The Competition and Tariffs Commission has embarked on a full-scale investigation into restrictive business practices by Cotton Ginners’ Association.
Restrictive practices are defined as abuse of dominant market position by private or public sector producers to prevent entry of new suppliers, or otherwise restraining fair and open competition.
These include apportioning of customers or markets among themselves, collusion to fix prices, and/or discriminatory pricing.
In a notice, the commission said: “Competition and Tariffs Commission is embarking on an investigation in terms of section 28 of the Act, into the alleged restrictive practices by Cotton Ginners’ Association through collusive arrangements that enable the association through collusive arrangements that enable the association to fix or determine uniform purchase prices for cotton from farmers.”
The commission said interested persons or parties should submit representations in regard to the alleged collusive arrangements.
Early this year there were tensions between farmers and the ginners association over prices.
After intense negotiations with farmers it was agreed that grade A seed cotton would attract a $1,05/kg; grade B $0,96/kg; grade C $0,89/kg and grade D 0,85/kg.
However after agreeing on the prices, farmers continued to cry foul that buyers were paying the minimum price of $0,85 per kilogramme.
In July this year Zimbabwe Farmers’ Union expressed concern at the unilateral price reduction of cotton lint.
The price war early in this year followed by parallel offers from big buyers such as Sino Zimbabwe Holdings Limited to contracted farmers.
In his 2011 mid-year fiscal review Finance minister Tendai Biti said cotton production is set to increase owing to continued firming in international prices which increased from an average of 150 cents per pound in the last quarter of 2010 to 20c in the first quarter of 2011.