Competition Commission nails Takealot sellers for alleged collusion

Two Takealot sellers that allegedly conspired to fix prices on personal protective equipment must face the Competition Tribunal.

The Competition Commission announced on Thursday that it referred the merchants to Competition Tribunal for prosecution.

“The Commission alleges that at the height of the Covid–19 pandemic Medmart Health (Pty) Ltd and BabyBug colluded to fix prices of face masks and divided the market by allocating customers in contravention of the Competition Act,” it stated.

“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.”

The Competition Commission explained that competing companies place their products on Takealot and, through an algorithm that takes variables such as price and stock availability into account, are then visible to customers.

“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,” it said.

“Furthermore, it is alleged that on 3 December 2020, during a telephone conversation between representatives of BabyBug and Medmart, the two companies agreed to manipulate their respective prices in such a manner that they would be able to make a profit selling 3-ply disposable face masks on the platform.”

The Competition Commission alleged the two companies allocated days to each other on which each company would adjust its respective prices and stock availability accordingly.

“This would limit competition between themselves,” the Commission stated.

“They also agreed to alternate the days each would price higher than the other.”

The Commission said this ensured BabyBug and Medmart would each have a day to charge a higher price followed by a day to charge a lower price.

The switch would happen at 17:00 every day.

“Medmart and BabyBug agreed to communicate from time to time regarding what would be the higher and lower prices,” the Commission said.

“Prices ranged from R79 to R90 per pack of fifty 3-ply face masks.”

It said that Takealot suspended BabyBug from its platform on 8 December 2022 and Medmart on 14 June 2021 on suspicion of collusion.

“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 inherently inimical to competition and the Commission has asked the Tribunal to impose a maximum penalty.”

Now read: Takealot and Makro reveal best-selling items over December holidays

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Competition Commission nails Takealot sellers for alleged collusion