15 Jun 2011 Bicycle price-fixing complaint withdrawn
A complaint of price-fixing in the bicycle industry was withdrawn because of technicalities, the Competition Commission said on Monday.
“We are not withdrawing the case because we didn’t think there was a case,” said spokesman Oupa Bodibe. However, a number of objections had been raised to the manner in which the case was initiated and the way in which the investigation had been conducted, he said.
The Commission had been accused of not following legitimate procedures. Bodibe said the Commission felt the case could be challenged on these technicalities. There had also been several Competition Tribunal judgments made in recent months which were critical of the Commission’s investigations.
“So, we decided to take the safer road and withdraw the case rather than face the humiliation,” he said.
The Commission notified 28 cycle retailers and wholesalers, the day before the Cape Argus Pick n Pay Cycle Tour in March 2009, that it was investigating them for alleged collusion and intent to adjust prices across the industry.
In a statement on Friday, Cycle Lab said the complaint had been withdrawn.
“Notification was sent in writing on Friday that the Competition Commission has withdrawn its complaint referral dated 25 June 2010… against all respondents in this matter in terms of… the rules for the conduct of proceedings in the Competition Tribunal,” it said.
Cycle Lab was one of the retailers against which the inquiry was launched.
On Monday, Bodibe said the Commission was “going back to the drawing board”. It would reassess the evidence, the issues raised by the retailers and whether any offending conduct took place less than three years ago.
Once a decision had been made, the Commission would make the necessary announcement, he said.
Cycle Lab director and founder Andrew McLean said on Friday that the withdrawal of the complaint had not come as a surprise. “As far as Cycle Lab is concerned, there isn’t and has never been any attempt at collusion to fix prices in the South African cycle industry,” he said. “Right from the beginning our attorneys examined this complaint and said there was no case to pursue.
“It’s just a pity it had to drag on so long and create an atmosphere of negativity.” McLean estimated that it had cost the industry more than R3 million in legal fees “just to prove that there was no case in the first place”.
In a statement in 2010, the Commission said the 28 were accused of colluding to set the wholesale and retail prices of cycles and accessories, and of excluding competitors from the market. It alleged that the recommended retail price included a mark-up of 35 percent for bicycles and 50 percent for accessories. The ceiling on mark-ups was also said to determine the profit that retailers could make on cycles and accessories.
“Bicycle retailers colluded to exclude competitors like internet retailers from the market,” the Commission alleged.
It claimed the strategy used was to ask the wholesaler to sell to independent retailers at a higher price and it said this conduct was likely to harm competitors and consumers.
At the time, the Commission asked the Competition Tribunal to levy an administrative penalty of 10 percent on the annual turnover of each of the firms involved. – Sapa