Regulator warns manufacturers against setting maximum prices

Spread This News

By Alois Vinga

THE Competition and Tariffs Commission (CTC) has issued a stern warning against manufacturers who are in the habit of setting maximum selling prices for retail and wholesale outlets highlighting that such practices contradicted the set law.

The remarks are a slap in the face for members of the public who expect authorities to act against unscrupulous businesses violating the exchange rates by charging much higher prices.

But in a recent update, CTC said specifying minimum and maximum price ranges to be charged by wholesalers/retailers can be construed as setting minimum resale prices, an initiative which stifles competition amongst the players.

“Floor price setting acts as a disincentive for efficient operators and innovators, as failure to charge the lowest possible price defeats the whole essence of promoting competition and enhancing consumer welfare,” said CTC.

The competition regulator said while such practices could be deemed as consumer protectionist initiatives, they can be easily used as a platform of operationalising cartels which are the worst evil of all conducted in competition policy law and enforcement circles.

The commission said it may commence investigations into such issues and depending on the outcomes, may charge those found guilty accordingly.

Such actions violate Part VII of the Competition Act [Chapter 14:28] and related provisions on unfair business practices and minimum resale prices.

Section 42 of the Act on unfair business practices states that any person who enters into or engages in or otherwise gives effect to an unfair business practice shall be guilty of an offence and liable – a) in the case of an individual to a fine not exceeding level twelve or to imprisonment for a period not exceeding two years or to both such fine and imprisonment; and b) in any other case to a fine not exceeding level fourteen.

“Accordingly, players in the market are therefore urged to desist from recommending minimum and maximum price ranges given the possible negative implications, specifically not the minimum price. The acceptable approach in line with the Act is the recommendation of a maximum price and not a range of prices,” CTC added.