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

[raptor-22]

Yeah, but I think its a short sighted attitude. We live in a global world where every single manufacturer bar none is trying to get closer to his customer, not further away. People buy goods in one country and move to or use it in another, why should they not be covered.? 

 

In most instances this is NOT the manufacturers attitude, its the distributors, the manufacturer cares not a jot where he replaces a warranty item, it can be in SA or inner Mongolia for all he cares, as far as he is concerned a warranty is a warranty.

 

Actually its my contention that the distributor does not lose money by supporting so called gray products for warranty, we were the distributors for an American brand of pumps for industry, but some of our customers were global companies who purchased their pumps elsewhere and shipped them around to the job on hand. Often we were called on to attend to warranty issues and we did it with a smile, why shouldn't we, it was no skin off our nose, we simply claimed a warranty part or unit from the manufacturer and without fail it was replaced.

In fact it was good business for us to attend to warranties even if we did not sell the product, because the customer came back time and time again for other items or jobs, never underestimate the goodwill of a happy customer.

 

I had an issue with my Sony camera i bought in SA, it was still under warranty by Sony and I took it to a dealer here, he looked at it to check the fault, made a call and replaced it, no questions about where i bought it, why should he care, Sony replaces it to him and he makes a customer happy who may, next time buy it from him.

 

As I say, to me its a short sighted attitude. 

 

 

The two distributors implicated in this saga are culprits of not honouring warranty on items purchased outside of SA, despite many of their brands having a global warranty. the practice is not to look after the brand but to look after their sales.

 

Also google anti-competitive claims against Shimano and you'll see a string a cases lodged by SRAM against them. 

 

When I wanted to import a Ducati 748 many years ago as part of my goods when moving back from Europe, I had no problem with the local supplier honouring warranty. No problem with Campagnolo , Dell, Yamaha, Pioneer no problem wit any of the global brands. But the local distributors of some especially the Shimano distributor.........

 

I buy all my Shimano from CRC. Will never spend a dime on their kit in SA while the distributor remains.

[Malpiet]

So true I was in europe on holiday and my panasonic camera was giving battery issues, took it into a panasonic dealer in amsterdam and 2days later it was sorted. Apparently its a factory fault on them.

 

no questions asked.

[Mongoose!]

 

 

Edit

Edited June 3, 2016 by Mongoose!

[Eldron]

Yeah, but I think its a short sighted attitude. We live in a global world where every single manufacturer bar none is trying to get closer to his customer, not further away. People buy goods in one country and move to or use it in another, why should they not be covered.? 

 

In most instances this is NOT the manufacturers attitude, its the distributors, the manufacturer cares not a jot where he replaces a warranty item, it can be in SA or inner Mongolia for all he cares, as far as he is concerned a warranty is a warranty.

 

Actually its my contention that the distributor does not lose money by supporting so called gray products for warranty, we were the distributors for an American brand of pumps for industry, but some of our customers were global companies who purchased their pumps elsewhere and shipped them around to the job on hand. Often we were called on to attend to warranty issues and we did it with a smile, why shouldn't we, it was no skin off our nose, we simply claimed a warranty part or unit from the manufacturer and without fail it was replaced.

In fact it was good business for us to attend to warranties even if we did not sell the product, because the customer came back time and time again for other items or jobs, never underestimate the goodwill of a happy customer.

 

I had an issue with my Sony camera i bought in SA, it was still under warranty by Sony and I took it to a dealer here, he looked at it to check the fault, made a call and replaced it, no questions about where i bought it, why should he care, Sony replaces it to him and he makes a customer happy who may, next time buy it from him.

 

As I say, to me its a short sighted attitude. 

 

In theory I would agree with you but practically I'm a win-win kinda guy.

 

Your pump analogy is great but it doesn't cover "grey" product. If there were another company like yours bringing in pumps cheaper than you and expecting you to cover all the warranties on their products you'd be out of pocket. That isn't right. Plus you had the financial incentive of winning maintenance contracts from these companies. There is no such incentive for distributors on bicycle components.

 

My only real issue with grey products is the after sale service. The official importer is lumped with the warranty costs of staff, millions of rands of spares, warehousing, shipping, supply chain etc - the grey importer is not. That is not a fair.

 

I'm all for people finding loopholes and reducing the cost to the client but it doesn't sit well with me for people to enjoy the reduced cost of grey product and then still expecting it to be fully warranteed.

 

If CRC/CWC struck up some kind of warranty deal with Shimano where they paid a portion of their Shimano turnover for global warranty different story but for them to enjoy the profit and never have to carry the cost of after sales doesn't sit well with me.

[raptor-22]

Nope the official distributor doesn't loose out because the stock they use to replace a warranty item is returned by the brand owner. Nobody loses. That's why I like SRAM. They replace parts under warranty regardless where you bought t and local prices are more competitive than CRC to encourage sales through the official distributor. That's competitive behavior

[Eldron]

Nope the official distributor doesn't loose out because the stock they use to replace a warranty item is returned by the brand owner. Nobody loses. That's why I like SRAM. They replace parts under warranty regardless where you bought t and local prices are more competitive than CRC to encourage sales through the official distributor. That's competitive behavior

 

What about warehousing, keeping millions of rands of stock, shipping, staff - who pays those costs?

 

SRAM doesn't cover regardless of where you bought - Rockshox in particular have unique codes on them and if you have one that wasn't brought in by the local agent you'll get shown the door chop chop.

