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

[Morwa]

OK.....my 5 cents....

 

"Both Omnico and Coolheat had attended the September meeting and agreement was reached to increase the mark-up on wholesale prices for bicycles and cycling accessories in co-ordination.

Motaung said the Tribunal could not find any mitigating factors for Coolheat as it elected not to give evidence at the Tribunal. It however‚ found some mitigating factors for Omnico.

The Tribunal let 17 companies off the hook after they admitted they contravened Section 4(1)(b) of the Competition Act. In addition‚ “the Commission had withdrawn its case against one of the companies‚ Fritz Pienaar Cycles‚ because the business was liquidated‚” said Motaung."

Lets name and shame the companies....

1. Omnico (Fox, Cannondale, GT, etc.)

2. CoolHeat (Shimano, etc.)

3. ? The other 17?

Even if I have to pay the import duties and taxes from CRC, eventually the local companies will feel it.

[Morwa]

Thanks for the post Maverick!

[Kranswurm]

Let's hear all those shop owners tell us how hard done by they are and how there is no money?

Having owned a bike shop in the family i can assure you not all bike shops are swimming in money.If the sherrif were here he would have something to say

[I FLY]

The fines can be a maximum of 10% of annual revenue and the commission actively promotes a " First through the door to give evidence" amnesty. 

[Eldron]

A question for those in the know.... Was the fixed pricing ever implemented or were the fines dished out based on intent?

 

Sounds a lot like standard government procedure - let the stooges off scot free and punish the rest for not pandering...

[FCH]

nought, nothing will change. Sure the omnico and coolheat guys are reading this thread (yes we know you are). Thinking, bit of inconvenience and splatter of egg on the face.

Yet, outside of the Hub (indeed, there is a world outside of Hubland) Joe & Joanne Public will still be taking in their bicycles to get fixed and repaired, still dutifully buying the officially imported parts.... paying the R4 bar fine one instalment after the next.

[jcza]

As someone said earlier, vote with your wallet. I'm as tired as the next guy of hearing the heartbreaking stories of how tough business is, yet the service is so poor that one wouldn't go back there even if they gave the spares away for free.

[edgarblount]

Those who fessed up early :The tribunal previously confirmed settlement agreements with Cytek Cycle Distributors, DBS Distributing trading as Thule Car Rack Systems, New Just Fun Group, Tridirect SA, Le Peloton, Mailot Jaune Trading, West Rand Cycles, Bowman Cycles, Pedaling Dynamics trading as Dunkeld Cycles, Moneymine 88 trading as Hotspot Cycles, Salojee’s Cycles, Summit Cycles, Dynamic Choices Two trading as Bester Cycles, Johnson Cycle Works, Melody Street 18, Pedal-On-Marketing trading as Maverick Cycles and Albatros Fishing and Cycling, previously named Winners Cycles.

I am not seeing any Spez shops...  

[raptor-22]

I am not seeing any Spez shops...  

 

Le peloton was the distributor for spaz at the time.

 

 

A question for those in the know.... Was the fixed pricing ever implemented or were the fines dished out based on intent?

Sounds a lot like standard government procedure

- let the stooges off scot free and punish the rest for not pandering...

 

 

Fine based on being the two members of the cartel with biggest market share and influence. No attempt at discouraging the cartel behavior was displayed if insider info is correct. Also both were arrogant enough to force the issue to trial as they sought to justify their behavior, I.e. Neither admitted to cartel behavior or really bothered to co-operate. Hence the lengthy process and fines.

[Morwa]

@raptor-22, thanks for the clarification.

 

That is the problem with sole distributors in a country.  I can "boycott" my LBS for not buying Shimano parts or a Fox fork from them, but in the end the LBS is going down.....

 

Distributors (Cool Heat and Omnico) set "recommended" retail prices for an item. And, if the LBS sells for less than the recommended retail price, they could risk losing "dealership" from the distributor, or the distributor could "cut" them off.

 

So it's the ARROGANT distributors (Cool Heat and Omnico) that are the culprits here, and like Raptor pointed out...."arrogant enough to force the issue to trial as they sough to justify their behavior, I.e. Neither admitted to cartel behavior or really bothered to co-operate. Hence the lengthy process and fines"

 

The only thing we can hope for is that the international companies (Shimano, Cannondale, GT, Fox, etc) cancel their distribution rights to Omnico and Cool Heat, based on this. But, I doubt it will happen.

 

 

[Mongoose!]

 ...

