THE Competition and Tariff Commission (CTC) has cautioned wholesalers and retailers against charging maximum set prices for goods, warning the watchdog will not hesitate to investigate sectors colluding on pricing.
BY FIDELITY MHLANGA
This follows recent announcements of recommended maximum wholesale and retail prices for various goods and services.
“Historically, CTC has observed that whenever a recommended maximum price is announced, retailers or wholesalers, have a tendency to all charge that maximum price under the guise of complying with the stipulation,” CTC said in a statement yesterday.
The competition watchdog said 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 incidentals to operations.
“In this respect, in spite of the recommended maximum prices the commission expects all players in any sector with the recommended maximum prices to charge significantly different prices that facilitate the competition process,” it said.
Instances where players charge exactly same prices or price fixing will be deemed to have colluded to commit an offence prohibited under the Competition Act. Price fixing defeats the promotion of competition and enhancement of consumer welfare.”
CTC said excessive pricing was anti-competitive, as it rules out the setting of prices according to recognisable competition considerations.
“In this respect, the commission will not hesitate to embark on investigations in sectors identified as colluding or price fixing or excessively pricing with a view to remedy such anti-competitive practices within the confines of the Act. All producers, wholesalers and retailers are therefore expected to comply with the Competition Act with immediate effect or face the wrath of the law,” said the watchdog.
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.
“Excessive pricing is defined as a price for a good or service, which bears no reasonable relation to the economic value or reasonable relation between price and economic value of that good or service and higher than that value.
“Such conduct leaves consumers with no alternative, as all players, producers, wholesalers and retailers charging
excessive prices eliminate the consequent competitive prices for basic goods and services and product associated with a competitive environment,” CTC said.