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

[Mongoose!]

as per minutes / notes of the said meeting posted here on page 9 :

 

Is Cajees really such a bad shop?

[raptor-22]

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/

 

 

More reason to buy Campag or SRAM. That's what it means to me.

 

For a small shop in the US it probably means better pricing. For a small shop in SA it means stuffall.

Edited June 3, 2016 by raptor-22

[shaper]

as per minutes / notes of the said meeting posted here on page 9 :

 

Is Cajees really such a bad shop?

Just do a forum search of Cajees.. there plenty of comment.  Here one https://community.bikehub.co.za/topic/159626-my-experience-with-cajees/?hl=cajees

[GrumpyOldGuy]

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.

Sure, I hear you Eldron, but unfortunately in business you cant stack everything in your favour, eventually it becomes too onerous for somebody, usually the customer.

 

As a distributor of any product I think one needs to factor in that a small percentage of your claims will be iffy, this could be due to grey products or downright fraud, but its part of the deal, if you are not prepared to accept that, then in my opinion you want too big a cake slice.

 

You are correct we benefited from future maintenance contracts, but had we said "sorry boys, not our problem", we would have also walked away from those contracts and a lot of good will, most people and companies are not unreasonable, its not difficult to find middle ground be it in the form of a small handling fee, or a minor labour charge or a call out fee, whatever, I think its important to look for ways to be inclusive, a rigid attitude to what is now a global phenomenon (internet purchases) is just riding a road to nowhere. 

[GrumpyOldGuy]

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.

Yah, indeed, I bought my Harley in SA and Harley here have had no issues with supporting the maintenance contract and warranty, all it required was a change of registration numbers and "Viola" ... done deal. 

Edited June 3, 2016 by GrumpyOldGuy

[Tumbleweed]

Yah, indeed, I bought my Harley in SA and Harley here have had no issues with supporting the maintenance contract and warranty, all it required was a change of registration numbers and "Viola" ... done deal.

I seen warranties being handled by local peeps for overseas purchases here. There is still the burden of providing PoP to ensure the bike/component was not obtained in the grey market. I was once had a customer at the shop get advice for a number of weeks, then go off to a discounter to buy the bike...and then have the cheek to try claim a free first service from us when it was set up wrong by the discounter.

[GrumpyOldGuy]

I seen warranties being handled by local peeps for overseas purchases here. There is still the burden of providing PoP to ensure the bike/component was not obtained in the grey market. I was once had a customer at the shop get advice for a number of weeks, then go off to a discounter to buy the bike...and then have the cheek to try claim a free first service from us when it was set up wrong by the discounter.

Sure, I think a lot of distributors locally in SA are accepting the fact that folk move around the world and supporting the brand is just as important for their future business as the name of the manufacturer. 

Yes, I had to show I had actually paid for the Harley legitimately with papers and I had to re register it on the USA data base with a local registration number, but thats part of the legal process which I imagine is the same all over, but Yah, you always get the chancer I guess.

 

Just as another example and I wonder how a local distributor would handle this, lets take a hypothetical case of a couple on Honeymoon in Austria, great ski slopes, great food, all looks good, but Hey, you want a better video of your lovely new wife than your mobile is capable of producing, so not wanting to waste your valuable honeymoon memories you rush out and buy, lets say, an action camera at the local store, you take some great video's and return home. 

A few weeks later it develops an issue, you take it in to your local shop explain the issue and rightly expect it to be repaired under warranty, but are refused based on the fact it was not bought domestically. This is not right, this is not a good business decision and does nothing but make the customer antagonistic and irritated, and for what, a camera the manufacturer will replace anyway? I have to ask is it worth it.?

 

Please let me reiterate, this is a hypothetical question, I have no idea if a SA distributor would react like that or not, for all I know they may say sure, no problem, I am just showing how a legitimate customer can be inconvenienced and irritated by rigid terms and conditions, and bear in mind a camera could just as easily be a wheel set, a seat, a pair of shoes, it makes no difference, the outcome is the same, an unhappy customer who feels done in.

[raptor-22]

If it's a garmin no problem . If it's a go pro...?

[IcemanGP]

Lloyd Gedye - Mail&Guardian - Thursday, 09 June 2016
 

The Competition Tribunal has fined two bicycle dealers who denied being part of a cartel, but those who admitted guilt have got off scot-free.

 

It’s one thing to find out that you have been paying more than you should for your bicycle and parts because of a cartel, but it’s another thing entirely to be told by a cartel member to “get on your bike” when you voice your outrage.

 

It was Coolheat Cycle Agencies’ managing director, Stephen Meltzer, who responded in this way to angry cycling enthusiasts on the website TheHubSA when the minutes from a meeting of colluding bicycle wholesalers and retailers were first exposed in 2008.

