Bicycle Price Fixing (Fin24 31May)

[davem]

Having kept an (jaundiced) eye on the workings of the Competition Commission for the last decade, my opinion is that the whole purpose of the commission has been missed altogether.

 

They get "convictions" by intimidating the accused to admitting guilt on technical grounds. Then they give them a slap on the wrist. Often the real big fish get off scott-free. Making arrangements with the little fish (like here) they use them to intimidate the bigger fish - just to give them, you guessed it, another little slap on the wrist. Not one little bit of competition has been promoted. Not one little benefit got to the consumer. All they've done was to teach the price fixers to be a lot smarter and to do it with a tick sheet of legal requirements in hand to stay out of trouble.

 

Think Tiger Brands, bread prices, medicine prices etc. And our petrol price is fixed - by government! Btw, do you realize the the state is exempt from the competition laws? Yes, the minister of health (as an example) have the legal right to tell pharmacies what they may charge. Free market, my ass!

 

I think some of those fines have been pretty weighty. Enough to significantly move share price. Telkom is trying to get out of a recommended multi billion fine.

 

The health minister is actually trying to limit the price of medicine. The pharmacies are complaining because they are making too little. Your point is the wrong way round.

[Li Mu Bai]

Where do the Gupta's fit in?

[Frankenberg]

This would be a whole lot less likely to happen if consumers had the freedom of ordering products from online stores and not solely through an agent. A competitive market drives prices down and creates consumer intelligence around variety and price.

 

Getting rid of the exclusive agent system would go a long way to preventing or at the least minimising this sort of behaviour.

[Wayne Booysen]

As a matter of interest, imagine if the petrol price wasn't regulated.

[Sportsworld.co.za]

Well, on this topic, when we had the idea for our own small online shop we did contact some of the larger local distributors here in SA. We were basically told ' nope, we won't supply you because the LBS stores with physical premises are complaining that online stores can sell the stuff for cheaper'.

 

Now I fully understand that there is an important place for the LBS, but they aso have to get their act together and get online because internet shopping isn't going to go away.

 

We have had mall retail shops, staff, theft, etc etc etc and I don't want to go that route again.

 

So in a way, the market is perhaps controlled to a certain degree in relation to the prices of locally distributed items. Personally I would like to also be able to shop locally and support jobs here in SA but we were forced to go abroad because I don't give up so easily.

 

So sometimes our prices for certain items are maybe a bit more expensive than local guys but we try our best and I know a lot of our prices (esp for clothing) are lower even though we have to import.

 

It's tough out there, and with the exchange rate woes it's going to affect everyone because somewhere along the line I would say that 95% of this stuff is imported.

 

But hey, onwards and upwards, and I can still go ride my bike !!!!!

[JGR]

Having kept an (jaundiced) eye on the workings of the Competition Commission for the last decade, my opinion is that the whole purpose of the commission has been missed altogether.

 

They get "convictions" by intimidating the accused to admitting guilt on technical grounds. Then they give them a slap on the wrist. Often the real big fish get off scott-free. Making arrangements with the little fish (like here) they use them to intimidate the bigger fish - just to give them, you guessed it, another little slap on the wrist. Not one little bit of competition has been promoted. Not one little benefit got to the consumer. All they've done was to teach the price fixers to be a lot smarter and to do it with a tick sheet of legal requirements in hand to stay out of trouble.

 

Think Tiger Brands, bread prices, medicine prices etc. And our petrol price is fixed - by government! Btw, do you realize the the state is exempt from the competition laws? Yes, the minister of health (as an example) have the legal right to tell pharmacies what they may charge. Free market, my ass!

Well said. I know of many owner run pharmacies who went out of business because their markup was dicated to them without consideration of economical factors - location/rent ect. Whilst Im happy we have a watch dog it seems to be a little like catching the backmarkers at epic doping.

 

Bicycles (new ones) are a luxury items and I would be more conerned about the Tiger Brands/Nestle/Kraft/Proctor and Gabmbles et al.

[JGR]

Well, on this topic, when we had the idea for our own small online shop we did contact some of the larger local distributors here in SA. We were basically told ' nope, we won't supply you because the LBS stores with physical premises are complaining that online stores can sell the stuff for cheaper'.

 

Now I fully understand that there is an important place for the LBS, but they aso have to get their act together and get online because internet shopping isn't going to go away.

