Bicycle cartel brought to task by competition commission

[Pure Savage]

Why Dipslick??

 

He has more than 10 000 posts so the journalist would be wanting to use the most reliable source on the hub. And I also like that he has not replaced his CAPS LOCKS key for years.

[Guest Travis.]

He has more than 10 000 posts so the journalist would be wanting to use the most reliable source on the hub. And I also like that he has not replaced his CAPS LOCKS key for years.

Don't expect him to use his name for this. He supports local more than most... and tbh, knowing him, he won't appreciate his name used in your post.

[Pure Savage]

Don't expect him to use his name for this. He supports local more than most... and tbh, knowing him, he won't appreciate his name used in your post.

I will remove it, was more tongue in cheek rather than fact.

[DJR]

Every time I read anything from the Competition Commission, I am left with the very strong smell of bull**** in my nostrils.

 

Their intended function is to look after the interest of the consumer........in that they have TOTALLY FAILED in the last decade. They "took on" the "bread cartel", the "medical cartel", the "lawyer cartel" and it has led only to "negotiated" fines. Fines that were paid to the Competition Commission to fund their admin and, I assume, the surplus into the state coffers. That is just another tax.

 

Not a cent has gone back to the consumer that was ripped off in the first place. No price reductions happened. The crooks just became smarter, stopped taking minutes and still colluded as before, now just legally. 

 

Free market? Not this way! 

[Sepia]

The consumer that was ripped off in the first place with this price fixing (again!!)[/size].  [/size]

 "Buy local" they say. [/size]Yeah, right. Flipping corruption all over. [/size] [/size]Will try and avoid local purchases where possible[/size]. Tired of it![/size]

Seriously, CRC is the best on offer.[/size]

[Shebeen]

I have no qualms buying from CRC. What about supporting local bikeshops?

When you're buying something from Shimano, there is no actual local value add. It's just a different retail source to procure the same thing, one with less middlemen.

 

BUT if you need it today, then you're prepared to pay more to go find it physically- that is a value add.

 

Labour is of course local, can't get that off CRC.

 

Some bikeshops will disagree with this line of thinking, but basic economic theory and market forces will do the learning.

[KingTJ]

Hey Fellow Hubbers

 

Came across this interesting article today, maybe somebody can shed some more light and warn our fellow Hubbers of the responsible bike shops

 

http://www.timeslive.co.za/local/2015/04/30/bicycle-cartel-brought-to-task-by-competition-commission

 

Cycling enthusiasts can ride a bit easier - and more affordably - as more of those involved in a nation-wide cycling cartel are brought to book.

Four of the 20 bicycle retailers and wholesalers implicated in the price-fixing scandal appeared before the Competition Tribunal on Wednesday, with the hope that the Tribunal will approve the terms of a settlement agreement they have reached with the Commission.

Melody Street 18, Pedal-On Marketing, trading as Maverick Cycles, Albatros Fishing and Cycling and Maillot Jaune Trading have admitted to colluding with others in 2008 to set the wholesale and retail prices of bicycles and cycling equipment. They have agreed to cooperate in the prosecution of others involved in the cartel.

Thirteen other companies, including Dunkeld Cycles in Johannesburg, Bowman Cycles in Cape Town and Bester Cycles in Pretoria, have entered into similar settlement agreements.

In a meeting, the companies agreed to all increase their mark-up on bicycles to 50% from 35% and the mark-up on cycling accessories to 75% from 50%.

The companies also agreed to get rid of discounting and ask wholesalers to advertise higher recommended retail prices to the public.

An anonymous source leaked the minutes of the meeting to the Commission, prompting the investigation.

Despite proof of this far-reaching cartel, industry insiders [the newspaper] spoke to pleaded ignorance to the existence of price-fixing in the sport.

Chairwoman of Soweto's Southsky Cycling Club Busisiwe Msimango said while prices of bicycles and accessories were steep, there were no indications of price-fixing.

“Prices differ and when you shop around you get a good price elsewhere," said Msimango.

Scott McKenzie, chairman of Sandton club Complete Cyclist, said: “We do not get a lot of cases [of price-fixing]. Cyclists have options to shop around [for] competitive prices.”

Bryanston-based Absolute Cycling Club chairman David Lange said no members of the club have complained about retailers suspected of collusion or fixing prices.

The Competition Tribunal late yesterday approved the terms of the settlement agreement, which will see the four businesses stop fixing prices, send all employees for training in competition law and display prominent notices at their premises detailing the disciplinary action handed down to them for engaging in uncompetitive practice.

But what raised the Tribunal's brows was that there was no undertaking to pay fines.

The Commission regularly imposes fines as punishment when companies admit wrongdoing and choose to settle. It can impose a fine to the maximum of 10% of the business's turnover in the previous year.

In 2010 the Tribunal fined Pioneer Foods R195-million for its involvement in the bread cartel. In the same year it imposed the maximum penalty for the first time when it fined Southern Pipeline Contractors almost R17-million for its role in the concrete pipes cartel.

The Commission on Wednesday told the Tribunal that the agreement's terms were sufficient to deter the companies from colluding in the future.

Senior legal counsel for the Commission Ngoako Moropene said the companies were small and imposing a fine might cripple them, which is not the Commision's goal.

Central Gauteng Cycling chairman Shahad Khan said he was not aware of the cartel and could not comment on it specifically, but he would be interested to know how the Commission had decided that the companies involved were small.

