On the 19th of March 2020, the Minister of Trade and Industry imposed regulations relating to the prohibition of price hikes of certain goods and services in order to protect consumers from being unjustly and unfairly commercially exploited during this period.
The Consumer and Customer Protection and National Disaster Management Regulations reiterate the provisions Section 8(3)(f) of the Competition Act 89 of 1998, which prohibits the abuse of dominance of a firm. The regulations, further, purport the spirit of Sections 40 and 48 of the Consumer Protection Act 68 of 2008, which prohibits unconscionable conduct of suppliers and unfair, unreasonable and unjust contract terms.
In terms of regulation 4, “a dominant firm may not charge an excessive price to the detriment of consumers or customers” and price increases on basic goods and services may not exceed the increase to the cost of raw materials or inputs. Profit levels should, furthermore, not be hiked higher than in the three-month period before 1 March 2020. The regulations deem the conduct as unconscionable, unfair, unreasonable and unjust and a supplier is prohibited from effecting such price increases or entering into any agreement to supply any good and service at a price that is unfair, unreasonable or unjust in terms of regulation 5.
Regulation 6 places an obligation on suppliers and retailers to implement measures to prevent stockpiling and must ensure that purchases by customers are not intended to circumvent the object and implementation of the measures.
The regulations impose strict penalties such as, a fine of R1 million, a fine of up to 10% of a firm’s turnover, and/or imprisonment for a period not exceeding 12 months, on any person or retailer that contravenes or fails to comply with regulation 4.
Any price hikes and unjustified price increases may be reported to the National Consumer Commission on the following toll-free hotline: 0800 014 880.
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