The FCCPA And Price Gouging Amidst the Covid-19 Pandemic in Nigeria
Following the outbreak and wild spread of the coronavirus disease (COVID-19), the World Health Organization (WHO) declared it to be a Public Health Emergency of International Concern, later labeled a Pandemic. This necessitated grounding to a halt movement, human-social, political and economic activities globally. Owing to the sporadic nature of this virus in Nigeria as well, various measures were implemented by the government to nip it in the board through lockdowns, social distancing, isolation, prohibiting mass gatherings, while excluding those rendering essential service such as healthcare workers, pharmaceuticals, food services, and a host of others.
By this development, the need to stay protected and prevent the spread of this virus has resulted in higher demand for basic health and sanitary products such as face masks, hand sanitizers, latex gloves, disinfectants, infrared thermometers among others. Food commodities have equally seen an unprecedented rise as people, forced to remain indoors pending when the lockdown would be eased or completely removed are expected to stock-up in order to survive. Consequently, worrisome in this predicament is that businesses are capitalizing on this to engage in obnoxious trade practices especially price gouging (increase) of goods, distorting market competition and infringing on consumers’ rights contrary to extant provisions of the Federal Competition and Consumer Protection Act (“FCCP ACT”).
Recognizing the fact that these products are extremely critical to the health, safety, and survival of consumers given the current pandemic, it would, therefore, be unconscionable to take advantage of consumers’ vulnerability in this precarious situation to gouge the prices of these products or services unreasonably and indiscriminately without due process. In light of this, this article succinctly considers the salient provisions of the FCCP Act as it relates to consumer rights, unconscionable increase in prices of goods, unfair trade practices, and the punitive remedy for its violation or potential tendency to abuse of consumer protection law in Nigeria.
Price Gouging, Consumers and Their Rights
Price gouging “occurs when, in the wake of an emergency, the price of some goods that are necessary or extremely useful for coping with the emergency is set at what appears to be an unfairly high level.” Putting this in perspective given the present global pandemic, occasioned by the outbreak and spread of the novel Covid-19, where sellers without justification or due process of law increase the prices of goods, services or commodities in an unconscionable and unreasonable manner above expectation, price gouging is said to have occurred.
A consumer has been simply defined as a person who buys or uses goods and services. Section 167(1) of the FCCP Act defines a consumer to include any person who purchases or offers to purchase goods otherwise than for the purpose of resale or to whom a service is rendered. As a consumer, certain rights are inherently conferred on you by existing and relevant law(s) so as to protect your interest, ensure your safety from unfair trade practices, and enforce those rights where occasion demands. Under the FCCP Act they include right against unfair prices and terms; right to be given information in a plain and understandable language; right of disclosure of prices of goods and services; right to be given adequate information of every transaction; right to cancel an advance reservation, booking or order; right to reject goods, among others. (See generally Section 114 – 133 of the FCCP Act).
Under the FCCP Act, Section 108 (1)(b) provides that an “undertaking shall not conspire, combine, agree or arrange with another undertaking to prevent, limit or reduce unduly, the manufacture or production of any goods or services or to unreasonably enhance the price of any goods or services.” An ‘undertaken’ in the context of the FCCP Act refers to any person involved in the production of, or the trade-in, goods or the provision of services. Accordingly, Price-fixing (which is an attempt to influence upward or discourage the reduction of, the price at which another undertaking supplies, offers to supply or advertises any goods or services) and Conspiracy (where businesses conspire, combine, agree or arrange to prevent, limit, or reduce unduly, the manufacture, or production, of any goods and services or to unreasonably enhance the price of any goods or services) are specific offences against competition within the ambit of the Consumer Protection and Competition Law in Nigeria that attracts severe penalties.
Another principal provision worthy of mention is Section 127 (1) (a) and (b) of the FCCP Act. It provides with exactitude that an “undertaking shall not offer to supply, supply, or enter into an agreement to supply, any goods or services at a price that is manifestly unfair, unreasonable or unjust, or on terms that are unfair, unreasonable or unjust” or “market any goods or services, or negotiate, enter into or administer a transaction or an agreement for the supply of any goods or services, in a manner that is unfair, unreasonable or unjust”. One of the conditionalities to determine what constitute ‘unfair’, ‘unreasonable’ or ‘unjust’ transactions of goods and services, as meticulously explained by Section 127 (2) (a), is that “it is excessively one-sided in favour of any person other than the consumer or other person to whom goods and services are to be supplied”.