 

Meltzer has been described as the “doyen of the cycling industry”, of which he has been part since 1979 when he founded Coolheat. He came in for heavy criticism from the Competition Tribunal last week when it threw the book at two cycling wholesalers, handing down judgment in the long-running bicycle cartel case.

 

In total, 11 bicycle retailers and six wholesalers had already admitted colluding, but two were adamant that they had done nothing wrong and so went before a tribunal hearing in May last year.

 

But the tribunal decided otherwise and found both Omnico and Coolheat Cycle Agencies guilty of price-fixing, fining them R4.6-million and R4.2-million respectively. They have 120 days in which to pay the fines.

 

The decision to take their chances at the tribunal proved costly, as the others who had admitted their guilt were let off without a fine. They are: Melody Street 18, Hotspot Cycles, Maverick Cycles, Saloojee’s Cycles, West Rand Cycles, Bowman Cycles, Albatros Fishing & Cycling, Citek Cycle Distributors, Maillot Jaune Trading, Bicicletta, Le Peloton, Thule Car Rack Systems, Dunkeld Cycles, Summit Cycles, Bester Cycles, Johnson Cycle Works and New Just Fun Group.

 

Omnico was given a 50% discount on its fine because it had only implemented the collusive agreement in a limited way, but the tribunal fined Coolheat the full possible amount because of Meltzer’s behaviour.

 

In its judgment, the tribunal pointed out that Meltzer was in attendance throughout the hearing but chose not to testify. It also criticised his dismissive and condescending attitude on TheHubSA, where the minutes from the meeting on colluding were first published in September 2008, sparking the Competition Commission’s investigation.

 

In response to an irate public comment on the website, Meltzer wrote that “the minutes on TheHubSA are not entirely the same as what was actually mentioned in this meeting. There are a lot of issues, which have been relayed, which have been incorrectly minuted. Do yourselves a favour, get on your bike and go enjoy yourselves.”

 

The tribunal’s judgment reads: “One would have expected him in such circumstances to be enthusiastic to provide the tribunal with an explanation of his posts rather than leaving readers thereof with the impression that he ridiculed those who expressed outrage at the alleged collusion.”

 

A fellow colluder, Fritz Pienaar of Fritz Pienaar Cycles, said he was “disappointed” that some industry players who had supported the proposal to increase margins distanced themselves from the decision when they saw how angry consumers were on TheHubSA.

 

The brazenness with which the cycling industry organised itself into a cartel is startling. During the hearing last year, the tribunal heard testimony about meetings that were organised in 2008 to set the recommended retail selling price for all bicycles and parts.

 

The agenda for a meeting held on September 10 2008 at the Midrand Conference Centre, which more than 200 people from the industry attended, states explicitly that the subject is “margins in the bicycle retail industry”.

 

The agenda also refers to “proposed new mark-ups of 50% on bicycles and 75% on bike accessories”, and a proposed date, October 1 2008, on which to implement the increases. The mark-up at the time was 30% to 35% on bicycles and 50% on bicycle accessories.

 

Revealingly, the last item on the agenda is “price-fixing concerns”.

 

Pienaar confirmed at the tribunal that, as minuted, he said at the meeting: “Many of you are concerned that this may be some form of price-fixing; it isn’t and this is not illegal.”

 

Pienaar was also implicated in allegations of threats and coercion against another bicycle wholesaler, Probike, which initially refused to be part of the meeting because of concerns about collusion.

 

Probike did not attend the first two meetings, held in May and June 2008.

 

Probike’s Brandon Els expressed his concerns about collusion to Pienaar in late August 2008 after being invited to the third meeting.

 

Pienaar is alleged by Els to have responded with the threat of a group boycott against the wholesaler.

 

“Mr Pienaar made it clear in my boardroom that retailers who attend the meeting would be encouraged to cancel their accounts with Probike if it did not support the initiative to raise the mark-ups,” Els told the tribunal. “I felt that he was threatening Probike to ensure we attended the meeting.”

 

The tribunal’s judgment records: “According to Els, it was this threat that made him decide to send [Probike employee Dave] Wyatt to the September meeting.” But Pienaar denied threatening Probike.

 

Following the publication of the minutes of the meeting on TheHubSA, Els said he distanced Probike from the proposed margin increases.

 

He told the tribunal that after that there were “just short of 10 retailers” who cancelled their accounts with Probike.

 

“I believe these were closed as a result of Probike refusing to increase its recommended retail pricing to the retailers, and due to the views I expressed on the Hub about the proposal to increase the prices of cycling product,” Els told the tribunal. “Those accounts were retailers that I know to be affiliated to Mr Pienaar.”