 

Both Coolheat and Cape Cycles are pretty decent when it comes to helping people (sometimes even parts they didn't supply locally) but for them to carry the costs and while CRC/CWC carry the profit is not fair.

[Tumbleweed]

CPA is pretty clear about it. Warranties on grey products have to be covered by the person/concern that sold it to you.  

[BDF]

What about warehousing, keeping millions of rands of stock, shipping, staff - who pays those costs?

 

SRAM doesn't cover regardless of where you bought - Rockshox in particular have unique codes on them and if you have one that wasn't brought in by the local agent you'll get shown the door chop chop.

 

Both Coolheat and Cape Cycles are pretty decent when it comes to helping people (sometimes even parts they didn't supply locally) but for them to carry the costs and while CRC/CWC carry the profit is not fair.

These costs should be recovered from the manufacturer through a warranty claims administrative process. The local agent does not carry the cost for the warranty claim (if it was a genuine warranty claim)

 

A great example of this is Navworld with Garmin. It doesn't matter where in the world you bought the Garmin, Navworld will handle the warranty and recover the costs from Garmin.

Edited June 3, 2016 by BDF

[Eldron]

These costs should be recovered from the manufacturer through a warranty claims administrative process. The local agent does not carry the cost for the warranty claim (if it was a genuine warranty claim)

 

A great example of this is Navworld with Garmin. It doesn't matter where in the world you bought the Garmin, Navworld will handle the warranty and recover the costs from Garmin.

 

If that all works out (and it doesn't in the real world - Shimano do not cover staff/warehouse rental/interest on millions of rands of spares etc) then what about the fairness aspect?

 

Why do CRC/CWC get to make profit only and not have to support product?

 

Garmin is a poor example - compared to shimano/campag/sram they have a tiny product portfolio. Garmins cheapest product is ~R1,000. Shimano/SRAM/Campy way less. Tough to create critical mess when a lot of your products are under R100.

 

Either way - everyone's experience is different. My experience with the evil evil local suppliers is that they're pretty awesome people that have made a plan to help and my customers on many occasions.

 

Of all the 40+ local distributors I've dealt with only 1 has managed to disappoint me. That's pretty good odds I'd say.

[Warrenfly]

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.”

so how do all of you avid riders feel now that you know you have been ripped off by your favorite local bike shop? These guys agreed to some of the highest markups in the retail sector and all we have to do is pay. I can now understand how a bikeshop owner can afford to have fancy toys, properties and farms. Not so sure if I am willing to call these guys my friends anymore.... 

[raptor-22]

I agree it's not fair to buy from CRC and ask ccs to warranty an item. But CCS hand over to local shops is competitive enough for local retail pricing to be attractive enough to prevent me from wanting to buy SRAM from CRC.
I only buy shimano from CRC because the local pricing is just stupidly expensive and out of line with international trend. So why would I support an entity that prices handover high so retailers sell high and then engages in anti competitive behavior with those retailers? For me that's a loose loose situation.

The stink of this situation has driven my purchase decisions since it broke in 2008. People who sit together to plan how to hurt people who are also trying to make a living are the lowest of the low.

Edited June 3, 2016 by raptor-22

[BDF]

If that all works out (and it doesn't in the real world - Shimano do not cover staff/warehouse rental/interest on millions of rands of spares etc) then what about the fairness aspect?

 

Why do CRC/CWC get to make profit only and not have to support product?

 

Garmin is a poor example - compared to shimano/campag/sram they have a tiny product portfolio. Garmins cheapest product is ~R1,000. Shimano/SRAM/Campy way less. Tough to create critical mess when a lot of your products are under R100.

 

Either way - everyone's experience is different. My experience with the evil evil local suppliers is that they're pretty awesome people that have made a plan to help and my customers on many occasions.

 

Of all the 40+ local distributors I've dealt with only 1 has managed to disappoint me. That's pretty good odds I'd say.

I have no gripe with the LBS whatsoever. Neither do I have a gripe with the online retailers. The latter have made products available to people who would otherwise have not made a purchase at all or at least, would have purchased the less premium option to save costs.

 

Merely stated that warranties are supported by the manufacturer, which in my experience so far has been the case.

[NotSoBigBen]

I agree it's not fair to buy from fed and ask ccs to warranty an item. But ccs hand over to local shops is competitive enough for local retail pricing to be attractive enough to prevent me from wanting to buy SRAM from CRC.

I only buy shimano from CRC because he local pricing is just stupidly expensive and out of line with international trend. So why would I support an entity that prices handover high so retailers sell high and then engages in anti competitive behavior with those retailers? For me that's a loose loose situation.

 

The stink of this situation has driven my purchase decisions since it broke in 2008. People who sit together to plan how to hurt people who are also trying to make a living are the lowest of the low.

 

Maak my so kwaad ek borsvoed sommer 'n krokodil 

[Mongoose!]

.

Edited June 3, 2016 by Mongoose!

[Tumbleweed]

Maak my so kwaad ek borsvoed sommer 'n krokodil 

 

And to think that some of the shops on the list posted earlier are recommended regularly here on the hub...   

[jcza]

Seems like loads of people have a problem with "cheap" Shimano from Europe

 

https://independentbikeblog.com/2015/02/04/the-s-word-dealers-speak-out/