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Tribunal to prosecute SAPS' PPE supplier for price gouging
Having concluded its investigation of complaints lodged by the South African Police Service (SAPS) for its procurement of personal protective equipment (PPE) during the national state of disaster, the Competition Commission has referred the case to the Competition Tribunal for prosecution.
Image source: Anna Shvets from Pexels
The Commission has found that Red Roses Africa (Red Roses), previously registered as Mainstreet 669, charged excessive prices to the SAPS when responding to a request for a quote for the supply of bulk hand sanitisers.
In March 2020, Tshwane-based Red Roses responded to a SAPS request for quotes for the supply of bulk hand sanitiser in 25L containers. Hand sanitisers were required by SAPS to combat the spread of the Covid-19 pandemic. Red Roses was subsequently appointed and supplied SAPS with 90,000 25L containers of hand sanitisers at a price of R4,700 per container with a gross markup of 236%.
The Commission’s investigations found the price Red Roses charged SAPS during the national state of disaster is excessive and contravene section 8(1)(a) of the Competition Act, read with Regulation 4 of the Consumer Protection Regulations and National Disaster Management Regulations and Directions in Government Notice No. 350 of Government Gazette no. 43116 (Consumer Protection Regulations).
The Commission also found that Red Roses’ price does not correspond to the increase in the cost of providing these 25L hand sanitisers. “The excessive price was exploitative and directed at taking advantage of the SAPS at a time when PPEs, and particularly hand sanitisers, were in high demand,” Commissioner Doris Tshepe explained.
This is the third Covid-19-related public procurement case the Commission has referred to the Tribunal.
Other price gouging cases
Two other cases in the context of a public procurement process have been successfully prosecuted by the Commission and determined by the Tribunal. The first prosecution of price gouging in relation to public procurement relates to the April 2022 matter where another SAPS supplier, Tsutsumani Business Enterprises (Tsutsumani), was found guilty of price gouging in its supply of face masks in 2020. Tsutsumani was fined R3.4m in administrative penalties by Tribunal. The Tsutsumani matter is currently under review before the Competition Appeal Court.
In April this year, BlueCollar Occupational Health (BlueCollar) acting on behalf of and/or within its partnership with Ateltico Investments (Ateltico), was found guilty of excessive pricing of hand sanitiser during the Covid-19 pandemic. The Tribunal also imposed an administrative penalty of R3,550,000 for overcharging the SAPS for the bulk supply of 10,000 25L containers of hand sanitisers in 2020.
