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Personal Finance

CAK should crack the whip on virus profiteers

masks
Protect vulnerable consumers amid war on disease. FILE PHOTO | NMG 

After the outbreak of Covid-19, a lot of retailers started engaging in business malpractices that may be deemed to be against the spirit of fair competition and therefore against the law. Ever since the virus outbreak, the market has experienced big changes.

First, there has been scarcity of some goods and services. This is mainly due to Government restrictions like lockdowns which have in many cases limited production. Closure of some border points has limited international trade such that it is becoming increasingly difficult to import some goods which were in circulation before the Covid-19 outbreak. All these have created shortages.

Some retailers have resorted to “virus-profiteering” which is taking advantage of the situation to make maximum profits. This is illegal and against the Competition Act. Some retailers have resorted to price- gouging by increasing the cost of goods to an unfair level.

For example, before Covid-19, dust masks were retailing at Sh150 for a box. Right now these face masks are retailing at Sh150 a piece or Sh1,500 for a box.

Price-gouging doesn’t only affect retailers but also manufacturers and suppliers. The entire supply chain is affected when this occurs. If a manufacturer, for example, resorts to price gouging, then he will sell the goods at a higher price to the retailer and the end result is felt by the consumer. Some retailers have resorted to hoarding goods such that they manipulate the price of goods by creating an artificial shortage. Goods such as masks are in high demand at the moment. An unscrupulous retailer can decide to hoard the goods so as to create a higher demand. This allows him to manipulate the prices. All these practices endanger the consumer especially those who are not able to afford the price. Price gouging and hoarding are business malpractices under Kenya’s competition laws. It is a malpractice to seek to make illegal profits out of Covid-19 by engaging in banned business practices.

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The Competition Act, 2010 of the Laws Of Kenya regulates competition in Kenya. Such business malpractices fall foul of the legal requirements.

The Competition Authority of Kenya (CAK) issued a caution to suppliers. In March 2020 the CAK made a decision that sheds light on the authority’s stand on virus-profiteering. It ordered a local retailer to refund to the consumers an amount in excess of the ordinary price.

The hand sanitisers were inflated by 20percent after Covid-19 was first reported in Kenya. Despite this decision, many businesses are still engaging in such malpractices and virus-profiteering. Other than price manipulation other forms of virus profiteering include manufacturing of sub-standard goods. There are some businesses which have resorted to manufacturing masks and sanitisers which do not have the standardisation mark. This is illegal. It is also illegal to manufacture sub-standard goods and other goods harmful to consumers.

The regulatory bodies have powers to investigate such practices and hear complaints.

Section 31 of the Competition Act gives the CAK powers to investigate complaints against any business. It has the powers to enter and search premises.

It can then restrain the action, direct actions to reverse the damaging effects as it did in the Cleanshelf Supermarkets case and impose financial penalties of up to 10 percent of the gross revenue of the previous year.

I hope the CAK will crack its whip as a deterrent to curtail price- gouging and hoarding. This will also serve to protect vulnerable consumers in the market.

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