Beware, retailers! If you hike prices or stockpile, you’ll get a fat fine
State brings in new regulations to make sure no one is tempted to exploit the coronavirus lock-down for profit
If companies hike the price of basic food items, medical and hygiene supplies or stockpile goods, they could be liable to a fine of up to R1m or 10% of their annual turnover – or jail time of up to 12 months.
Trade and industry minister Ebrahim Patel has announced that the government is cracking the whip over price manipulation, a dramatic rise in the cost of basic goods and anticompetitive behaviour amid the declaration of a national disaster in the wake of the coronavirus pandemic.
Patel said on Thursday the new regulations were to ensure there were no unjustified price hikes or stockpiling of goods.
“We are doing this to protect consumers and to ensure fairness and promote social solidarity in this period,” he said.
Since the government announced a state of national disaster, prices of basic food items and hygiene products have increased as many consumers rushed to stockpile in anticipation of a total lockdown.
“I want to point out that breaches of the regulations can have serious consequences,” said Patel.
According to the regulations gazetted on Thursday, effective immediately, if big firms increased their prices exorbitantly or stockpiled, they may be liable to a fine of R1m, a fine of up to 10% of turnover, or imprisonment of up to 12 months.
“Price increases may not exceed the increase to the cost of raw materials or inputs and the profit levels should not be hiked higher than in the period just before the outbreak of Covid-19,” said Patel.
The regulations notes that this includes basic food and consumer items, emergency products and services, medical and hygiene supplies, and emergency cleaning products.
Patel said there had been some limits imposed on the number of items that could be purchased.
“All retailers will be required to take steps to limit the number of goods sold to any individual consumer,” he said.
The new regulations state that retailers could restrict the sales of toilet paper, hand sanitiser, facial masks, disinfectant cleaners and wipes, surgical gloves and masks, antiseptic liquids and all-purpose cleaners.
Other items include baby formula, nappies, cooking oil, flour, rice, maize meal, pasta, sugar, long-life milk, canned or frozen vegetables, frozen meat and chicken, as well as bottled water.
“The purpose of these regulations is to promote concerted conduct to prevent an escalation of the natural disaster and to alleviate, contain and minimise the effects of the national disaster – and protect consumers and customers from unconscionable, unfair, unreasonable, unjust or improper commercial practices during the national disaster,” read the regulations.
Patel said retailers must take steps to ensure adequate stocks of basic goods during this period, including for weekends and month-end shopping, adding that wholesalers must also prevent stockpiling.
He said the government was partnering with retailers to restrict stockpiling but it would take further measures if necessary, which will include setting limits on each item.
“We do not believe this will be necessary immediately because working together with the business community and our people, we will contain prices and limit any stockpiling.”