Price Fixing: Wholesaler Still Maintains Innocence

Last week the importer of brands like Cannondale, GT and Giro, Omnico, lost their appeal against the findings of the Competition Commission but still maintain their innocence in a controversial price fixing scandal that started in 2008.

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In a statement on Thursday, Omnico, one of South Africa’s leading bike importers, said that they were ‘disappointed’ by the Competition Appeal Court’s ruling that found against them – and fellow wholesaler Coolheat, importers of Shimano – after they decided not to settle over alleged accusations of price fixing in 2008.

“Before this matter was heard by the Competition Tribunal, Omnico was offered the opportunity to settle the matter on the basis that it would not have to pay any administrative penalty, if it admitted a contravention of section 4(1)(b) the Competition Act. However, as a matter of principle, Omnico chose not to settle but to proceed to court to prove its innocence,” the statement said.

Despite the judgement late last week Omnico was ‘steadfast in its view that it was not involved in any price fixing in the cycle retail industry.”

“While Omnico feels that the Competition Commission is an important and integral part of policing business practice in South Africa (and does outstanding work in uncovering self-enriching price fixing cartels), it believes that the Tribunal and Competition Appeal Court, in this particular instance, erred in their judgment,” the statement said.

Omnico did however admit that they had successfully appealed against the heavy fine rumoured to be over R4-million – and that the fine had been ‘substantially reduced.’

In a meeting in 2008, several bicycle retailers and wholesalers contravened the Competition Act by agreeing to fix prices. In this meeting parties agreed to mark-up cycling accessories from 50% to 75% and bicycles from 35% to 50% in a bid to increase gross margins and stop shops undercutting each other.

A complaint by the Competition Commission was lodged against the 20 parties present at the meeting and fines dished out – Omnico elected not to settle but to proceed to court to prove its innocence. The CAC last week ruled that, although Omnico distanced themselves from the meeting, its silence over this time was tantamount to an agreement.

 

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