From the above, it is sufficiently clear that engaging in trade practices that aim to unfairly, unreasonably, or unjustly increase the prices of goods and services are unlawful. Whether or not there is an unprecedent rise in the demand or/and supply pyramid due to a natural catastrophe, any attempt to jack up prices of commodities (without due process) in such a way that adversely affects consumers and indeed infringes on their rights is legally misplaced and morally perverse.
Similarly, Section 115 (3) provides that an undertaking shall not require a consumer to pay a price for any goods or services higher than the displayed price for those goods or services, or if disclosure of price of goods or services more than one price is concurrently displayed, higher than the lower or lowest of the prices so displayed. Although this provision of the FCCP Act speaks to the variation or discrepancy of prices of disclosed goods, not necessarily steep price increase. It however shows that consumers are not expected to pay more than what the price for the goods disclosed reveal, even where more than one of such goods or services are displaced at the same time and place (concurrently).
The FCCP Act establishes the Federal Competition and Consumer Protection Commission (“FCCPC”) as an independent body charged with the responsibility/function to administer and enforce the provisions including protecting and promoting consumer interest, resolving disputes or complaints, to issue directive and apply sanction where necessary. Specifically, Section 17(s) of the FCCP Act empowers FCCPC to “ensure that consumers’ interests receive due consideration at appropriate fora and provide redresses to obnoxious practices or the unscrupulous exploitation of consumers by companies, firms, trade associations or individuals.” In this regard, consumer’s interest and consideration against obnoxious practices or unconscionable exploitation by businesses are safeguarded by the FCCPC in line with its statutory responsibilities together with international best practices.
Incidents of Price Gouging and Unfair Trade Practices
Admittedly, in the period of a global/national emergency, the issue of price gouging may not seem strange. It may become common practice to exorbitantly inflate prices of basic necessities far above the laws of demand and supply as fears over shortage, panic buying, hoarding may linger; thus, creating a veritable opportunity for businesses to act unscrupulously and illegally. Below are few incidents where ballooning costs and unfair trade practice on personal hygiene, health, and food products have become prevalent across countries.
The FCCPC in an attempt to fetter the inclinations of sellers and retailers to take undue advantage of consumers through unconscionable trade practices with respect to basic medical and sanitary products issued two publications on February 28th and March 24th which enjoined businesses “against arbitrary, unreasonable, excessive, and irrational pricing of critical hygiene products (price gouging)”. Where an undertaking violates the provisions of the FCCP Act, the FFCPC has a duty to investigate same, and if found wanting impose a sanction on such a business outlet in tandem with the provisions of the FCCP Act. Premium Times reported that the FCCPC prosecuted four supermarkets and their proprietors in Abuja for allegedly hiking the prices of sanitizers, hand-wash liquids, disinfectants, and other anti-bacteria hygiene products.
It was reported on the 12th of March 2020, that following a stern warning issued by the FCCPC to vendors engaged in arbitrary price gouging of protective and hygiene products, Jumia, an online retail shop had to delist 390 products belonging to 168 sellers of hand sanitizers and face masks due to price manipulations which undermined consumers’ interest.
There are similar consumer protection concerns being raised in respect of transactions by online retailers, telecommunication providers, banking services, electricity providers, etc., over the actual or likely possibility of inexplicable price manipulations and exploitation of consumers amidst this pandemic.
The United States of America
In the United States of America, the increasing spate of this unwholesome and illegal practices continues unabated across various states including New York, California, Massachusetts, and several others. Consequently, these issues have prompted the Department of Justice through the Attorney General as well as the Consumer Protection Commissions (at both federal and state levels) to caution bad actors’ profiteering on the volatility of the pandemic through hoarding and price gouging to desist from such or face sanction.
