FCCPC’s case against profiteers

Today’s issue of critical national importance is the growing trend of unreasonable pricing of consumer goods and services across the country, coupled with the unwholesome practice of market associations engaged in price fixing.

As a responsive organization, we have conducted extensive market surveys across the country in recent weeks. Our findings are quite disturbing. Our gathering today underscores the gravity of the situation and the urgency of the need for collective action to address this unwholesome development.

As a statutory body mandated to protect consumer rights, we cannot allow this unhealthy trend to continue.

To be clear, we recognize that an unfavorable exchange rate has negatively impacted the cost of production in local currency. However, the margins in the pricing of goods and services are often unreasonable or excessive.

We have observed that, for example, the price margins on imported goods are often very disproportionate. For locally produced goods, prices are excessively inflated. This situation is untenable, especially in the retail segment, where we have identified patterns of price fixing by some market associations, price gouging, and other anti-consumer practices.

For clarity, price fixing refers to an agreement between competing businesses to set prices at a certain level, either explicitly or implicitly. This practice prevents healthy competition, which is otherwise expected to drive prices down and improve quality.

Price gouging, on the other hand, occurs when sellers significantly increase the price of goods or services during a crisis or period of economic challenge, taking undue advantage of consumers.

To illustrate, let me share some of our findings. Just two days ago, a popular supermarket chain in Texas, United States, displayed a fruit blender called Ninja for $89 (roughly N140,000). Meanwhile, the same product was priced at N944,999 at a popular supermarket on Victoria Island in Lagos on the same day and at the same hour, representing more than a 500 percent markup.

Interestingly, when our undercover officer visited the same supermarket two weeks earlier, the blender was priced at N750,000.

The question then arises: What justifies this arbitrary price hike compared to the United States? What business principle can justify such profiteering?

Here are more of our findings from our investigation. In notable supermarkets surveyed in Abuja, Kano, Port Harcourt, and Lagos, we found that prices were arbitrarily increased without justification. In one supermarket in Abuja, consumers were charged N2,600 for an imported toilet soap at the payment point, although the price tag, as mandated by FCCPC, was not displayed. The same soap was sold for N1,950 at a popular supermarket in Lekki, Lagos, on the same day. This already constitutes a double offense.

Our findings also show a trend of arbitrary price hikes among sellers of food items and transport operators. When we engaged foodstuff sellers, they commonly cited increased transportation costs. But is it justifiable for a tomato seller to double the price of a basket of tomatoes simply due to higher transport costs? In another market within the same area, our field officers found the same basket of tomatoes was sold far cheaper. Did the seller at the lower price not also incur transport costs?

In a typical foodstuff market, this is how price fixing occurs. A trailer-load of yam tubers arrives at Wuse Market in Abuja from, say, Benue State. Instead of allowing free trade, market cartels insert themselves between the farmers and retailers. They buy in large quantities from the producer at a low rate and then sell to retailers at much higher prices. The retailers, in turn, sell to consumers at inflated rates.

Such price fixing is no longer acceptable, and the FCCPC will henceforth crack down on those involved in these profiteering schemes.

In public transportation, how justifiable is it for a bus driver to double their fare simply due to a slight increase in petrol prices? This only leads to a spiral of arbitrary price hikes in other services. The landlord who pays more for transport may increase rent as a survival strategy. The school owner, facing higher rent, may also raise fees. This cycle results in a higher cost of living for everyone.

Given the current situation in Nigeria, let me be clear: Price gouging and price fixing are not only unethical but illegal under the FCCPA. The FCCPC is prepared to enforce the law against those exploiting consumers.

However, our approach today is not punitive. We have chosen to withhold the names of the errant supermarkets, hoping that, after this revelation, they will adjust their prices to reasonable levels.

This approach is based on our belief that dialogue and collaboration are crucial in fostering a fair marketplace. Through constructive engagement, we can establish a framework for reasonable pricing that benefits all stakeholders, especially consumers, who are the backbone of our economy.

This new initiative by the FCCPC aligns with President Bola Tinubu’s renewed hope agenda, which prioritizes the welfare of the Nigerian people in all economic activities. We are committed to ensuring that market practices do not worsen the economic challenges facing our citizens.

President Bola Tinubu has already taken steps to improve food security in the country, including providing fertilizer to farmers and removing tariffs on selected staple food imports. It is only fair that distributors and traders pass these benefits to Nigerian consumers by reducing prices.

As we move forward, I urge all stakeholders to embrace patriotism and cooperation. The law empowers the Commission to impose heavy fines for breaches and prosecute offenders, potentially leading to jail terms.

For example, Section 107 (4a) of the FCCPA states, “Where the undertaking is a natural person, [they are] liable on conviction to imprisonment for a term not exceeding three years or to payment of a fine not exceeding N10,000,000.00 (N10m) or to both the fine and imprisonment.”

Section 107 (4b) also states, “Where the undertaking is a body corporate, [it is] liable on conviction to a fine not exceeding 10% of its turnover in the preceding business year.”

But in the spirit of democracy, we are first exploring dialogue. We are giving a one-month moratorium (September) before the Commission begins firm enforcement. Let us work together to create a marketplace that is competitive, fair, and just. The FCCPC is committed to continuing these dialogues, monitoring compliance, and taking decisive action where necessary.

Excerpts from the keynote address by the Executive Vice Chairman/Chief Executive Officer (FCCPC), Mr. Tunji Bello, at a stakeholders meeting on exploitative pricing hosted by the FCCPC in Abuja on Thursday, August 29, 2024.

Credit: TheNews Nigeria