 

The tribunal’s judgment brings to an end the commission’s investigation into the bicycle retail and wholesale sectors.

[AdamA]

SAD!

[wiledog_x]

Unfortunately for us peeps who buy bikes and stuff.... we'll still be paying for this cartel. The Tribunal should've mandated all guilty parties to offer discounts on all their ill gotten gains.... and pay it forward to the cycle buying public. 

 

Sadly, that won't happen..... our only recourse is to not support them anymore.

Edited June 14, 2016 by wiledog_x

[Shebeen]

 

Lloyd Gedye - Mail&Guardian - Thursday, 09 June 2016

 

The Competition Tribunal has fined two bicycle dealers who denied being part of a cartel, but those who admitted guilt have got off scot-free.

 

It’s one thing to find out that you have been paying more than you should for your bicycle and parts because of a cartel, but it’s another thing entirely to be told by a cartel member to “get on your bike” when you voice your outrage.

 

It was Coolheat Cycle Agencies’ managing director, Stephen Meltzer, who responded in this way to angry cycling enthusiasts on the website TheHubSA when the minutes from a meeting of colluding bicycle wholesalers and retailers were first exposed in 2008.

 

Meltzer has been described as the “doyen of the cycling industry”, of which he has been part since 1979 when he founded Coolheat. He came in for heavy criticism from the Competition Tribunal last week when it threw the book at two cycling wholesalers, handing down judgment in the long-running bicycle cartel case.

 

In total, 11 bicycle retailers and six wholesalers had already admitted colluding, but two were adamant that they had done nothing wrong and so went before a tribunal hearing in May last year.

 

But the tribunal decided otherwise and found both Omnico and Coolheat Cycle Agencies guilty of price-fixing, fining them R4.6-million and R4.2-million respectively. They have 120 days in which to pay the fines.

 

The decision to take their chances at the tribunal proved costly, as the others who had admitted their guilt were let off without a fine. They are: Melody Street 18, Hotspot Cycles, Maverick Cycles, Saloojee’s Cycles, West Rand Cycles, Bowman Cycles, Albatros Fishing & Cycling, Citek Cycle Distributors, Maillot Jaune Trading, Bicicletta, Le Peloton, Thule Car Rack Systems, Dunkeld Cycles, Summit Cycles, Bester Cycles, Johnson Cycle Works and New Just Fun Group.

 

Omnico was given a 50% discount on its fine because it had only implemented the collusive agreement in a limited way, but the tribunal fined Coolheat the full possible amount because of Meltzer’s behaviour.

 

In its judgment, the tribunal pointed out that Meltzer was in attendance throughout the hearing but chose not to testify. It also criticised his dismissive and condescending attitude on TheHubSA, where the minutes from the meeting on colluding were first published in September 2008, sparking the Competition Commission’s investigation.

 

In response to an irate public comment on the website, Meltzer wrote that “the minutes on TheHubSA are not entirely the same as what was actually mentioned in this meeting. There are a lot of issues, which have been relayed, which have been incorrectly minuted. Do yourselves a favour, get on your bike and go enjoy yourselves.”

 

The tribunal’s judgment reads: “One would have expected him in such circumstances to be enthusiastic to provide the tribunal with an explanation of his posts rather than leaving readers thereof with the impression that he ridiculed those who expressed outrage at the alleged collusion.”

 

A fellow colluder, Fritz Pienaar of Fritz Pienaar Cycles, said he was “disappointed” that some industry players who had supported the proposal to increase margins distanced themselves from the decision when they saw how angry consumers were on TheHubSA.

 

The brazenness with which the cycling industry organised itself into a cartel is startling. During the hearing last year, the tribunal heard testimony about meetings that were organised in 2008 to set the recommended retail selling price for all bicycles and parts.

 

The agenda for a meeting held on September 10 2008 at the Midrand Conference Centre, which more than 200 people from the industry attended, states explicitly that the subject is “margins in the bicycle retail industry”.

 

The agenda also refers to “proposed new mark-ups of 50% on bicycles and 75% on bike accessories”, and a proposed date, October 1 2008, on which to implement the increases. The mark-up at the time was 30% to 35% on bicycles and 50% on bicycle accessories.

 

Revealingly, the last item on the agenda is “price-fixing concerns”.

 

Pienaar confirmed at the tribunal that, as minuted, he said at the meeting: “Many of you are concerned that this may be some form of price-fixing; it isn’t and this is not illegal.”

 

Pienaar was also implicated in allegations of threats and coercion against another bicycle wholesaler, Probike, which initially refused to be part of the meeting because of concerns about collusion.

 

Probike did not attend the first two meetings, held in May and June 2008.

 

Probike’s Brandon Els expressed his concerns about collusion to Pienaar in late August 2008 after being invited to the third meeting.

