Cape Town - Tile and ceramic ware retailer Italtile (ITE) has agreed to pay an administrative penalty totaling R2.0m after the competition commission found that the group`s conduct in the central setting of selling prices to franchisees amounted to minimum resale maintenance and therefore violated the Competition Act, the commission said on Thursday.
The commission will be holding a hearing on the application for confirmation of the agreement between Italtile and the commission on the matter on Tuesday, September 20.
The penalty arises from a complaint received by the commission in September 2001 from Italtile franchisees, who alleged that the Italtile Group was abusing its dominance in the ceramic tiles and related products industry.
The commission undertook an investigation into the alleged prohibited practices, and found that:
the group compels franchisees to charge prices that are set centrally by the group;
deviation from the central set prices, under certain circumstances, requires that franchisees obtain prior approval from Italtile;
Italtile, through their officials, threatened to terminate franchises that do not sell products at the set prices and the prices set centrally in the group are, therefore, mandatory.
As a result of these findings, the commission found that Italtile Group`s conduct amounted to minimum resale maintenance, and was therefore in contravention of the Competition Act.
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