Suppliers of essential items should weigh price increases carefully
Competition commission rulings spark debate over whether demand-induced hikes should be prohibited
The recent civil unrest created unfortunate scenes of consumers queuing for basic foods. In such a crisis, competition authorities are mindful that suppliers may be able to take advantage of vulnerable consumers by charging significantly higher prices, despite the underlying costs not changing to the same extent.
In SA, consumer protection regulations were promulgated at the beginning of the Covid-19 pandemic. These have shaped how section 8 of the Competition Act is to be applied in this time of crisis, and specifically prevent certain suppliers of basic foods, medicine and cleanup products and services from applying price increases that are not equivalent to the increase in the cost of providing the goods or service, or that increase the net margin or mark-up above the mark-up or average net margin in the three months before March 1 2020...