 

Pienaar is alleged by Els to have responded with the threat of a group boycott against the wholesaler.

 

“Mr Pienaar made it clear in my boardroom that retailers who attend the meeting would be encouraged to cancel their accounts with Probike if it did not support the initiative to raise the mark-ups,” Els told the tribunal. “I felt that he was threatening Probike to ensure we attended the meeting.”

 

The tribunal’s judgment records: “According to Els, it was this threat that made him decide to send [Probike employee Dave] Wyatt to the September meeting.” But Pienaar denied threatening Probike.

 

Following the publication of the minutes of the meeting on TheHubSA, Els said he distanced Probike from the proposed margin increases.

 

He told the tribunal that after that there were “just short of 10 retailers” who cancelled their accounts with Probike.

 

“I believe these were closed as a result of Probike refusing to increase its recommended retail pricing to the retailers, and due to the views I expressed on the Hub about the proposal to increase the prices of cycling product,” Els told the tribunal. “Those accounts were retailers that I know to be affiliated to Mr Pienaar.”

 

The tribunal’s judgment brings to an end the commission’s investigation into the bicycle retail and wholesale sectors.

 

when a dude is referred to as "the godfather" in an industry, then you need to start question things!

[5t0pi]

Is this situation seen as done and dusted. Or will there be any further investigations?

 

"The commission also took into account the views of the tribunal in a meeting prior to the commencement of a hearing into an exception application by some of the implicated firms, including that the continued prosecution of 20 firms was a waste of public funds given that they were all small businesses."

-http://www.iol.co.za/business/companies/two-bicycle-wholesalers-fined-2028818

 

It seems like nothing came of it. Is there maybe something the consumers can do?

[FCH]

the silence from Shimano group is deafening, sram here I come.

[Paul Ruinaard]

So Mail and Guardian has picked it up, with some interesting new twists which really add some fuel to the flames.

 

http://mg.co.za/article/2016-06-08-bicycle-conspiracy-runs-out-of-road#.V2OAi4eilvQ.facebook

 

Quoting the article:

 

In response to an irate public comment on the website, Meltzer wrote that “the minutes on TheHubSA are not entirely the same as what was actually mentioned in this meeting. There are a lot of issues, which have been relayed, which have been incorrectly minuted. Do yourselves a favour, get on your bike and go enjoy yourselves.”

The tribunal’s judgment reads: “One would have expected him in such circumstances to be enthusiastic to provide the tribunal with an explanation of his posts rather than leaving readers thereof with the impression that he ridiculed those who expressed outrage at the alleged collusion.”

A fellow colluder, Fritz Pienaar of Fritz Pienaar Cycles, said he was “disappointed” that some industry players who had supported the proposal to increase margins distanced themselves from the decision when they saw how angry consumers were on TheHubSA.

The brazenness with which the cycling industry organised itself into a cartel is startling. During the hearing last year, the tribunal heard testimony about meetings that were organised in 2008 to set the recommended retail selling price for all bicycles and parts.

The agenda for a meeting held on September 10 2008 at the Midrand Conference Centre, which more than 200 people from the industry attended, states explicitly that the subject is “margins in the bicycle retail industry”.

The agenda also refers to “proposed new mark-ups of 50% on bicycles and 75% on bike accessories”, and a proposed date, October 1 2008, on which to implement the increases. The mark-up at the time was 30% to 35% on bicycles and 50% on bicycle accessories.

Revealingly, the last item on the agenda is “price-fixing concerns”.

Pienaar confirmed at the tribunal that, as minuted, he said at the meeting: “Many of you are concerned that this may be some form of price-fixing; it isn’t and this is not illegal.”

Pienaar was also implicated in allegations of threats and coercion against another bicycle wholesaler, Probike, which initially refused to be part of the meeting because of concerns about collusion.

Probike did not attend the first two meetings, held in May and June 2008.

Probike’s Brandon Els expressed his concerns about collusion to Pienaar in late August 2008 after being invited to the third meeting.

Pienaar is alleged by Els to have responded with the threat of a group boycott against the wholesaler.

“Mr Pienaar made it clear in my boardroom that retailers who attend the meeting would be encouraged to cancel their accounts with Probike if it did not support the initiative to raise the mark-ups,” Els told the tribunal. “I felt that he was threatening Probike to ensure we attended the meeting.”

The tribunal’s judgment records: “According to Els, it was this threat that made him decide to send [Probike employee Dave] Wyatt to the September meeting.” But Pienaar denied threatening Probike.

Following the publication of the minutes of the meeting on TheHubSA, Els said he distanced Probike from the proposed margin increases.

 

[Sepia]

The list of collusionist LBS makes for some interesting speculation.