This news article discusses a complaint filed by a small gym owner in South Africa, Body Action Gym, against Discovery Vitality, Virgin Active, and Planet Fitness. The complaint alleges anti-competitive behaviour and claims that Discovery Vitality subsidizes up to 75% of their members’ gym membership fees when they join Virgin Active or Planet Fitness, while denying similar arrangements to other competing gyms.
Body Action Gym initiated the complaint in September 2021, and it has been referred to the Competition Tribunal, with a potential outcome expected in eight months. The CEO of Body Action Gym, Antonio Iozzo, stated that Discovery Vitality, Virgin Active, and Planet Fitness all promote the same benefits and share marketing costs among themselves. However, smaller gyms like Body Action Gym are unable to access the Vitality subsidy enjoyed by the larger gym groups, which reportedly account for up to 70% of their income.
“Body Action Gym’s complaint aims to address this unfair business practice which stifles competition and has resulted in gym closures, job losses and the further consolidation of power within the industry,” he said.
Attempts to obtain further comment from Virgin Active proved fruitless on Friday. Virgin is by far the largest gym group in South Africa, with about 159 active gyms. Discovery is, in turn, the largest open medical aid scheme, with 2.4 million members.
Iozzo claims that this closed alliance and the denial of subsidies to smaller gyms have created barriers to entry and harmed the industry. He believes that if his complaint is successful and other smaller gyms receive the Vitality subsidy, it could impact the overall market valuation of Virgin Active once it goes public. This is not the first-time smaller gym operators have taken legal action against Discovery Vitality, Virgin Active, and Planet Fitness for similar reasons, but previous attempts were unsuccessful.
