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Found 2 results

  1. Two wholesalers in bicycle price-fixing charges get R4m administrative fines each - 31 March 2016 Today, 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 The Commission had withdrawn its case against one of the companies, Fritz Pienaar Cycles, because the business was liquidated.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.”
  2. Final blow for bicycle cartelDec 22 2016 07:54 Cape Town - The Competition Appeals Court (CAC) has dismissed the appeal of two bicycle wholesalers, saying doing nothing amounted to agreeing to fix prices. The CAC upheld a Tribunal finding that Omnico and Coolheat engaged in conduct directly and indirectly in contravention of the Competition Act, namely agreeing as competitors to fix prices. This ruling brought an end to the long-running bicycle cartel case. In 2008, some 20 bicycle retailers and wholesalers contravened the Competition Act in that while being competitors in the market for the supply and delivery of bicycles and bicycle accessories, they agreed to fix prices. This resulted from a meeting held on 10 September 2008. In the meeting the parties agreed to increase gross margins by inflating mark-ups for cycling accessories from 50% to 75% and for bicycles from 35% to 50%. They further agreed to implement the increases from October of that year while stopping discounts and getting shops to stop undercutting each other. In addition, wholesalers would provide higher recommended retail prices to retailers and advertise these to the public. The Commission initiated a complaint in terms of the Act against all 20 parties that were at the meeting. Prior to the hearing at the Competition Tribunal, the Commission concluded settlement agreements with eleven bicycle retailers and six wholesalers. Among other things, the retailers and wholesalers agreed to settle the matter based on the following: · They admitted to having contravened the Competition Act; · They agreed to conclude the settlement agreements without payment of an administrative penalty; · They undertook to cooperate fully with the Commission in relation to the prosecution of any other party who are subjects of this matter; · They undertook to desist from engaging in similar conduct; · They agreed to refrain from engaging in meetings that may constitute cartel conduct; and · They agreed that their employees, management, directors and agents would attend competition law compliance programmes. Two more wholesalers, however, did not conclude any settlement with the Commission and decided to pursue the matter at the Tribunal. Omnico and Cool Heat Agencies argued that they did not "actively participate" in the discussions and were therefore not liable. The Tribunal, however, found the wholesalers did nothing to distance themselves from the discussions and that their silence amounted to an agreement. Administrative penalties of R4 627 412.00 and R4 250 612.00 were imposed on Omnico and Coolheat respectively. The two subsequently took the matter on appeal to the CAC, which has handed down judgment and concluded the long-running case. In dismissing the appeal, the CAC found that neither Omnico nor Coolheat distanced themselves at the meeting after consensus had been reached: “They gave no indication thereafter that they disagreed and they placed no evidence before the Tribunal that the increased recommended retail price, following the September meeting, was as a result of an independent decision without anti-competitive effect.” In dismissing the appeal, the CAC ordered the wholesalers to pay the costs of the appeal. Omnico was granted a 50% discount on its administrative penalty. http://www.fin24.com/Companies/Retail/final-blow-for-bicycle-cartel-20161222
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