 

We have had mall retail shops, staff, theft, etc etc etc and I don't want to go that route again.

 

So in a way, the market is perhaps controlled to a certain degree in relation to the prices of locally distributed items. Personally I would like to also be able to shop locally and support jobs here in SA but we were forced to go abroad because I don't give up so easily.

 

So sometimes our prices for certain items are maybe a bit more expensive than local guys but we try our best and I know a lot of our prices (esp for clothing) are lower even though we have to import.

 

It's tough out there, and with the exchange rate woes it's going to affect everyone because somewhere along the line I would say that 95% of this stuff is imported.

 

But hey, onwards and upwards, and I can still go ride my bike !!!!!

SA has a market place to support both. There are a lot of people who dont have or cant affort credit making the LBS their only option. I think many people in SA are still wary of online shopping - my mom for example doesnt even trust EFTs to make payment - She still writes cheques.

 

Online is not only sales for a store but advertising and having a presence 24hrs a day. I personally never harly ever go to stores without websites

[DIPSLICK]

Can a single store business with a single owner really be involved in price fixing?

 

Have no doubt on the distributor side, but the little guy is more a passenger who basically charges RRP.

A SINGLE STORE CAN IF HE IS THE DISTRIBUTORS BIGGEST ACCOUNT

[Wayne Booysen]

A SINGLE STORE CAN IF HE IS THE DISTRIBUTORS BIGGEST ACCOUNT

 

It might be that the distributor owns the store.

[DIPSLICK]

It might be that the distributor owns the store.

POSSIBLE BUT NOT NESSASARY

[Mtblife]

Merc do the same as soon as you request a quote they ask for your ID, THEN through out SA when ever you call another dealer they see price quoted on a intranet and know not to under quote it. So what's new!! But Merc probably bribed the commissioner with a dissy on a car so they never have a hearing...

 

I am told commissioner does not MTB!!

[andydude]

Can a single store business with a single owner really be involved in price fixing?

 

Have no doubt on the distributor side, but the little guy is more a passenger who basically charges RRP.

 

There were 28 chops... I mean shops involved, not one?

[DJR]

I think some of those fines have been pretty weighty. Enough to significantly move share price. Telkom is trying to get out of a recommended multi billion fine.

 

The health minister is actually trying to limit the price of medicine. The pharmacies are complaining because they are making too little. Your point is the wrong way round.

 

Like I said, "jaundiced eye" I have!

 

Share price is moved by perceptions. No large company ever got anywhere near a 10% of turnover fine. Mostly it was very much less. 10 % of turnover could put a lot of smaller companies out of business. They negotiate a fine in line with what they can afford and still leave them with a profit from their ill gotten gains. If they can't get the fine down below their break even point, they fight it in court. The competition commission wants to avoid this, because it is difficult to prove beyond a reasonable doubt and make for messy court cases, so they keep the fines affordable. That also keeps the Competition Commissions' "profit" margin high. (They have to fund themselves from the fines.) Telkom won't be fined anywhere near what they made out of their uncompetitive behaviour, mark my words. Medicine prices did not come down, fewer alternatives are now available and there are fewer pharmacies today.

[DJR]

Btw, it would be interesting to see how hard the accused price fixers will fight if they are slapped with a criminal case. Imho, no executive will settle if that is the case. Much easier to pay a negotiated fine. How many will be convicted? Very few! Far fewer than would be willing to pay the fine. The whole thing is a poor and ineffective way to prevent price fixing and smell too much like the story of the goose that laid golden eggs........

[Sammajoor]

Just read this..

http://www.beeld.com/sake/2013-06-02-fiets-kartel-s-boet-vyf-winkels

[maffias]

@ Domestique I couldn't agree with you more in regards to the Local Bike distis in this country. the Local Distis need to catch a BIG wake up call as sales aren't only driven by LBS (times and sales have changed) Some LBS don't advise you correctly they have an attitude where they are doing you a favour when you walk in as a customer. The bottom line is simple they are all working together at the price of the consumer. I'm sorry for B!tching but I really feel strong about this. At the end of the day the Distis needs to look at sales and getting their products out on the market. If a new store owner wants to sell a Distis product that means that the new prospect trust's and is loyal to that brand why not supply ?

I bet the online store at a competitive price will probably out sell the LBS. Its funny how overseas everything is online and locally we have to mission to get ecommerce going ? Very sad and narrow minded.

 

My 2c.