Joint effort to bring down prices of essential items

We salute the commendable steps taken by Ministers Bandula Gunawardena, H.R. Mithrapala and Najeeb Abdul Majeed, the Consumer Affairs Authority headed by the Chairman in stabilising and bringing down the prices of essential consumer items to the needy sections of society.

The Minister, the Chairman and the staff including the Investigation Officers right round the island were on duty during the week-end and holidays and will continue to be serving during the vacation as your obedient servants.

Competition, competitiveness and sustainable growth

A Good Competition law and policy is a concomitant requirement for any market based reforms. In as much as reforms are brought about rein unnecessary command and control measures, a competition law ensures the promotion of a sound market, which is not exploited by dominant business.

A competition law promotes competition, whereby it buttresses consumer welfare and economic efficiency. Importantly it also enables the Government to keep a check on concentration of economic power. On the other hand the current phase of globalization and liberalization is adding newer and complex definitions of market structures, concentration etc and pushing the authorities to redefine like dominance and abuse of dominance.

Competition policy has emerged as a significant focal point of policy makers in countries undergoing transition from central planning towards greater reliance on market participation processes.

National competition agencies in this part of the world are facing challenges today due to globalization, transformation and rapid technological changes/development. The rapidly changing environment has created a very vulnerable situation for policy makers.

It is essential to have a competition law in place and a formal competition regime established. It is important to design laws to prevent market conduct, which restricts competition.

The conference provided the opportunity to discuss, the issues as to how Competition Authorities and systems should evolve in order to take account of globalisation. Business tends to develop global strategies.

There is a growing trend for higher co-ordination among the Competition Authorities. This is important in order to secure an effective scrutiny of foreign direct investment in emerging economies from cross boarder takeover.

It was noted that sometimes takeovers allow large multi-nationals to increase their market power, and increase the risk of abuse of market power.

Abuse of dominant position and likely to impair competition to the detriment of consumers.

Abuse of dominant position has an adverse impact not only on domestic economies but on international trade.

Therefore implementing competition law and policy in the region may be better way of dealing with the risks brought about by liberalizing one’s economy.

The aim is to bring about consistent evaluation of all potential anti-competitive conducts in such a way as to guarantee a real competitive market structure for the benefits of consumers.

Globalisation has been acting as an accentuating force in this regard with doors wide open for multi-nationals and other big foreign investors with inequitable benefit or share to the consumer.

The Sri Lankan consumer, on his side, has not been quite aware of his rights and even if he was aware, has been very slow and lethargic in coming forward to assert his rights. Therefore, Sri Lanka has a long way to go in the opposite direction to ensure consumer rights and protection through competition promotion.

Competition authorities and sector regulators across region

The relationship between competition authorities and sector regulators has at times involved disagreements over regulatory approaches. The regulators have sometimes been felt to act more in the interests of the firm/s they regulate than in the interest of consumers or promoting competition.

Competition authorities have sometimes been felt to ignore broader social objectives apart from increasing competition and to lack adequate technical knowledge in complex sectors.

Fractious relationships are not inevitable. Competition authorities and sector regulators should be on the same footing mainly because economic growth is enhanced by pro-competitive regulation. Also many of the objectives of competition authorities and regulators are in similar.

The ideal situation has been identified as the relationship between competition authorities and sector regulators is driven by a Government that promotes broad review of existing regulations with pro-competitive lens, ensuring that a “Competition Culture” in place.

However, in practice the ideal has not been reached so far. One of the most powerful mechanisms for achieving pro-competitive regulation is to improve the co-operation and co-ordination between sector regulators and competition authorities. The Government support for pro-competitive regulation is justified in order to enhance and develop an economy that is better able to resist economic shocks.

The following key elements have been identified for increasing pro-competitive regulation;

* The central government should encourage and actively supports pro-competitive regulation by taking actions such as; 1. Including pro-competitive regulation as part of a sector regulator’s mandate;

2. Requiring that ministries and regulatory bodies review their laws and regulations for unnecessary restrains of competition;

3. Appointing regulators with a proven interest in competition; and

4. Giving competition oversight functions to the competition agency with technical back up from the sector regulator.

* Identify the instruments for co-operation to be implemented by both competition authorities and regulatory bodies such as:

1. giving statutory powers to the competition agency for some aspects of regulatory reviews;

2. Placing senior officials of competition authority on oversight board for sector regulator and vice versa; and

3. Providing competition authorities with the standing to submit public comments that require written response by the regulator prior to final decisions.

* Mechanisms for ensuring domestic consistency in competition rules should be applied:

1. To the extent that multiple agencies have competition oversight functions, a common appeal route should be created so that competition cases are governed by a common standard;

2. regulatory impact assessment should take into account competition objectives, among other goals; and

3. Competition authorities should be given the right to intervene with respect to existing and proposed regulations that are potentially harmful to competition in view of overall principals of competition law enforcement to be adopted across different sector regulators.

