Fresh push to protect consumers against spiralling costs of goods

A Bill seeking to bar manufacturers and distributors of consumer goods from arbitrary price increases is to be reintroduced in Parliament when it reopens next week.

The move is aimed at protecting consumers from price-induced inflation.

The prices of most consumer goods have risen sharply, pushing the country’s inflation rate hit the roof as manufacturers claim high cost of production and transportation.

Jail term

Retailers who increase the prices of consumer goods without express permission of manufacturers on goods with affixed recommended prices will be breaking the law and could be jailed for up to five years if the Bill is passed into law.

But Parliament could clamp down on arbitrary price increases when it resumes next week to debate ,among other bills and motions, the Competition Bill 2009.

The Bill was referred to the Parliamentary Committee on Finance, Planning and Trade for scrutiny in May after it was introduced in Parliament by Finance Minister Uhuru Kenyatta for first reading in April.

The Bill seeks to establish the Competitions Authority that will regulate the concentration of economic power in a few institutions such as manufacturers to the detriment of consumers.

Producers will be forced to take into account the prevailing economic conditions in the country before increasing prices of their goods so as to make extra profits.

If passed into law, manufacturers who lower the quality of their goods without duly informing consumers will be deemed to have contravened the law and be liable for prosecution.

The law will also prohibit any manufacturer of popular goods from making it difficult for consumers to access their goods either by way of increased pricing or by way of hoarding.

The authority will have powers to institute public hearings or investigations to determine if a company or a manufacturer has unreasonably increased prices and will be ordered to rescind the decision to increase prices.

“After completion of its investigation, the authority may make an order directing any person whom it deems to hold an unwarranted concentration of economic power in any sector to dispose of such portion of his interests in production, distribution or the supply of services as it deems necessary to remove the unwarranted concentration” says the Bill.

Manufacturers or individual distributors who fail to comply with the Authority’s directives would be deemed to have committed an offence and would be liable to a five year jail sentence or a fine not exceeding one million shillings.

The Bill also seeks to repeal the Restrictive Trade Practices, Monopolies and Price Control Act and it will also allow for changing of the Monopolies and Prices Department of the ministry of Finance into a fully fledged regulatory body that will protect consumers’ interest.

If passed, it will establish a Competition Tribunal to replace the existing the Restrictive Trade Practices Tribunal.

The Bill seeks to protect consumer welfare by guarding consumers from goods of inferior standards being passed as quality goods.

Inferior quality

It says that manufacturers or distributors would be committing an offence if they sold goods that are falsely labelled as of a particular standard or quality while they are of poor or inferior quality.

The law will also prohibit dominant companies from abusing their positions by exploiting consumers through price increases or the supply of sub-standard products.

“Abuse of a dominant position includes directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions, limiting or restricting production, market, outlets or market access, investment, distribution, technical development or technological progress through predatory or other practices” says the Bill.