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

[Joe Low]

Another thought on this.

 

When I worked running a steel merchant's in Malawi, all the Asian retailers got together one time to set a minimum price for roof-sheets - a FMCG up there.

 

I asked a couple of them what they thought of the meeting and agreement and they said:

 

"it's great, we all find out what the agreed price is, then we all go back and undercut each other".

 

The market is the market and water follows the path of least resistance.

 

I doubt the cycle retailers would stick together which may be one reason that 20+ of them disowned the thing pretty rapidly.

[Mongoose!]

 

I remember the then owner of said nationwide franchise chatting about this meeting on a certain cycling-related programme, saying it was just a discussion etc.
I remember being somewhat discomfited at the time,

also remembered it - the conclusion was that this actions were done to regulate the cycling industry and all parties involved in cycling would benefit from it at the end.

Edited June 1, 2016 by Mongoose!

[Bspoke]

NICE ONE!!!

Unfortunately we will all pay the price eventually ,as they will just

adjust prices UPWARDS.

With the currency adjusted to junk status for import purposes new bikes

are going to cost car prices .

It's happening already ;200k for Cannondale,rather buy a 2nd hand Ducati 999.and have something of value between your legs!

If you shop around its still not worth importing from Chain Reaction most of the time.

[Maverick rider]

Cant speak for the others, I only spoke with Kim Johnson.

 

Duress in a legal sense of duress from a financial perspective?

 

No to Duress in a legal perspective,

Yes to duress from a financial perspective.

 

There comes a point where standing your ground from a legal perspective costs more money than you have. At that point, from a financial survival point of view one needs to make some decisions. He chose not to bankrupt himself.

[Maverick rider]

Not so sure 4 1 (b) which is what the 17 admitted to says you agreed to raise prices with others why would somebody agree to that ? Quite easy to disprove given that the agreement is for a certain percentage.

Edited June 1, 2016 by Maverick rider

[raptor-22]

Fair point - the market was way more closed back then...

 

Nowadays the likes of CRC and CWC with their gray products keep the official distributors honest.

 

It is a bit rough to use the terms arrogant and call for the removal of distribution rights when the market is pretty clean and honest now though....

 

 

I think arrogant is appropriate for the time. today they are probably sitting there thinking "What If I approached this differently?"

 

I recallmany cycle shops were moaning back then that they needed to protect their business from CRC and other online stores that were gaining traction locally. Also parallel importers were taking distributors market share so all parties felt they needed to collude to arrive at a mutually beneficial outcome....

 

 

and therein lies the rub.

 

raising prices is not illegal, agreeing with your "competitors" to do the same is outright illegal and unfair on the consumer.

 

May have changed their ways in the interim but they have the opportunity to change their minds and plead guilty, learned our lesson, saw the error of ways etc etc etc.

 

But where does all this leave us cyclists? We still going to buy product and 95% of people will still buy in the same way from the same people because likely the market is more fair today anyway.

 

Personally I think the timing of the fine and verdict is likely more hurtful than the verdict itself. I say this because in todays economy, a cash outflow of R4.6million and R4.2million (assuming fine is 10% of turnover) means more than a months operating capital.

that's a lot of profit to set aside / provision for

Edited June 1, 2016 by raptor-22

[BDF]

Not so sure 4 1 (b) which is what the 17 admitted to says you agreed to raise prices with others why would somebody agree to that ? Quite easy to disprove given that the agreement is for a certain percentage.

It seems easy until you have to do it.

It's easy to have an over-simplified opinion sitting on the other side of a keyboard. The real cost is in proving the matter to them and constantly needing to defend your position given the very obtuse angles they come at it from.

 

Have you ever had to defend something with the Competition Commission? I have been involved in a couple of merger submissions to the CC and believe me, it's not just a matter of sending an email or making an affidavit. Much more is involved. Including certificated from Auditors and representation by attorneys.

[raptor-22]

Not so sure 4 1 (b) which is what the 17 admitted to says you agreed to raise prices with others why would somebody agree to that ? Quite easy to disprove given that the agreement is for a certain percentage.

 

 

an agreement to raise prices is only an outcome which would be an additional charge. the fact they all met to discuss pricing is in itself an illegal act of cartel behavior.

[raptor-22]

NICE ONE!!!

Unfortunately we will all pay the price eventually ,as they will just

adjust prices UPWARDS.

With the currency adjusted to junk status for import purposes new bikes

are going to cost car prices .

It's happening already ;200k for Cannondale,rather buy a 2nd hand Ducati 999.and have something of value between your legs!

If you shop around its still not worth importing from Chain Reaction most of the time.

 

 

Ratings agency decision is only due Friday. Inidcations are that we will not be reduced to junk.

one indicator is the ZAR strengthened

[Mongoose!]

Ratings agency decision is only due Friday. Inidcations are that we will not be reduced to junk.

one indicator is the ZAR strengthened

 

really hope you are right

[Tumbleweed]

Ratings agency decision is only due Friday. Inidcations are that we will not be reduced to junk.

one indicator is the ZAR strengthened

 

Although the agencies did give the ANC a finger-wagging:

 

http://www.bdlive.co.za/national/2016/06/01/ratings-agencies-warn-the-anc

[raptor-22]

Yes which is why i see movement on some key national projects suddenly

[Wez-O]

Two wholesalers in bicycle price-fixing charges get R4m administrative fines each - 31 March 2016

 

I'm having a good laugh now as I remember some users recently slating me and throwing insults my way when I mentioned that wherever possible I bypass the ripoff South African distributors. Ja nee 

[rock]

hold on, if the meeting was to increase the retailer's margins why do the distributors get nailed?

 

what am I missing here?

[Gerhardc]

GREAT NEWS!!!     

[Wez-O]

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.