Recommendations and conclusion

In my view, the most powerful means for improving the well-being of consumers is to promote competition in business markets. From the interaction I had with the members present from the region specially Japan, Korea and India.

In most circumstances business competition is the best way of encouraging efficiency, innovation and value for money. Some complaints handled by respective countries in the region were discussed and reports convince me that consumer protection and competition policy interact very well and that boundaries between them are very thin.

The Consumer Affairs Authority Act in Sri Lanka is a mixture of Competition and Consumer protection. It may be weaker in some respects, particulary with the removal of the provision to investigate monopolies and mergers which was under the predecessor of the Authority, The Fair Trading Commission.

It may be worth our while to examine the experience of other countries as to ascertain the interface between competition and consumer protection, and as to see whether we should bring in amendments to the present legislation. We are to be mindful of the fact the size of the economy, whether it is a burden on the State to have two institutions or to maintain one.

Being a small agricultural based country who is heavily dependent on imports for our essential commodities and also particularly when the Government is facing severe budget constraints in allocating resources.

I recommend establishing a committee with suitable terms and references focusing on aspects relating to investigate powers of monopolies, mergers and interface between the Authority and other regulatory authorities such as Public Utilities Commission, transport, telecommunication etc.

The growing globalization of trade has brought into focus the question of international co-operation. We have bilateral, multilateral trade agreements. Similarly we have to maintain co-operation in competition law with the region and the world at large in order to handle global and anti-competitive practices and abuse of dominance by multinationals.

A competition authority may find itself unable to tackle market failure where it occurs out of actions of firms located overseas or it may risk taking action which affects interest of other countries. Therefore the necessity for competition authorities to co-operate with each other is very essential.

Mrs. Shanthini Neelakandhan,

Director, Competition

Promotion, CAA.

Nation focuses attention on Consumer Affairs Authority

The attention of the nation today is on the Consumer Affairs Authority. It is the duty of the Authority to provide consumers, consumer articles of quality at reasonable price.

The Consumer Affairs Authority for the first time in 30 years has introduced an innovative step on the initiative of the Minister of Trade, Marketing Development, Co-operatives and Consumer Services to activate Section 14 of the Consumer Affairs Authority Act and agreed on the maximum prices of the following items to static.

We thank the traders for having agreed upon the agreement and to show the world that we are in the verge of becoming set of exemplary and just traders. The prices of maximum retail prices and the 10 items specified are as follows:

1.Potatoes : Rs. 46.00 per Kg

Potatoes : Rs. 65.00 per Kg

2.Big Onions : Rs. 45.00 per Kg

3.Red Onions : Rs. 42.00 per Kg

4. Grams (Kadala)

Grade I : Rs. 115.00 per Kg

Grade II :Rs. 98.00 per Kg

5.Green Moong :Rs. 105.00 per Kg

6.Sprats : Rs. 145.00 per Kg

7.Dried Chillies :Rs. 160.00 per Kg

8.Dhal -Turkey :Rs. 70.00 per Kg

9.Sugar - White:Rs. 47.50 per Kg

10.Canned Fish:Rs. 91.60 per tin

This is the maximum retail price. The prices of all the retail prices are not specified. The retail price of chicken is specified as Rs. 260 per Kg as has been agreed upon with the All Island Poultry Association.

This is a very encouraging and pleasant development, where the Consumer Affairs Authority, the Minister and the trader have developed a mechanism to help the consumer. Consumer Affairs Authority considers consumer’s interests paramount. Consumer understands the new trend of friendly negotiations with the trader. As in a free economy there is no room for strict price control.

The Consumer Affairs Authority had a difficult time in negotiating with the Poultry Association. But in the end parties succeeded in achieving a consensus. Now throughout the entire island the price of poultry is static. The nation must be provided with a balance diet.

As fish is expensive and poultry is convenient to produce, the Consumer Affairs Authority and the Minister chose poultry in place of fish to cater the needy consumer. We publish a letter dated 09.04.2007 elsewhere in this page with the permission of the Association, with difficulty we agreed upon the consensus.

The next difficult mechanism is to provide the ordinary consumer with the benefits of agreements and concessions. This is a difficult task in the open economic structure. It has to be affected by way of competition, regulation and indirect price control Section 18 of the Act has provided for the mechanism where the Authority is empowered to monitor increase of prices of specified items.

The other mechanism of monitoring price structure is activating Section 26 of the Act which states as follows:

1. Every trader shall exhibit conspicuously in his place of business, a notice specifying the maximum retail or wholesale price, as the case may be, of goods available for sale in his place of business other than the price of any goods, the price of which is marked on the goods itself or on the wrapper or pack containing it or marked in any other manner as may be required by any law.

