Cycling price fixing case before Tribunal

Image courtesy of FreeDigitalPhotos.net Credit: Simon Howden

The firms face the allegation that they colluded to set the wholesale and retail prices of cycles and accessories. In addition, they are alleged to have excluded competitors from the market.

Price list

Wholesalers sent retailers a price list with the wholesale price and the recommended retail price on a regular basis.

The recommended retail price includes a mark-up of 35% for bicycles and 50% for accessories. In turn, the ceiling on mark-ups also determined the profit/margin that retailers could make on cycles and accessories.

Bicycle retailers colluded to exclude competitors like internet retailers from the market. The stratagem employed was to ask the wholesaler to sell to independent retailers at a higher price. The Competition Commission believes this conduct is likely to harm competitors and consumers.

The Commission has asked the Tribunal to levy an administrative penalty of 10% on the annual turnover of each of the firms involved.

Firms and wholesalers

The firms facing these allegations include retailers Fritz Pienaar Cycles, Cycle Lab, Hotspot Cycles, Maverick Cycles, Dunkeld Cycles, Summit Cycles, Bester Cycles, Johnson Cycle Works, Salojee's Cycles, West Rand Cycles, Bowman Cycles, and Winners Cycles.

Further it includes the following wholesalers: Thule, The Just Fun Group, Omnico, Cytek Cycle Distributors, Cape Cycle Systems, Silverback Lab, Shimano, Emotion Cycling, International Agencies, J&J Cycling, Le Peleton, Ravx Design, RFA Distributors, Supersport Cycling, Maillot Juine Trading and Bicicletta.

Following the lead

The Commission initiated this investigation on March 2009 following an anonymous tip-off, a complaint lodged by Yellow Saddle Cycling and admissions by some of the respondents during its investigation process.

During its investigation the Commission also found that the respondents met on various occasions in 2008 to discuss and agree on wholesaler and retail prices.

The Commission is in possession of minutes of a meeting, which took place on September 2008 in Gauteng between various retailers and wholesalers in the industry.

At this particular meeting an agreement to increase retailers' prices and to fix prices, discounts and other trading conditions applied by wholesalers was concluded.