EXCESSIVE PRICING IN SOUTH AFRICA IN THE AGE OF COVID-19

By John Paul Ongeso Monday, March 23, 2020
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On 19 March 2020, the Minister of Trade and Industry issued the Consumer and Customer Protection and National Disaster Management Regulations and Directions in terms of section 8(3)(f) of the Competition Act  89 of 1998 and sections 40 and 48 of the Consumer Protection Act 68 of 2008 (Regulations). The Regulations seek to prevent unjustified price hikes and stockpiling of goods in order to protect consumers from unjust and unfair, or improper commercial practices during the national disaster declared by the Minister of Co-operative Governance and Traditional Affairs in terms of section 27(2) of the Disaster Management Act 57 of 2002 on 15 March 2020.

Prohibition on price hikes

The Regulations prohibit unfair conduct such as false or misleading pricing practices and covet manipulation of prices and manipulation through raising or reducing grade levels of goods and services. This prohibition applies to basic food and consumer items, emergency products and services, medical and hygiene supplies and emergency clean-up products and services (Basic Goods and Services). Specifically, the Regulations provide that:

  • price rises may not exceed the increase in the costs of the raw materials or inputs and profit levels should not be hiked higher than the period prior to the outbreak of COVID-19; and
  • the prohibition against price increases applies to the full supply-chain in similar fashion.

Obligation to maintain adequate stock

The Regulations direct suppliers to develop and implement measures to ensure equitable distribution of the listed Basic Good and Services to consumers and customers including small businesses. The Regulations provide that:

  • retailers must take steps to limit the quantity of goods sold to any individual consumer*;
  • retailers must take steps to maintain adequate stocks of basic goods during this period, including for weekends and month-end shopping; and
  • wholesalers must take steps to ensure that there is no stock-piling at the cash-and-carries.

*Sale limits apply to the following: toilet paper, hand sanitizer, facial masks, disinfectant cleaners, surgical gloves, surgical masks, disinfectant wipes, antiseptic fluids, all-purpose cleaners, baby formula, disposable nappies, bleach, cooking oils, wheat flour, rice, maize meal, pasta, sugar, long-life milk, canned and frozen vegetables, canned, frozen and fresh meat, chicken or fish, bottled water, and private medical service relating to the testing, prevention and treatment of Covid-19 and associated diseases.

The public may report any price spikes and unjustified price increases to the National Consumer Commission on a toll-free hotline. The number is 0800-014-880.

Penalties for breach include the imposition of a fine of up to ZAR 1 million, or up to 10% of a company’s turnover, or imprisonment of up to 12 months.

Any person may submit written representations regarding the Regulations to the Department of Trade and Industry not later than 14 days from 19 March 2020. Representations are to be submitted to: ministry@economy.gov.za. The Minister may amend the Regulations following consideration of representations.