THE EASY ride is up for nearly 30 South African cycling companies facing stiff penalties after allegations of collusion by the Competition Commission, which clamped down on the industry for alleged anti-competitive practices.
Following a complaint by Yellow Saddle Cycling, admissions by some of the respondents during its investigation and an anonymous tip-off, the commission investigated the domestic cycling industry.
Its complaint referral could see each of the 28 firms involved paying a penalty of 10 percent of annual turnover.
Oupa Bodibe, the manager of the commission's advocacy and stakeholder relations department, said the commission had found that the respondents met on various occasions in 2008 to discuss and agree on wholesaler and retail prices.
"Most of the firms involved in the matter were at several of the meetings," he said.
Business Report contacted some of the companies for comment, but most were unwilling to disclose any information. Others could not be reached.
Last Friday the commission referred its findings of price fixing in the industry to the Competition Tribunal.
The commission alleges that they colluded to set the wholesale and retail prices of bicycles and accessories, and that they excluded competitors from the market.
Bodibe confirmed that the commission was in possession of minutes of a meeting in September 2008 in Gauteng between various retailers and wholesalers in the industry, where an agreement to increase retailers' prices and to fix prices, discounts and other trading conditions applied by cycle wholesalers was made.
The minutes from the meeting were posted on an online forum on a cycling website, but have since been removed.
According to the commission, wholesalers sent retailers a price list with the wholesale price and the recommended retail price on a regular basis.
The recommended retail price included a mark-up of 35 percent for bicycles and of 50 percent for accessories.
In turn, the ceiling on mark-ups determined the profit and margin retailers could make on cycles and accessories.
"Bicycle retailers colluded to exclude competitors like internet retailers from the market," the commission said. "The stratagem employed was to ask the wholesaler to sell to independent retailers at a higher price."
Bodibe said he believed 10 percent was a sufficient deterrent to send a message to all the firms in the economy that this kind of behaviour was completely unacceptable.
The retailers facing allegations include 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. The wholesalers are: 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.