stock availability accordingly, limiting competition between themselves.
“They also agreed to alternate the days each would price higher than the other. This meant BabyBug and Medmart would each have a day to charge a higher price followed by a day to charge a lower price.” The switching would be at 5pm each day.
“The prices ranged from R79 to R90 per pack of 50 three-ply face masks. Medmart was suspended from the platform by Takealot in June 2021 on suspicion of collusion and BabyBug for the same reason in early December 2022.
“This type of collusive conduct is harmful to consumers as it deprives them of the benefits which arise from competition,” the commission said.
“Such agreements are inimical to competition and the commission has asked the tribunal to impose a maximum penalty.”
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Competition Commission unmasks alleged mask price collusion at the height of Covid-19
Image: 123RF/Oksana Smyshliaeva
At the height of the Covid-19 pandemic two face mask suppliers allegedly colluded to exploit Takealot’s listing algorithm to maximise profits.
That’s what the Competition Commission alleges and it has referred the two competing companies — Medmart Health and BabyBug — to the Competition Tribunal on collusion allegations, asking it to impose the maximum penalty — 10% of annual turnover.
It is alleged that in or around December 2020 Medmart and BabyBug entered into an agreement “and/or engaged in concerted practice to fix prices and divide markets by allocating suppliers” — an offence in terms of the Act.
The commission said on Thursday competing companies place their products on Takealot which become visible to consumers based on an algorithm which takes variables such as price and stock availability into account.
“For example, a supplier that has a cheaper product and available stock is likely to have its product more visible to customers who enter the Takealot platform than a supplier with a higher price and less stock.
“So during a phone conversation in early December, the companies allegedly came up with a scheme to manipulate the algorithm to their benefit.
“It is alleged the two companies allocated days to each other on which each company would adjust its respective prices and stock availability accordingly, limiting competition between themselves.
“They also agreed to alternate the days each would price higher than the other. This meant BabyBug and Medmart would each have a day to charge a higher price followed by a day to charge a lower price.” The switching would be at 5pm each day.
“The prices ranged from R79 to R90 per pack of 50 three-ply face masks. Medmart was suspended from the platform by Takealot in June 2021 on suspicion of collusion and BabyBug for the same reason in early December 2022.
“This type of collusive conduct is harmful to consumers as it deprives them of the benefits which arise from competition,” the commission said.
“Such agreements are inimical to competition and the commission has asked the tribunal to impose a maximum penalty.”
TimesLIVE
Support independent journalism by subscribing to the Sunday Times. Just R20 for the first month.
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