2. A complete list of the price of goods available for sale shall be kept within the place of business at all times for inspection whenever required.

We have requested traders strictly adhere to this procedure, at least by exhibiting the prices of essential items which are fast moving and which are needed for day-to-day life. Our network of Investigation Officers are occupied round the clock during the festive season to maintain continuity and stability on prices.

The raids will be conducted by the Consumer Affairs Authority flying squad. Raids will be conducted to nab traders selling commodities at high prices, not displaying the price index, providing false details, using faulty scales, and selling expired commodities. Trade, Marketing Development, Co-operatives and Consumer Services Ministry sources said the Consumer Protection Authority received 200 complaints on Friday regarding errant traders.

The Authority has inquired into these complaints and conducted 113 raids in Anuradhapura, Polonnaruwa, Hambantota, Katugastota, Kadugannawa, Kandy, Matara, Bambalapitiya, Rajagiriya and several other cities on April 6 and 7 alone.

The Consumer Affairs Authority is also conducting awareness programmes for traders on the current regulations and penalties. The Government has assured that the present trend of price reductions would continue even after the New Year, affording year-round relief for consumers.

We continued to conduct raids, inquiries and investigations all over the island. We have conducted sudden raids on the following townships on 9th of April.

1. Matugama 02, 2. Kalutara 02, 3. Wattala 04, 4. Thihariya 02, 5. Pelawatte 01, 6. Kandy 04, 7. Tangalle 01, 8. Middeniya 03, 9. Walasmulla 02, 10. Hingurakgoda 02, 11. Kaduruwela 02, 12. Gampaha 05, 13. Panadura 02, 14. Kurunegala 03, 15. Pelmadulla 02.

We have engaged investigation officers to deep interior villages and found the prices are static all over in Hakmana, the prices of sugar was Rs. 50 per Kg on 6th April 2007. The price of Red and Bombay onions are Rs. 50 each in Akuressa.

The price of Sugar was 49/- where as the Maximum Retail Price in Pettah was supposed to be Rs. 50 but due to competition, the price has come down to Rs. 46.

There was a confusion over gas which is an item specified along with the 3 other items viz, milk powder, cement, and wheat flour. We had to make a public statement that the prices have not changed and the price may change only with the permission of the Consumer Affairs Authority. The Consumer Affairs Authority will permit such an increase only after having listened to the applicant party carefully and determine based on natural justice.

We were inundated with telephone calls and inquiries throughout the festive season. The average number of complaints for a day exceeded 200 from all over the country via text, email, fax, telephone, in writing and by calling over. Most complaints were based on non-exhibition of the prices.

In the rush, there were people who were trying to make hay when sun shines by increasing prices disproportionately.

We also take the opportunity to warn the traders if those who pose themselves as Consumer Affairs Authority Officers. If you do come across any individuals who pose to be Consumer Affairs Authority Investigation Officers, please telephone us or the relevant Police Station or the Bribery Commission.

We continue to conduct workshops and orientation seminars. We conducted seminars for traders in Maharagama, Hatton, Nuwara Eliya, Kegalle and Mawanella. We take the opportunity to invite traders and Traders Associations all over the island to communicate with us to organize orientation seminars and work shops in order to educate the traders on this complicated mechanism and on the procedure, directions and the jurisdiction of consumer law and consumerism.

The professionals and the lawyers too have an important role to play in this exercise. We take the opportunity to invite them too to communicate with us in these exercises.Having successfully completed the first phase Hon. Minister will invite the traders for a discussion on 20th of April in order to re-negotiate the second step of the agreement with the experiences, achievements and mistakes for the last few months.

We state with humanity that the Minister has succeeded in achieving the target of stabilizing and maintaining the price structure, and we hope to maintain it beyond the festive season.

CAA Hotline: 2321696. CAA General Numbers: 2445897, 2393577

- Sarath Wijesinghe,
Chairman, Consumer Affairs Authority.

*************************

Mr. Bandula Gunawardena,
Minister of Trade, Commerce,
Consumer Affairs & Marketing,
2nd Floor,
CWE Secretariat Bldg,
27, Vauxhall St.
Colombo - 02

Retail price of chicken

The All Island Poultry Association agreed with the CAA to stay at Rs. 260 per Kg (retail price) of dressed broiler chicken during the Sinhala New Year period.

To enable the retailers to stay at this price (Rs. 260 per Kg retail) the chicken producers members of our association have adjusted (lowered) the whole sale price and advised the retailers to keep to the maximum retail price of Rs. 260 per Kg.

Since the price on the bags have been printed months before as maximum retail price as Rs. 270 - Rs. 280 and the products have been stored in freezers at - 18C the price markings cannot be changed.

When this difficulty was explained to the Minister he agreed to disregard the price markings on the bags, but requested to keep the retail price at Rs. 260 per Kg.

