eBusiness Weekly
Fradreck Gorwe
The Competition and Tariff Commission (CTC) has implored producers and retailers alike to desist from fixing prices or charge excessive prices as has been the norm whenever an announcement on recommended maximum wholesale and retail prices is made.
The CTC, which is mandated to implement the country’s competition policy and execution of the country’s trade tariffs policy, said such practice is tantamount to both ripping of consumers and to anti-competitive behaviour prohibited under the Competition Act (Chapter 14:28).
“Following recent announcements of “recommended maximum wholesale and retail prices” for various goods and services, the CTC would like to urge all players involved to guard against the likely resultant anti-competitive effects of this conduct,” reads a statement released on Wednesday by the statutory body.
The CTC said it has observed that whenever a “recommended maximum price” is announced, retailers or wholesalers, have a tendency to charge that maximum price under the guise of complying with the stipulation.
“While players may use similar formulas to determine prices at which they sell their products, certainly two or more players cannot charge the same price for identical products given the different overheads base, capacity utilisation levels, economies of scale and other costs incidental to operations.
“In this respect, despite the recommended maximum price, the commission expects all players in any sector with maximum ‘recommended maximum prices’, to charge significantly different prices that facilitate the competition process,” said the commission.
The commission further denounced the practice of inflating prices, which is also deemed an offence by the Act for engineering anti-competitiveness.
“CTC has also observed the rampant unsupported price increases on goods and services, equated to excessive pricing in competition law and policy, to the detriment of consumers.
“In competition policy and law, price fixing together with excessive pricing are both conducts which eliminate and/or stifle competition amongst players in a sector. Price fixing defeats the promotion of competition and enhancement of consumer welfare.
“All producers, wholesalers and retailers are therefore, expected to comply with the Competition Act with immediate effect or else face the wrath of the law,” admonished CTC.
Further, the CTC considered unfair business practice the act by producers or manufacturers to set minimum “resale prices” for retailers and wholesalers. This, the producers do in the “guise of cushioning consumers from likely exploitation by unscrupulous retailers” yet from the commission’s perspective it is a platform for “operationalising a cartel” which act is the worst of all conducts in the competition policy.
The fight on monopolies and cartels tops as one of the Government’s agendas.
Unfair business practices, and in particular the specification of minimum resale prices, are prohibited under Section 42 of the CTC Act;
“While it is permissible to set maximum recommended prices, the Act views setting minimum resale prices as an unfair business practice, a conduct prohibited in the Act, Part V11 of the Competition Act (Charter 14:28) and related provisions on unfair business practices and minimum resale prices,” said the commission.
