Government’s centralising of vaccine procurement muddies the waters

The Governments's insistence of the centralising of procurement for the Covid-19 pandemic’s vaccines and PPEs threw a spanner in the works of the Competition Commission’s efforts to regulate as the bureaucracy added multi-pronged dimensions of unqualified suppliers, doubtful quality supplies and corruption, the commission said on Friday.

At a Competition Commission webinar outlining its work over the past 18 months of the pandemic, commissioners said a progress survey conducted after the first wave revealed how the centralising was not of benefit to the concerted efforts.

“Procurement of vaccines could have been done by individual companies or hospitals, but government decided to centralise the processes to keep tabs on how much vaccine stock there was. There were instances where there were complaints about the quality of PPEs for the public sector.

“This brought problems for the stakeholders, because they felt the processes were too slow, there were delays in the arrival of stock, the quality was questionable … and the corruption issues,” Commissioner Qhawe Mahlalela elaborated. The commission said the introduction of block exemptions in the healthcare, hospitality, banking and retail sectors facilitated better mitigation of the pandemic, as businesses were allowed to communicate on price, space and capacity.

This was more beneficial to the health sector as private and public hospitals could swap information on bed capacity, medicinal stock levels and transfer of patients. Commission officials said anxiety over the March 2020 lockdown forced the pulling out of all stops as the normally placid complaints division of the commission, which would normally handle about 350 cases per year, saw the number of complaints rocket to more than 2 000 cases in the first two months of the hard lockdown between March and April 2020.

Khanyisa Qobo, divisional manager for advocacy said the lockdown experience had helped reshape the commission’s strategies after they had to restructure its operations, personnel and priority cases, to deal with the avalanche of matters related to Covid-19 price gouging and overpricing.

“Some of these complaints were not relevant with the commission’s work, we had complaints on muffin mixes, alcohol pricing, shipping and ports, as well as cleaning chemicals among others, but we had to engage the s chief executives of retail industries to warn against pricing practices,” Qobo said.

Measures including the granting of payment holidays and or rental discounts for designated retail tenants, had benefited consumers as deliberations between landlords and their tenants helped find common ground. The relief provided between R7 billion and R10 billion of value in the property market as savings from evictions and tenant pull-outs, which also prevented between 4 000 and 7 000 job losses.

“However, on the downside, there is a risk that the landlords might have co-ordinated around denying more extensive benefits to tenants. “This emanates from submissions from some stakeholders who allege that property owners might have engaged in ‘cartel-like’ behaviour when they collectively decided to require 100 percent rental payment in one instance and to require 70 percent rental payment in another instance, instead of offering payment holidays satisfactory rental relief,” litigation manager Candice Slump said.

The commission said close monitoring and regulation of business during the lockdown had helped save consumers money, as cases of price gouging, running into hundreds of percentages were uncovered. Price-gouging regulations to basic food and consumer items, and hygiene supplies such as hand sanitiser, bleach, masks and gloves were implemented in March 2020, restricting companies to a maximum 10 percent increase in their profit margin for as long as the Disaster Management Act remained in effect.

Price gouging refers to cases where prices increase without a rise in input costs (from the supplier) and where net price mark-ups increase during a crisis. For example, retailer Dis-Chem was found guilty of increasing the price of surgical masks by 317 percent, and paid an administrative penalty of R1.2 million. There were other matters still pending for a decision.