Edited June 1, 2016 by Mongoose!

[Spoke101]

@raptor-22, thanks for the clarification.

 

That is the problem with sole distributors in a country.  I can "boycott" my LBS for not buying Shimano parts or a Fox fork from them, but in the end the LBS is going down.....

 

Distributors (Cool Heat and Omnico) set "recommended" retail prices for an item. And, if the LBS sells for less than the recommended retail price, they could risk losing "dealership" from the distributor, or the distributor could "cut" them off.

 

So it's the ARROGANT distributors (Cool Heat and Omnico) that are the culprits here, and like Raptor pointed out...."arrogant enough to force the issue to trial as they sough to justify their behavior, I.e. Neither admitted to cartel behavior or really bothered to co-operate. Hence the lengthy process and fines"

 

The only thing we can hope for is that the international companies (Shimano, Cannondale, GT, Fox, etc) cancel their distribution rights to Omnico and Cool Heat, based on this. But, I doubt it will happen.

 

 

 

Coolheat don't and have not had a RRP for Shimano for a couple of years now.

[cdevil]

Yeah. I'll continue to purchase grey/gray imports. The system is sick and I'm not interested in being part of it.

 

+1

 

If I can import Shimano at +- 25% cheaper (after paying shipping, VAT and duties) than buying locally why should I buy local?

[BDF]

Those who fessed up early :The tribunal previously confirmed settlement agreements with Cytek Cycle Distributors, DBS Distributing trading as Thule Car Rack Systems, New Just Fun Group, Tridirect SA, Le Peloton, Mailot Jaune Trading, West Rand Cycles, Bowman Cycles, Pedaling Dynamics trading as Dunkeld Cycles, Moneymine 88 trading as Hotspot Cycles, Salojee’s Cycles, Summit Cycles, Dynamic Choices Two trading as Bester Cycles, Johnson Cycle Works, Melody Street 18, Pedal-On-Marketing trading as Maverick Cycles and Albatros Fishing and Cycling, previously named Winners Cycles.

Flame suit on!

I had a long chat with Kim Johnson on this topic. Basically he says that for his part, he did nothing wrong. I have known Km for many years and quite frankly, I believe him. They were bullied into making a so-called confession with the consequence of further summonses and legal action if they did not. At the end of the day, he went along with it because he was not willing to spend more money on legal costs. This thing hurt him badly.

[Eldron]

@raptor-22, thanks for the clarification.

 

That is the problem with sole distributors in a country.  I can "boycott" my LBS for not buying Shimano parts or a Fox fork from them, but in the end the LBS is going down.....

 

Distributors (Cool Heat and Omnico) set "recommended" retail prices for an item. And, if the LBS sells for less than the recommended retail price, they could risk losing "dealership" from the distributor, or the distributor could "cut" them off.

 

So it's the ARROGANT distributors (Cool Heat and Omnico) that are the culprits here, and like Raptor pointed out...."arrogant enough to force the issue to trial as they sough to justify their behavior, I.e. Neither admitted to cartel behavior or really bothered to co-operate. Hence the lengthy process and fines"

 

The only thing we can hope for is that the international companies (Shimano, Cannondale, GT, Fox, etc) cancel their distribution rights to Omnico and Cool Heat, based on this. But, I doubt it will happen.

 

 

 

You need a bit more fact and a little less tin foil hat...

 

Singling out Omnico and Coolheat is a little unfair given that most of the industry players were at the fixing meet.

 

Neither Omnico or Coolheat run RRPs.

 

In fact of the ~40 suppliers I have perhaps 6 or 7 have RRPs on their price lists and those are not enforced in any way (just numbers on an excel spread sheet).

 

I have never witnessed any kind of collusion or threat of  "we'll stop supply unless you rip your customers off".

 

Also - how exactly does forcing the retailer to set high prices make sense to the importer? All it'll do is send people towards CRC/CWC... Plus how is it that the shops are the innocent party if they're the ones making tons of cash by being forced into setting prices high?

 

 

My opinion is that this or more a crazy witch hunt with little to no fact rather than a well informed investigation with the public interest at heart....

[Karakoram]

+1

 

If I can import Shimano at +- 25% cheaper (after paying shipping, VAT and duties) than buying locally why should I buy local?

Maybe the perfect opportunity to pool the purchasing power of Hubbers and develop an app to combine weekly requirements for spares, bulk order from wherever it is the cheapest, save on shipping and distribute to individuals via Mr. Delivery. Like Uber for bicycle parts.