Dis-Chem withdraws appeal after being compared to PPE corruption scandal

CFO Rui Morais: There comes a point where you have to consider the potential reputational damage.

Dis-Chem has withdrawn its appeal at the competition appeal court after being found guilty of excessive mask pricing, due to the bad publicity it was receiving, in which the appeal was being compared to the personal protective equipment (PPE) corruption scandal that has involved some politicians and other businesses. 

Dis-Chem CFO Rui Morais said:

“We don’t want our brand embroiled within the corruption travesty. We believe that we have done nothing wrong, but there is also a point where you have to consider the potential reputational damage.”

The company said in a statement that the “decision is informed by justifiable anger at procurement abuses during the provision of PPE at taxpayers’ expense that have been recently exposed”, adding that its appeal was being compared to corruption scandals, which “could taint Dis-Chem’s reputation by misplaced association”. 

Dis-Chem lawyers argued during the hearing that it had priced the masks more highly as it anticipated future higher prices from suppliers due to global mask shortages, and that it had chosen a lower price than competitor Clicks.

Rui said lawyers advised the company would have won the case on appeal. “We remain confident that we neither overcharged nor broke the law. We believe that our price adjustments during March 2020 were justified given the increased costs we were facing and our commitment to ensure stock availability.”

He added that it is important to recall that in April, Dis-Chem reduced its mask prices when its costs started reducing, even before the Competition Commission began its investigation. 

However, it no longer wants to be tainted by other corruption scandals, so it will settle and pay the R1.2 million fine. “We would rather move forward and focus on delivering value to consumers for the products they need, especially during the continued challenging environment,” Rui said.