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

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 The Commission had withdrawn its case against one of the companies, Fritz Pienaar Cycles, because the business was liquidated.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

 






254 Comments

bassasdaindia, May 31 2016 04:21

should make an entertaining thread .

Shebeen, May 31 2016 04:22

BOOOOOOM!

 

but, like the bread vibe, i suppose we're going to pay in the end.

shaper, May 31 2016 04:25

Seems the mark up policy has been implemented since 2008 and continues to do so each year.....

Eon du Plessis, May 31 2016 04:26

Not really surprised

Hairy, May 31 2016 04:26

guess shimano prices are going to go through the roof soon  :ph34r:

Cois, May 31 2016 04:30

31 March or 31 May?  Smells like zuma to me

Showtime, May 31 2016 04:31

guess shimano prices are going to go through the roof soon  :ph34r:

 

I can almost see them approaching SRAM prices  :ph34r:

T-Bob, May 31 2016 04:33

guess shimano prices are going to go through the roof soon  :ph34r:

 

Their sales are falling this year site badly... but don't worry, they'll go up! :)

Steven Holmes, May 31 2016 04:34

I think its good. For years these guys have milked us!! With this type of pressure from the Competition Tribunal and the competition from the online guys, prices will be kept in check. Well, as much as they can be anyway. Damn exchange rate!! 

Flemish Lion, May 31 2016 04:37

The R4m x 2 should be distributed to us CONSUMERS!

Hairy, May 31 2016 04:39

The R4m x 2 should be distributed to us CONSUMERS!

?

Flemish Lion, May 31 2016 04:44

?

They've been marking up and we paid the higher prices...

davidl, May 31 2016 04:47

Whilst levying the fines is a good thing, it will not have any benefit for us. The retailers are now all hiding behind the exchange rate to increase prices. Nothing really comes our way!

Hairy, May 31 2016 04:48

They've been marking up and we paid the higher prices...

got you .... so now they just hand over the cash owed and then mark up anyway ?

danger dassie, May 31 2016 04:49

They've been marking up and we paid the higher prices...

 

The issue was price fixing, not the actual percentage of markup. 

T-Bob, May 31 2016 04:51

 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.

 

 

 

Missed that part in initial reading. Shame the old hub got broken, would loved to have seen the discussions in question that kicked this off. 

robsc, May 31 2016 04:55

The issue was price fixing, not the actual percentage of markup. 

 

Correct but the only way to bounce back from a R4 mil fine is to increase your profit 

Kranswurm, May 31 2016 04:57

Old news....was a great saga at the time.The good old days of little or no censorship on here

Bizkit031, May 31 2016 05:12

guess shimano prices are going to go through the roof soon  :ph34r:

yea they need to make up their lost 4mil from us for their wheeling and dealing.

BaGearA, May 31 2016 05:17

And "POP" goes the weasel 

Tumbleweed, May 31 2016 07:01

The issue was price fixing, not the actual percentage of markup.


This price would be fixed if a mark-up percentage was agreed to across the industry.

Tumbleweed, May 31 2016 07:06

It wouldn't surprise me if the fine is challenged. The authorities have made a number of missteps in this process.

'Kaze Pete, May 31 2016 07:08

It wouldn't surprise me if the fine is challenged. The authorities have made a number of missteps in this process.

Were you not part of exposing this, and subsequently had threats made against you?

https://www.bikehub....artel/?p=580258

fanievb, May 31 2016 07:14

BOOOOOOM!

but, like the bread vibe, i suppose we're going to pay in the end.

You've already paid

Tumbleweed, May 31 2016 07:17

Were you not part of exposing this, and subsequently had threats made against you?


Ja, there were about seven or eight pages of discussion before I posted the minutes and attendance list of the meeting. It got a bit ugly after that.