The Competition Commission found that the Food Lover’s Market in Westgate charged excessive prices for raw ginger in May 2020. The commission also deemed it a basic food and therefore an essential item during the pandemic.
FOOD LOVER’S MARKET AGREES TO THE FOLLOWING
In terms of the consent agreement between the Commission and Food Lover’s Market, the company has agreed to the following, among others:
- Food Lover’s Market will immediately stop the excessive pricing conduct as described in the agreement;
- It will immediately reduce the Food Lover’s Market Westgate gross profit margin on raw ginger to an agreed maximum percentage for the duration of the state of national disaster;
- It will donate essential goods worth R18 579 (at cost price) to the Mohlakeng Old Age Home in Randfontein. This amount is based on, among others, the additional income derived by Food Lovers Market as a result of the significant increase in margins on raw ginger in May 2020; and
- It will develop and implement a competition law compliance programme.
GINGER PRICE HIKES
Around 14 May 2020, the Commission received information relating to alleged excessive prices being charged per kilogram of raw ginger at the Food Lover’s Market Hillfox and Westgate branches.
The Commission found, and Food Lover’s Market admits, that the average mark-up and gross profit margins for raw ginger, in May 2020 by Food Lover’s Market in Westgate, were unreasonably high for an essential product during the state of national disaster when compared to the mark-up and gross profit margin in the preceding period and may amount to a contravention of section 8(1)(a) of the Competition Act (the Act) read together with Regulation 4 of the Regulations.
The Commission also found that there was no cost increase to justify the higher margin.
FOOD CONSTITUTES 30% OF LOW-INCOME HOUSEHOLD EXPENDITURE
Following the announcement of the National State of Disaster and widespread complaints of food price escalations, the Competition Commission released a report on food price monitoring. The report culminates from the commission’s concerted efforts on enforcement aimed at containing excessive pricing and price gouging on essential food items in addition to face masks and hand sanitisers.
Food constitutes 30% of low-income household expenditure and is essential for maintaining a healthy immune system, so containing price inflation is a priority during the crisis. Of the 1 600 complaints received under the excessive pricing and consumer protection regulations by the end of June, 307 (19%) related to basic food products in retail stores.
“The commission will continue to monitor food prices throughout the COVID-19 crisis in order to ensure that vulnerable low-income households suffering under the economic crisis are protected,” it said.
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