I understand that despite the above agreed maximum retail price, some retailers are selling at higher prices.

I feel that it is my responsibility to bring this situation to your notice and suggest that the CAA publish press and media notices early declaring the maximum retail price to make the consumers aware.

Assuring you of our corporation
Yours truly,
Dr. D.D. Wanasinghe,
Chairman,
All Island Poultry Association.

Dealing with Consumer complaints

Activities of the Consumer Affairs Authority have been stepped up during these days, particularly after the recent changes in the Ministry following the Cabinet reshuffle.

In addition, stabilising the prices of 10 specified items has been given priority for the Consumers to benefit. In this context, the functions of the Consumer Affairs Authority are being spoken of; on and off.

In the interests of those who wish to get a clear idea of the functions of the Authority, some of the important functions are being reproduced below for easy reference.

A direction had also been issued effective from 01st September, 2005 with regard to the minimum warranty period of not less than six (06) months from the date of sale for all electrical and/or electronic items/appliances/accessories.

A further direction had been issued to be effected from 01st January 2007 directing all manufacturers, importers, distributors and traders in every advertisement in respect of the sale of any article or articles published in newspapers, films, television, video, audio, internet or any other print, electronic media, shall specifically mention the retail price of such article or articles for sale in such advertisement.

If different models, sizes, types or grades of any article are specified in such advertisement every such manufacturer, importer, agent, distributor and trader should specify the real prices of each such model, size, type or grade of any such article specified in such advertisement.

Every direction issued by the Consumer Affairs Authority under subsection (1) shall be published in Gazette and in at least one Sinhala, one Tamil and one English newspaper.

Any manufacturer who fails to comply with any direction issued under subsection (1) shall be guilty of an offence under this Act.

Any person who removes, alters, obliterates, erases or defaces any label, description or price mark on any goods in respect of which a direction under subsection (1) has been issued, or sells or offers for sale any such goods from or on which the label, description or price mark has been removed, altered, obliterated, erased or defaced, shall be guilty of an offence under the Consumer Affairs Authority Act.

Savera Guruge
Assistant Manager – Legal, Consumer Affairs Authority

Consumer Tips - How to prevent a cold

A Boil on my neck”, said Sir Winston Churchill, “is more important to me than World War II” likewise, when you have a bad cold, you cannot see anything beyond your nose.

The world seems so dreary. You suffer alone. You can’t concentrate on anything. You can’t speak clearly, you can’t breath freely, and you can’t even pronounce ‘Macbeth’ or ‘mucus’! People give you advice by the buckets. But your agony persists. It’s time you could tell the myths from the facts and, with a few tips, got well soon.

1. Bacteria cause a cold and antibiotics can cure it.

False: Viruses cause a cold. Antibiotics treat bacterial infection and, therefore, don’t cure a cold. Antibiotics may be necessary if the cold causes a secondary bacterial infection such as in the ear or sinuses.

2. Being in crowds puts you at risk for a cold.

False: It actually can take up to several hundred hours or exposure to a cold virus to catch a cold. You are more likely to catch a cold from family members.

3. A child catching a cold has a weakened immune system.

False: Healthy children too catch colds. One study in healthy adults found that 95 per cent developed cold symptoms when drops of the virus were placed in their noses.

4. Washing your hands can prevent a cold.

True: Most colds are caused by rhinoviruses that concentrate in the nasal passage. Cold viruses are mostly transmitted by hand - to - nose or hand - to - eye contact. Scrubbing your hands well kills the viruses and is the most

6. Drinking lots of fluids will help get rid of a cold.

True: Keep your body well-hydrated during a cold. Drink adequate amounts of liquids such as water or juice. A dehydrated - or water - starved-body - will cause the lining of the nose and throat to dry out. Lots of liquid will ensure that the mucus stays moist and continues to flow out of the body.

7. Becoming cold or chilled leads to catching a cold.

False: Almost everybody becomes infected, whether they are chilled or not, if cold virus enters the nose. However, studies carried out in the 1940s showed that volunteers who were wet and exposed to cold air were no more likely to catch a cold than control subjects were.

8. Drinking milk increases nasal mucus during a cold.

False: Milk is digested like any other protein and is not specifically converted into nasal mucus. According to an Australian study, people drinking lots of milk have no more nasal mucus than those not drinking milk. There is also no evidence that drinking milk will increase the amount of mucus.

9. One catches a cold by going from the heat into air conditioning.

False: Just as exposure to cold weather does not cause a cold, going from the heat into air conditioning does not cause a cold. Going barefoot, having wet hair or clothes, or not wearing a hat in winter do not make one sick.

10. Vigorous work out and/or not getting enough sleep cause cold.

False: Exercise doesn’t cause a cold. But if you are emotionally or physically stressed, your ability to fight off a virus may be reduced, making it easier to become sick.

Courtesy:
The Consumer Magazine