Next month, the Commission will prosecute two wholesalers - Coolheat Cycle Agencies and Omnico - that have opted not to settle. These are the final members of the cartel that still need to be brought to book.

The Commission withdrew its case Fritz Pienaar Cycles in Pretoria because the business was liquidated. No further action will be taken against former owner Fritz Pienaar, who may testify against Coolheat and Omnico.

[Tumbleweed]

I did not see a single thehubsa.co.za reference in either article! These journalists don't know the first thing about cycling related articles.

Maybe some unenlightened sub-editor edited it out...

 

"thehubsa.co.za, a local cycling forum, was approached for comment, but had not returned calls or replied to text messages at the time of publication."

 

Actually, to be fair to the media (scum though they are), early reports on this issue identified this site as where it first emerged.

[DJR]

A little birdie involved in the trade tweeted loud enough for my deaf ears to hear......goes something like this:

 

Most of the small local bike shops were invited to a meeting to discuss the state of the industry because many of them were not really making ends meet. They arrived innocently enough and among other things, was the discussion about upping margins etc etc.......but no agreement was reached to do anything, certainly not by all.

 

Imagine the surprize later when the Competition Commission came a knocking! The easiest way to make their problem disappear was to agree to co-operate because fighting it would have killed them with legal costs. The Competition Commission also knows that they have a tricky case to prove, and even then, that there isn't a multi million dollar fine coming their way, because most shops would be bust instantly, so, they also preferred a settlement that will make it look like they did what they were supposed to do.

 

Disgusting altogether, while we are short on people to catch murderers and rapists and real crooks. Reminds me of busting the backmarkers at funrides for taking Voltaren......(Yes, I am the devils' advocate on this one!)

[amasendeinja]

Go Grey...works like a charm

 

the interwebs makes the world a very small place

*Gray ????

[CleatsnCleavage]

Who knows if there is price fixing, but no doubt that cycling related gear just gets more and more expensive as mark ups get hiked. I wonder if any of our local bike magazines will run an article discussing the CC investigation, probably not because they know where their bread is buttered and are too scared to criticize. 

[Barry Stuart]

Free market principles, if people can get their parts at a decent price from overseas then why not? It's kind of a joke that motocross has become cheaper than mountain biking.

[Paul Ruinaard]

Who knows if there is price fixing, but no doubt that cycling related gear just gets more and more expensive as mark ups get hiked. I wonder if any of our local bike magazines will run an article discussing the CC investigation, probably not because they know where their bread is buttered and are too scared to criticize. 

No, there was price fixing - they admitted it. See the previous posts. This goes back years and there was a lot of hullabaloo on the hub as the minutes of the meeting were posted here as well with some red faced apologies from certain TV presenters etc.....

 

I agree on the press - advertising rags for the industry in a cozy little club. Ride magazine at a time might well have been an advertorial it was so bad.

 

WE need a cycling "Top Gear: :-)

[JXV]

A little birdie involved in the trade tweeted loud enough for my deaf ears to hear......goes something like this:

 

Most of the small local bike shops were invited to a meeting to discuss the state of the industry because many of them were not really making ends meet. They arrived innocently enough and among other things, was the discussion about upping margins etc etc.......but no agreement was reached to do anything, certainly not by all.

 

Imagine the surprize later when the Competition Commission came a knocking! The easiest way to make their problem disappear was to agree to co-operate because fighting it would have killed them with legal costs. The Competition Commission also knows that they have a tricky case to prove, and even then, that there isn't a multi million dollar fine coming their way, because most shops would be bust instantly, so, they also preferred a settlement that will make it look like they did what they were supposed to do.

 

Disgusting altogether, while we are short on people to catch murderers and rapists and real crooks. Reminds me of busting the backmarkers at funrides for taking Voltaren......(Yes, I am the devils' advocate on this one!)

The law makes it illegal for competing members of an industry to discuss pricing ... in any way.

 

Two bike shop owners are not permitted to discuss pricing, even in a private conversation. They dont have to agree. Just having the discussion would be illegal in terms of the regulations. Of course, proving that discussions led to price fixing is much more difficult and more serious but you can be fined simply for having such discussions

 

Go and do the training....it is surprising to learn how little you can ethically/legally discuss with a market competitor.

[DJR]

The law makes it illegal for competing members of an industry to discuss pricing ... in any way.

 

Two bike shop owners are not permitted to discuss pricing, even in a private conversation. They dont have to agree. Just having the discussion would be illegal in terms of the regulations.

 

Go and do the training....it is surprising to learn how little you can ethically/legally discuss with a market competitor.

I know this all too well, as I work in an industry (health) that got investigated and fined very early on by the Competition Commission as well. Actually, the first fine went to the Pretoria Law Association, for setting recommended fees for lawyers. They decided not to fight it, co-operated and was given a small fine. Basically, the Competition Commission did this to set a legal president. Thereafter, it was easy to get the other industries in the same way, with bigger fines.

 

The point I was trying to make, is this: Right or wrong, according to the letter of the law, that law and how it is wielded by the Competition Commission, has not at all benefitted the consumer it is meant to do. It has only benefitted the Competition Commission. If anything, it has had a negative effect in that it raised prices to the consumer.

 

Where do you think the bread cartel got the money from to pay their hefty fine? From the same consumer they ripped off to start with. How did they do this? By upping their prices "independently" but legally. Where did the fine money go? Not back to the consumer, for sure!

[Wez-O]

Cheers to CW Cyles for screwing the ripoffs (as mentioned in this thread).