Face mask distributor slapped with R11 million fine for inflating prices

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Facemask

The Competition Commission has pounced on yet another company, for exploiting the current coronavirus pandemic by way of inflating the prices of face masks and other personal protective gear.

The Commission has reached an agreement with the company, MATUS, which has offices in Johannesburg, Cape Town and Durban and satellite branches in Port Elizabeth and Mbombela. As per the agreement, the company will fork out an administrative penalty of R5.9 million after it admitted to inflation of its gross profit margins with regards to essential hygienic products.

“The company will also contribute R5 million to the Solidarity Fund for COVID-19. Further, it will, with immediate effect, reduce its gross profit margin on dust masks to acceptable levels for the duration of the state of national disaster,” said the commission’s spokesperson Sipho Ngwema.

“The company undertook, for the duration of the state of national disaster, to ensure that its gross profit margins for essential products would not be increased above what was applicable on 16 February 2020, for as long as such products remain essential in terms of the Consumer Protection Regulations or any subsequent amendment or replacement of the regulations”, Ngwema said.

The commission initiated an investigation into the matter, after obtaining information implicating the company in a series of wrong doings.

“Subsequently, the commission found that MATUS unreasonably increased the prices of dusk masks resulting in excessively inflated gross profit margins in contravention of the Competition Act and Regulation 4 of the Consumer Protection Regulations”

MATUS supplies and distributes personal protective equipment such as dust masks (including FFP1 and FFP2 masks), overalls, hand sanitizers, fire protective gear and first aid kits, among other things. These are procured from local and overseas distributors.

Other companies also found to have inflated prices

The commission had also concluded numerous consent settlements with small independent retailers and pharmacies with regards to COVID-19 cases emanating from contraventions of Competition Act and Regulation 4 of the Consumer Protection Regulations.

“The small companies, largely pharmacies and hardware stores, excessively inflated their prices of essential hygienic products like sanitisers and face dust masks who only sold in March 2020 with excessive mark-ups or gross profit margins. Most of these shops did not sell these products before March this year”, Ngwema further said.

“These retailers, as part of the settlement, will reduce prices to appropriate levels and will contribute various amounts or essential hygienic items, based on the merits of each case, to charity organisations nominated or approved by the commission, including the Solidarity Fund for COVID-19. In some cases, some retailers have agreed to freeze price increases and/or run specials.”