The United Kingdom
In the United Kingdom, concerns over price gouging abound on marketplaces especially now where online retail outlets like Amazon and eBay are swamped with demands as residents’ movement has been limited thus making online shopping a viable alternative. Incidence of price hikes on theses platforms remains unattended as sellers continue to rip-off profits through unethical trade practice in spite of the warnings issued by the UK’s Competition and Markets Authority (CMA).
The Competition Policy International reported that South Africa sent Mask Manufacturer to Court for price gouging having hiked the price of face masks by 500% due to the coronavirus pandemic. The Competition Commission of South Africa continues to investigate over 300 complaints against businesses. The government has issued regulations prohibiting dominant suppliers from charging excessive prices for certain specified goods and services (comprising basis food and household items, medical and hygiene supplies, and other emergency products and services).
In the same vein, there are reported cases in Kenya, Uganda, India, Italy, Poland, Netherland, Spain among several others. This evidently shows that businesses are untamed in exploiting this current pandemic to unjustifiably spike prices, while consumers continue to seek government intervention.
Sanctions Under the FCCP Act
By virtue of the provisions of Section 155 of the FCCP Act any individual who contravenes the rights of the consumer commits an offence. On the one hand, a natural person who violates the rights of a consumer is liable to an offense punishable by imprisonment for a term not exceeding five years, or to the payment of a fine not exceeding ₦10,000,000.00 (Ten Million Naira only) or to both a fine and imprisonment. On the other hand, a corporate body shall be liable to a fine of not less than ₦100,000,000.00 (One Hundred Million Naira only) or 10% of its turnover for the preceding business year, whichever is higher. Additionally, where a director of a corporate body is found guilty of violating consumers’ rights, such a director would be punished according to the sanction prescribed for a natural person under the Act. Notably, this punishment appears to cut across the FCCP Act in relation to other violations such as price-fixing, conspiracy, bid-rigging, giving of false or misleading information, failure to attend or give evidence, etc.
Recommendations and Conclusion
Admittedly, the FCCPC would have to more than press releases to stem this predatory trade practice of sellers and retailers. It must take decisive steps in living up to its statutory responsibilities in ensuring the protection of consumers, most especially in this very volatile circumstance that might spur marketers or businesses to unreasonably and unconscionably snowball the prices of goods and services. The moves involving the investigation, arrest, and prosecution of some businesses engaging the unfair trade practices in contravention of the provisions of the FCCP Act is a welcome development. Hopefully, this would continue in a much broader scope to curtail this menace.
Furthermore, businesses must become very wary of their practices during this pandemic so they don’t err on the side of the law. It is suggested they secure quality legal guidance to help them lawfully navigate their practices in accordance with the provisions of extant laws.
The government should, by way of policy, ensure that essential goods and services indispensable to human survival are not shortly supplied. Bloomberg reported that countries like Russia, Kazakhstan, and Vietnam are ensuring food security through domestic supply by limiting exports. The government of Nigeria can navigate the same compass and implement collaborative measures to guarantee the continued supply of and access to food staples, household commodities, basis medical protective, and personal hygiene kits together with other essential products necessary to guarantee safety and survival of consumers while this pandemic persists.
In conclusion, as the current pandemic lingers on and the lockdown persists, there are escalating concerns over the tendencies by businesses to abuse consumer protection law and competitive practice through the unjust, unfair, unjustifiable, unconscionable, unreasonable and unlawful increment of prices of essential commodities contrary to existing laws. This becomes more apparent as the lockdown orders (affecting movements) have inhibited the FCCPC to effectively discharge its obligations including carrying out investigations or inquiries, resolving complaints, issuing directives, and applying sanctions where necessary. It is opined that the FCCPC should be granted some latitude to enable them conduct their affairs unhindered as their services are somewhat essential to keeping businesses within the confines of the law and protect consumers generally. The more this pandemic elongates, the more uncertainties befall consumers’ rights, protection and collective welfare. Thus, the Consumer and Competition Commission together with other relevant stakeholder must ensure those uncertain plights are assuaged, if not completely obliterated.
Bamidele Ikusika can be reached at Johnsonbamidele13@gmail.com