Events

Two wholesalers in bicycle price-fixing charges get R4m administrative fines each

· By Press Office · 254 comments

Tuesday 31 May, the Tribunal has issued both its order and its reasons in the Omnico and Coolheat Cycle case. It has awarded an administrative penalty to Omnico of R4627412 and to Coolheat Cycles a penalty of R4250612. The Tribunal has already confirmed six consent orders by wholesalers and 11 retailers in the bicycle sector who were implicated in a price-fixing investigation by the Competition Commission.

The two wholesalers, Omnico and Coolheat, however, chose to oppose the charges and the matter was heard last year by the Tribunal.

The Commission relied for its case primarily on a meeting held on 10 September 2008 where about 200 bicycle wholesalers and retailers attended a meeting at Midrand Conference Centre in Gauteng to discuss increasing their markup on bicycles to 50% from 35%, and the markup 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. Details of these discussions had been posted on an online discussion forum called The Hub and was brought to the attention of the Commission.

Evidence presented at the hearing revealed that both Omnico and Coolheat had attended the September meeting that there was agreement among wholesalers to increase the mark-up on wholesale prices for bicycles and cycling accessories in co-ordination.

In determining the penalties the Tribunal took into account some mitigating factors for Omnico. However, it found no such mitigating factors for Coolheat, who had elected not to give evidence at the Tribunal and to explain its subsequent price increases.

The other 17 companies who settled early with the Commission were not fined for the offence as they had admitted they had contravened section 4(1)(b) of the Competition Act. The Commission had withdrawn its case against one of the companies, Fritz Pienaar Cycles, because the business was liquidated.

Issued by:
Chantelle Benjamin
Communications: Competition Tribunal

Omnico’s official statement on this matter – 1 June 2016

“Four years ago the Competition Commission commenced legal proceedings against a number of wholesalers and retailers contending that they were guilty of price fixing. 17 consent orders were obtained by the Commission ( ie these parties agreed to admitting guilt) and no fine was imposed on them. Omnico and another party denied any contravention as alleged by the Commission and as such refused to consent to an order as required by the Commission. Had Omnico simply consented, that effectively would have been the end of the matter and no fine would have been imposed on them by the Commission.

The matter proceeded and the Competition Tribunal, after a lengthy and expensive legal process has ordered that Omnico contravened the Competition Act and imposed a fine.

Omnico is disappointed at the Tribunal’s decision and maintains that it was not party to any anti-competitive agreement as alleged.

In the circumstances Omnico has instructed its legal advisors to appeal the Tribunal’s decision.”

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Comments

bassasdaindia

May 31, 2016, 2:21 PM

should make an entertaining thread .

Shebeen

May 31, 2016, 2:22 PM

BOOOOOOM!

 

but, like the bread vibe, i suppose we're going to pay in the end.

shaper

May 31, 2016, 2:25 PM

Seems the mark up policy has been implemented since 2008 and continues to do so each year.....

Eon du Plessis

May 31, 2016, 2:26 PM

Not really surprised

Hairy

May 31, 2016, 2:26 PM

guess shimano prices are going to go through the roof soon  :ph34r:

Cois

May 31, 2016, 2:30 PM

31 March or 31 May?  Smells like zuma to me

Showtime

May 31, 2016, 2:31 PM

guess shimano prices are going to go through the roof soon  :ph34r:

 

I can almost see them approaching SRAM prices  :ph34r:

T-Bob

May 31, 2016, 2:33 PM

guess shimano prices are going to go through the roof soon  :ph34r:

 

Their sales are falling this year site badly... but don't worry, they'll go up! :)

Steven Holmes

May 31, 2016, 2:34 PM

I think its good. For years these guys have milked us!! With this type of pressure from the Competition Tribunal and the competition from the online guys, prices will be kept in check. Well, as much as they can be anyway. Damn exchange rate!! 

Flemish Lion

May 31, 2016, 2:37 PM

The R4m x 2 should be distributed to us CONSUMERS!

Hairy

May 31, 2016, 2:39 PM

The R4m x 2 should be distributed to us CONSUMERS!

?

Flemish Lion

May 31, 2016, 2:44 PM

?

They've been marking up and we paid the higher prices...

davidl

May 31, 2016, 2:47 PM

Whilst levying the fines is a good thing, it will not have any benefit for us. The retailers are now all hiding behind the exchange rate to increase prices. Nothing really comes our way!

Hairy

May 31, 2016, 2:48 PM

They've been marking up and we paid the higher prices...

got you .... so now they just hand over the cash owed and then mark up anyway ?

Danger Dassie

May 31, 2016, 2:49 PM

They've been marking up and we paid the higher prices...

 

The issue was price fixing, not the actual percentage of markup. 

T-Bob

May 31, 2016, 2:51 PM

 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. Details of these discussions had been posted on an online discussion forum called The Hub and was brought to the attention of the Commission.

 

 

 

Missed that part in initial reading. Shame the old hub got broken, would loved to have seen the discussions in question that kicked this off. 

robsc

May 31, 2016, 2:55 PM

The issue was price fixing, not the actual percentage of markup. 

 

Correct but the only way to bounce back from a R4 mil fine is to increase your profit 

Kranswurm

May 31, 2016, 2:57 PM

Old news....was a great saga at the time.The good old days of little or no censorship on here

Bizkit031

May 31, 2016, 3:12 PM

guess shimano prices are going to go through the roof soon  :ph34r:

yea they need to make up their lost 4mil from us for their wheeling and dealing.
BaGearA

May 31, 2016, 3:17 PM

And "POP" goes the weasel 

Tumbleweed

May 31, 2016, 5:01 PM

The issue was price fixing, not the actual percentage of markup.

This price would be fixed if a mark-up percentage was agreed to across the industry.

Tumbleweed

May 31, 2016, 5:06 PM

It wouldn't surprise me if the fine is challenged. The authorities have made a number of missteps in this process.

'Kaze Pete

May 31, 2016, 5:08 PM

It wouldn't surprise me if the fine is challenged. The authorities have made a number of missteps in this process.

Were you not part of exposing this, and subsequently had threats made against you?

 

https://community.bikehub.co.za/topic/34441-bike-retailer-cartel/?p=580258

fanievb

May 31, 2016, 5:14 PM

BOOOOOOM!

 

but, like the bread vibe, i suppose we're going to pay in the end.

You've already paid

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