FCCPC, Price Gouging and Matters Arising, by Edwin Uhara

According to Wikipedia, “Price gouging is the practice of increasing the prices of goods and services to a higher level much higher than is considered reasonable or fair.”

In other words, price gouging is the act of increasing prices of goods and services without recourse to common sense or moderation.

Price gouging is a moral burden on the conscience of producers and marketers because it tends to send a lot of persons back to the poverty line.

The worst is the fact that any little attempt made to encourage fair competition is usually tagged as price control.

For instance, in a reaction to FCCPC’s directive that prices of commodities should be reasonable and devoid of price gouging and exploitative practices, the Centre for the Promotion of Private Enterprise (CPPE) said, the Federal Competition and Consumer Protection Commission was ‘intimidating’ retailers across Nigeria.

In a statement released by the Director/CEO of CPPE, Dr. Muda Yusuf, the organisation said, “The FCCPC’s recent actions, which it believes are veering dangerously close to price control… appears to be transforming into a “price control agency” instead of upholding its duty as a consumer protection body.”

The big question is, how can an agency established to promote and protect the Nigerian consumers carry out such responsibility without demanding for fair competition among players?

Is the act of forming cartels to ripoff Nigerians of their hard earned money not anti-competitive practice which the extant laws of the nation empowered the FCCPC as an agency to fight against?

At a recent event in Lagos, the Executive Vice-Chairman and Chief Executive Officer (CEO) of the Federal Compettion and Consumer Protection Commission, Mr. Olatunji Bello while addressing leaders of market associations, transport operators, and service providers at a town hall meeting hosted by the FCCPC said; “The commission discovered that “cartels” excessively increase the prices of food items to exploit consumers.”

“As a Commission, we are not acting out of a brainwave. Indeed, we had carried out extensive discreet market survey across the country and our findings were quite disturbing.”

“We identified patterns of price fixing perpetrated by some market associations, price gouging, and other anti-consumer practices.

“We noticed that the margin in the prices of imported goods are very disproportionate in many cases; and in the case of locally produced goods, excessively inflated.”

“In some areas, we discovered that some players are engaged in hoarding of grains, to create artificial scarcity, thereby distorting the market in unduly high prices of such food items.”

“In our investigation, we also discovered that some traders form a cartel in the market and put barriers in the form of ridiculous membership fees intended to ensure price fixing in the market.”

“Without joining them, they won’t allow anyone to sell goods in the market or provide services.”

“Price gouging and price fixing are unethical and “patently illegal” also under the FCCP law.”

“Section 17 of the Act empowers the commission to eliminate anti-competitive practices, misleading, unfair, deceptive, or unconscionable marketing, trading, and business practices.”

“Sanctions include a fine of up to N10m and a jail term for anyone found guilty by the court,” the FCCPC boss said.”

In similar vein, while speaking on why the prices of foods are over the roof across the country, the Chairman of BUA Foods PLC, Mr. Abdul Samad Rabiu said: “The rising cost of food in Nigeria is due to the actions of greedy distributors and producers.’

He disclosed this during the company’s 7th annual general meeting held in Abuja recently.

He said: ” A few months ago, while the price of flour reached N70,000 per bag, BUA maintained its price at N50,000 to encourage competitors to reduce theirs. But instead of adjusting, some companies decided to halt production altogether, creating scarcity and driving prices even higher.”

“When we were at N50,000, distributors added N20,000 more and sold it at N70,000 per bag.”

“At one point, distributors were making almost N20 million per truckload of 75 tonnes of flour.”

“While we kept our prices low, other companies were unhappy with us and deliberately stopped producing to create a shortage, which caused prices to keep increasing.”

Seeing this, BUA Foods felt it didn’t make sense to keep selling at N50,000 when the market price was at N70,000.”

Although BUA’s production is significant, but Mr. Rabiu acknowledged that there are still two companies larger than theirs.

He further explained that “BUA Foods offers some of the most affordable products in the market. However, because there are other companies selling similar items, it’s challenging to keep the prices low.”

He praised President Bola Tinubu for providing duty waivers on food imports, which he believes could help ease the situation. 

Other food items such as groundnut oil, red oil, fresh tomatoes and pepper are not left out in this price gouging thing.

Garri that used to be regarded as very cheap has changed, and has also become the food for the rich. A paint bucket has risen to between N2,500 and N3,000, instead of N500 it used be.

According to Ngozi Okafor, a teacher, she observed that even vegetables such as Ugu, green, saint leaf, others, are even expensive. “At times I wonder why our local veggies are expensive.

While there are some prevailing factors like removal of fuel subsidy and floating of the Naira which has caused some adjustments in the cost of production and distribution of goods and services in the country, it should however not be the justification for price gouging and exploitative practices in our local markets.

The same factors are there but currently, a start-up company known as Egoras have decided to be selling 50kg bag of rice for N45,000 while in our various markets, same 50kg goes for between N85,000 and N90,000 per bag depending on location.

According to the Chief Executive Officer of Egoras, Ugoji Harry, he said “That at a significantly reduced price of N45,000 per 50kg bag, Nigerians will be getting some relief from the impact of food inflation.”

He recognised the growing hardships that many Nigerians face in affording basic food supplies. “The current economic situation has pushed many families into extreme financial strain. We understand that food is becoming unaffordable for many households, and as a company, we feel a responsibility to support our communities.”

This rice, which is locally produced, would ordinarily sell for almost double the price, but we are offering it at N45,000 to make it accessible.”

Harry highlighted that the discounted rice is not intended for resellers or distributors.

“To prevent exploitation, we have set a limit of one bag per customer. We want to ensure that as many households as possible benefit from this initiative, and we don’t want people buying in bulk just to resell it at a profit. This is a way of giving back, and we’re trying to reach everyday Nigerians who need this the most.”

He said customers can pre-order through egomart.org to secure their bags of rice, which will be available on a first-come, first-served basis.

The Egoras initiative is quite commendable and should be emulated by other companies.

Accordingly, Nigerians should throw their weights behind the FCCPC as it seeks to protect Nigerians from the crushing effects of price gouging, price fixing and exploitative practices in our various markets.

FCCPC will serve Nigerians better when we all support it’s activities and not condemnation.

Therefore, now is the time to prove our patriotism by rallying supports for the activities of FCCPC to defend the  Nigerian consumers from exploitative practices.

Comrade Edwin Uhara is A Public Affairs Commentator