Dis-Chem under Competition Commission investigation following health minister’s complaint

The Competition Commission is investigating Dis-Chem’s Better Rewards programme following a complaint from Health Minister Aaron Motsoaledi. The commission’s spokesperson, Siyabulela Makunga, toldThe Citizenthat the investigation focuses on determining whether Dis-Chem has violated any provisions of the Competition Act. The investigation relates to the part of the Rewards programme that provides customers with a 5% discount on front-shop retail products for a 30-day period, only if they have visited Dis-Chem’s pharmacy.

“The focus of the investigation is to determine whether the rewards programme is structured in a way that could potentially restrict or exclude competition within the market, specifically if it has the effect of inducing consumers not to engage with competitors,” said Makunga. “The affected sections of the Competition Act are sections 8(c) and 8(d).” Section 8(c) of the Act stipulates that “a dominant company is not allowed to use exclusionary conduct, unless it can show that the conduct has strong efficiency or pro-competition benefits”. Section 8(d) stipulates that it “prohibits dominant firms from engaging in specific exclusionary practices, such as blocking suppliers or customers, refusing to supply competitors, tying products, or selling below cost, unless they can show that these actions deliver efficiency or other pro-competitive benefits that outweigh their harm to competition.” Makunga said the commission has reached out to 13 market participants to collect relevant information.

“Requests for information have been issued to Dis-Chem, nine other retail pharmacies, two pharmaceutical industry associations and the National Department of Health,” he added. “We are actively engaging with these participants to ensure we have a comprehensive understanding of the alleged conduct. The commission is currently reviewing the information gathered and is preparing a preliminary report, which will include preliminary findings and recommendations based on the strength of the evidence.”