CTC moves to curtail unfair market practices
THE Competition and Tariff Commission (CTC) is taking a proactive stance against potential anti-competitive practices in the wake of adverse effects of the El Niño weather phenomenon.
El Niño, a phenomenon characterised by unusually warm ocean temperatures in the Pacific, disrupts rainfall patterns and often leads to drier conditions. It has triggered drought fears in Zimbabwe and the rest of southern Africa, threatening to drive food prices and inflation higher.
The concerns stem from the risk the weather phenomenon poses a significant threat to food security and economic stability in the region.
Agricultural production, a cornerstone of Southern African economies, is particularly vulnerable.
Such a situation can also create an environment for anti-competitive practices.
Sectors that are most vulnerable to drought conditions, such as agriculture and essential goods suppliers, may be tempted to engage in price gouging, a practice that involves unfairly raising prices to capitalise on scarcity and consumer desperation.
The practice places a heavy burden on consumers, particularly low-income households.
CTC has acknowledged these concerns and says it is “closely monitoring” these vulnerable sectors to ensure fair market practices.
The commission is at law empowered to undertake investigations into any restrictive practice which it has reason to believe exists or may come into existence.
“The commission will be closely monitoring specific industries at the back of El Nino to ensure it proactively handles unfair business practices,” said CTC in its fourth quarter newsletter.
Zimbabwe is already experiencing the early effects of the El Nino. Tobacco production is expected to decline from 296 million, the biggest ever the country has produced to 235 million kg.
Patrick Devenish, the chairman of the Tobacco Industry and Marketing Board (TIMB), said the impact of the drought had further been reflected in shrinking hectarage and grower numbers. Planted tobacco land has decreased from 117 645 hectares last year to 113 101 hectares this season.
In addition, the number of registered tobacco growers has dropped by 22 percent to 115 114.
“The tobacco sector was not spared,” Mr Devenish said at an event to mark the official opening at the Tobacco Sales Floor in Harare.
“The negative variance was because of delayed rains that were received which affected the delayed timing for planting dry land crops.
The late rains (also) caused a delayed establishment of crops for small-scale farmers who contribute 70 percent of the national yield. Consequently, there was a decline in volume produced per hectare.”
The Cotton Producers and Marketers Association also anticipates a significant decline in cotton production due to the El Niño-induced drought.
This conforms with a recent snap survey by our sister paper, Business Weekly, which revealed substantial maize crop failures in some areas due to insufficient rainfall.
However, the survey also identified selected areas with crops in fair condition, suggesting the possibility of modest harvests in those regions.
Meanwhile, the CTC has issued a cease and desist order against Profeeds, a major supplier of poultry products, for engaging in "tied selling" practices.
The order prohibits Profeeds from forcing customers to purchase broiler stockfeed as a condition of buying day-old chicks.
Tied selling, also known as bundled selling, occurs when a company requires the purchase of one product (in this case, broiler stockfeed) in order to buy another (day-old chicks). This practice can limit consumer choice and potentially inflate prices.
The CTC's investigation found that Profeeds had been conditioning the sale of day-old chicks on the purchase of their brand of broiler stockfeed.
“The Competition and Tariff Commission has issued an order against Profeeds to cease and desist from tied and conditional selling of day old chicks and broiler stockfeed,” said CTC.
“This implies that customers are not required to buy broiler stock feed as a condition for purchasing day-old chicks.”
Last year, CTC also undertook investigations in the branded uniforms market which affected tertiary learning institutions. Tertiary learning institutions were making students buy branded uniforms exclusively from the college, without giving them a choice of other suppliers.
Students were invoiced during enrolment for branded uniforms (sporting attire and protective clothing) and if students got uniforms elsewhere, they still owed the institution money for the cost of the uniforms upon completion of their studies, which would result in them failing to collect certificates.
The commission’s investigations are still going on. The CTC also investigated restrictive practices in the medical aid sector whereby CIMAS Medical Aid Society deregistered Family Medical Clinic as one of its service providers.