Hand sanitiser price gouging — it’s been almost two years and still no judgment

As South Africa mops up after the acute phase of the Covid-19 pandemic, and the corruption that exploited it, there are still a large number of investigations, disciplinary hearings and prosecutions outstanding. 

The Special Investigating Unit (SIU), for example, handed its final report under Regulation 23 of 2020 to President Cyril Ramaphosa in early July. Ramaphosa has not yet made that report public or even commented on it.

President Cyril Ramaphosa. (Photo: Gallo Images / Jeffrey Abrahams)

Another area relates to the investigation and prosecution of cases by the Competition Commission involving unlawful excessive pricing. In one case in particular, legal and competition experts are questioning why a ruling is taking so long to be delivered.

It involves a complaint against BlueCollar Occupational Health (Pty) Ltd and Ateltico Invest (Pty) Ltd, two companies accused of excessive pricing of hand sanitiser sold to the South African Police Service (SAPS). According to a media statement by the Competition Commission on 3 September 2020, the complaint had been investigated and referred to the Competition Tribunal, the body that adjudicates disputes and has the powers of a court.

When the matter was heard by the tribunal in March 2021, its importance was again stressed by legal representatives for the commission who said they had found that the two companies had overcharged the SAPS by R14-million and made excessive profits in the region of 54%.

That sounded like an open-and-shut case, but frustratingly, 18 months later, a judgment has still not been handed down.

The matter is of public interest in itself. But it also has bearing on at least one other important matter being investigated by the Competition Commission, which also concerns price gouging in the sale of hand sanitiser. 

In 2021, Maverick Citizen exposed how Red Roses Africa (Pty) Ltd, a company with no track record in the sanitation business, had sold R515-million worth of hand sanitiser and masks to the SAPS in the space of a couple of months after the state of disaster was declared.

In October 2020, the sale was flagged as irregular in an audit at the SAPS by Major-General Diana Nkosi, an internal auditor who was later demoted.

The amounts are many times larger than those involved in the BlueCollar matter (BlueCollar sold 10,000 containers of hand sanitiser for R3,550 per 25l, Red Roses sold 90,000 containers for R5,405 per 25l).

https://www.dailymaverick.co.za/article/2021-10-06-competition-commission-and-siu-investigate-polices-disinfectant-supplier-red-roses-africa/

https://www.dailymaverick.co.za/article/2021-10-11-net-closing-in-on-ppe-looters-after-sars-and-hawks-execute-surprise-pincer-movement/

 

It is also being investigated by the SIU.

After Red Roses Africa suggested it had been cleared by the Competition Commission, in October 2021 commission spokesperson Siyabulela Makunga contradicted this. He told Maverick Citizen that Red Roses Africa was under investigation, but had been put on hold pending the findings of the tribunal in the BlueCollar matter.

Makunga’s exact words: “We are waiting for the tribunal’s decision on the two cases on price gouging in public procurement that we prosecuted.” 

When asked how advanced the Red Roses Africa investigation was and when the tribunal was expected to make a finding, he said: “The investigation is completed, but for the reason stated above, we keep the matter on hold.”

---

Visit Daily Maverick's home page for more news, analysis and investigations

---

Ten months later the judgment is still awaited. Nearly two years have passed since the first two Covid-19-related public procurement cases were referred to the tribunal for prosecution, as the commission described them at the time.

As a result, Tembinkosi Bonakele, the Competition Commissioner, said the commission was “reprioritising its work to ensure that it is able to deter excessive pricing in the public sector and to hold the companies involved in the worst price abuses accountable.”

Maverick Citizen also spoke to one of the parties involved who said they too find the delay “unusual”.

Judith February, a legal commentator and ​​editor of Daily Maverick’s legal newsletter, Judith’s Prudence, agreed that the delay was problematic “specifically in light of the public interest in the matter and the broader context of PPE corruption. It should have been handled expeditiously.”

A former senior official at the Competition Commission agreed that 18 months “is a very long time indeed”.

Heavy workload the reason — Competition Tribunal 

Competition Tribunal spokesperson Gillian de Gouveia, in response to our questions about the reasons for the delay, said the BlueCollar matter was one of two cases heard in 2021. “The first matter was CC/Tsutsumani Business Enterprises CC (‘Tsutsumani’). Tsutsumani was prioritised since it was the first of the two matters; it has been decided and reasons were issued,” she said.

“We understand that the tribunal’s Tsutsumani judgment has been taken on review by Tsutsumani to the Competition Appeal Court,” she said.

https://www.dailymaverick.co.za/article/2022-05-03-competition-tribunal-finds-saps-mask-supplier-guilty-of-price-gouging/

De Gouveia said that “the tribunal panel is in the process of drafting the reasons”, adding that “it is a complex matter that raises some novel issues specific to the case”. 

She did not indicate how soon a judgment could be expected.

According to De Gouveia, the delays are solely to do with the tribunal’s workload. 

“In this period, the tribunal also heard and issued orders in 40 matters concerning excessive pricing for various essential goods and services necessary to combat Covid-19 (including face masks, surgical gloves, raw ginger, maize meal and eggs).”

However, all of these matters, although important, involved formalising consent orders reached with the Competition Commission. They are mostly based on complaints against individual pharmacies and suppliers, and as part of the order include an agreement to make a payment, usually to the Solidarity Fund.

De Gouveia said: “The tribunal held hearings in respect of all 40 matters, as it is required to in terms of section 52 of the act. In line with the tribunal’s Covid-19 directives issued in 2020 (they can be accessed here), most of the matters were heard in chambers. 

“In many instances the tribunal exercised its inquisitorial powers to request further information/clarification from the [Competition Commission] and respondents, including on the appropriate economic benchmark for excessive pricing and administrative penalties, before confirming the consent orders.”

To its credit, as a result of these orders, fines and “donations” totalling nearly R8-million have been made to the Solidarity Fund, the largest being a payment of R5.9-million by Matus, a company investigated for excessive pricing of dust masks.

This, however, does not allay concerns about the impact of the delay in ensuring that all those who corruptly and unlawfully exploited the Covid-19 pandemic and caused loss of life are brought to book. The public needs to remain as vigilant in ensuring the prosecution of all those involved in Covid crimes as it needs to be on State Capture. DM/MC