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

[Krypt0n1te]

Looking at Specialized, the difference between Dealer Cost and MSRP is a whopping 54% on their bikes.

Not picking on Spez here, I ride one myself, pretty sure it is the same with the other big brands.

 

But what to do? You want the bike you pay the price!

 

Sent from my SM-N910F using Tapatalk

[Halfdoesyn]

So fine money flows:

 

Consumer -> Bike shops -> Bad Evil Distributors -> even Badder Eviller Gav'ment

 

Mmmmm... Looks like we get shafted regardless.

[NotShatterProof]

Here's an example: I recently bought a 36T for the SS, paid R1100 for it. When I got home I looked at the old 33T and changed my mind. Sent the wife back to exchange it for a 34T. She phones me in a flat panic from the shop telling me that she has to pay in R500 because the new stock has come in. That's a rather large exchange rate movement. Fixing, exchange rate, call it what you want, it seems excessive. Just as a matter of interest the same 36T is about R600 on CRC.

 

Now I ride a 36T to work.

[Mongoose!]

Here's an example: I recently bought a 36T for the SS, paid R1100 for it. When I got home I looked at the old 33T and changed my mind. Sent the wife back to exchange it for a 34T. She phones me in a flat panic from the shop telling me that she has to pay in R500 because the new stock has come in. That's a rather large exchange rate movement. Fixing, exchange rate, call it what you want, it seems excessive. Just as a matter of interest the same 36T is about R600 on CRC.

 

Now I ride a 36T to work.

 

You are a lucky man. My wife will never go to a bike shop on my behalf to exchange parts

Edited June 1, 2016 by Mongoose!

[Morwa]

Here's an example of how distributors are ripping of South African consumers...

 

CW Cycles (who presumably use grey market stuff) sometimes sell products (such as Continental tyres) at half the retail price. Not only this, but I've heard from bike shops that many of their specials are infact lower than the cost price bike shops are paying for them. Go figure.

 

 

That's exactly why I will keep on supporting CWC!   Go Chris Go!  I don't care about grey/gray......but I do care about the cash in the pocket.

 

It's time we list these shops.....like CWC.  Let's support them.

[raptor-22]

Looking at Specialized, the difference between Dealer Cost and MSRP is a whopping 54% on their bikes.

Not picking on Spez here, I ride one myself, pretty sure it is the same with the other big brands.

 

But what to do? You want the bike you pay the price!

 

Sent from my SM-N910F using Tapatalk

 

 

that's why retailers feel miffed when not considered by Specialised  to be a dealer because that's a significantly higher mark up on the products than other brands offer. And they can't be discounted due to contractual obligations.

[andydude]

It's interesting everyone slating the distributors, rightly so, but our beloved Shimano is not an angel either.

 

Interesting read, even though it's from 2001. A Stick In The Spokes http://www.forbes.com/forbes/2001/0305/148.html

[Tumbleweed]

Think this will end up at the Competition Appeal Court? I get that the administrative penalty thing is supposed to act as a deterrent, but it's really a fine for annoying the state if you think about it. No one wins except the Comp Comm/Trib...which needs to pay a silk or two after the bread cartel challenges.

 

R4-bar apiece sounds an awful lot if all that really happened was one meeting, having just read again how the fines are calculated.

 

And what of the much-whispered-about Cape Town meeting...? 

 

On a tangent: think anyone who attended that Gauteng meeting applied for leniency from the Comp Comm?

 

Another tangent: I remember there was a hubber who said he'd made two appearances at the Comp Comm at around that time - one to do with this issue and the other to answer a complaint laid by another hubber on a different issue (although I believe the complainant in both issues was actually the same hubber...) That seemed to involve a dealer allegedly telling a wholesaler not to do business with another person in the industry. Odd case. Don't think it was ever pronounced on. Neither said anything, and neither of them post here anymore. Funny old industry...

Edited June 1, 2016 by Tumbleweed

[Sidmouth]

I think the LBS is the biggest victim of this, them have no choice, as consumers we come in a close second, but at least we have CWC and CRC,  

 

I am a big fan of these two online stores, The service and delivery from CRC is at another level, for anyone hesitant to use CRC, give it a go you will be pleasantly surprised, and when it comes to a warranty issue, just email them a description of the problem and a photo and they refund your bank account, truly amazing.

[raptor-22]

Think this will end up at the Competition Appeal Court? I get that the administrative penalty thing is supposed to act as a deterrent, but it's really a fine for annoying the state if you think about it. No one wins except the Comp Comm/Trib...which needs to pay a silk or two after the bread cartel challenges.

 

R4-bar apiece sounds an awful lot if all that really happened was one meeting, having just read again how the fines are calculated.

 

And what of the much-whispered-about Cape Town meeting...? 

 

On a tangent: think anyone who attended that Gauteng meeting applied for leniency from the Comp Comm?

 

Another tangent: I remember there was a hubber who said he'd made two appearances at the Comp Comm at around that time - one to do with this issue and the other to answer a complaint laid by another hubber on a different issue (although I believe the complainant in both issues was actually the same hubber...) That seemed to involve a dealer allegedly telling a wholesaler not to do business with another person in the industry. Odd case. Don't think it was ever pronounced on. Neither said anything, and neither of them post here anymore. Funny old industry...

 

 

A fine for annoying the state? Isnt that what any punishment is dished out by a court?

Yes its a deterent that would not be needed if fair business practice was followed

[Tumbleweed]

A fine for annoying the state? Isnt that what any punishment is dished out by a court?

Yes its a deterent that would not be needed if fair business practice was followed

 

I guess you're right.

 

But then you could argue that this lot got a fine for sitting around and saying they will run a red robot rather than actually running it.

[raptor-22]

Well they also planned to prevent other people using the intersection and mugging anyone using it for the first time. If you still ok with that then I guess you don't have a problem with crime in South Africa

[Matt]

The quote below is an official statement we have received from Omnico regarding this matter.

 

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

 

“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.”

[Tumbleweed]

Well they also planned to prevent other people using the intersection and mugging anyone using it for the first time. If you still ok with that then I guess you don't have a problem with crime in South Africa

 

Haha! Good analogy.

 

What I can't get my head around is how they came to the amount. If the duration of the collusion is one of the determining factors used in the calculation of a penalty, the amount does seem on the high side.

[raptor-22]

its typically 10% of turnover. 

 

that's a massive cash outflow that's not going to salaries or stock.

 

I can see why they want to appeal but they are also only digging a bigger hole.

 

With so many parties having admitted guilt there is no way out of this rabbit hole except through redemption via 4milion hail Mary's and a sprinkling of Wholey Water

Edited June 1, 2016 by raptor-22

[Tumbleweed]

its typically 10% of turnover. 

 

Ja, I have seen that percentage spoken of, but there are other factors to be weighed up too.