South Africa’s Competition Commission warned businesses against price gouging as surging global oil prices threaten to drive up domestic fuel and goods costs.
The Competition Commission of South Africa has warned businesses against price gouging following a surge in global oil prices, which is expected to raise the cost of goods in South Africa.
The commission said the war in the Middle East has caused oil prices to rise above $100 per barrel over the past two weeks, which will likely lead to higher domestic fuel costs.
“There is a distinct risk that unscrupulous businesses will exploit the sudden surge and uncertainty in fuel prices by engaging in price gouging,” it stated.
Price gouging, it explained, would be considered increasing prices beyond what is warranted by the fuel cost increases.
“This risk is prevalent for unregulated fuels such as diesel retail prices and jet fuel, and oil-based products such as nitrogen-based fertilisers and plastics,”
it said.
“Fuel-intensive services such as air, land and sea transport and logistics, and all other products and services that rely on these inputs, particularly food products and delivery services, are also at risk.”
The commission warned that South African case law sets a clear precedent for how businesses should handle such cost increases. These are as follows:
- Businesses may not raise prices in anticipation of future fuel cost increases; they may raise prices only when they experience actual increases in fuel costs.
- Businesses that experience fuel cost increases may only raise prices in proportion to those increases.
- In effect, these two conditions mean that product or service margins after the surge in fuel prices should not exceed those before the fuel price increase.
“Furthermore, once fuel costs decline, product or service prices should decline immediately,”
it stated.
“Businesses that increase prices in advance of any actual fuel cost increases or increase prices by far more than their actual cost increases, risk being prosecuted and found guilty of price gouging.”
The same applies to businesses that continue to charge higher prices after the oil price shock has subsided, it warned.
“The Competition Commission calls on all businesses in South Africa to comply with the law and avoid price-gouging behaviour during this period of oil price volatility.”
Given the heightened risk of price gouging during this period of oil price volatility, the Commission called on the public and businesses to report such instances.
Where people believe price gouging is occurring, they should contact the Consumer Commission so that it can investigate.
“To assist with the investigation, please provide your name and contact details, as well as the name and location of the business suspected of price gouging,”
it stated.
Source: Mybroadband
