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Control of Prices

Control of Prices
May 21
12:10 2018

Price control undertaken by the Fijian Competition and Consumer Commis­sion (FCCC) as stipulated under the Fijian Competition and Consumer Commis­sion Act 2010 (FCCC Act 2010) is applied in markets where competition is restricted or lessened.

It is also imposed in line with government policies on necessities where certain goods and services are intended to be made avail­able to consumers at affordable prices.

Such is common to support policies relat­ing to developments like housing, agriculture, education, entrepreneurship and so forth.

FCCC can impose price control by way of ‘price ceiling’ (where price is set below the market price) or ‘price floor’ (where price is set above the market price).

Price ceiling is normally employed to en­sure that prices are fair and reasonable to consumers and price floor is to protect sup­pliers from losses to low market prices.

In the Fijian situation,‘price ceiling’ is the predominant mode employed to ensure pric­es are fair and reasonable in the market.

  1. What is Price Control?

‘Price regulation’ commonly known as ‘Price Control’ refers to the mandatory control of prices in the market by an independent or state regulator; a role that is assumed by the FCCC in Fiji.

This means that instead of allowing the mar­ket to determine the prices in which controlled goods and services are traded, the price regula­tor sets the legal price for the market to follow.

In this exercise, the FCCC obtains all the neces­sary cost evidences from traders by normal sub­mission or by way of legal notice and computes the maximum wholesale and retail prices based on its standard mark-up and pricing formula.

The FCCC also has the legal liberty to set dif­ferent prices for different geographical loca­tions within Fiji.

This pricing methodology is commonly known as the Cost-plus Mark Up methodology.

All the prices set by FCCC are issued by way of a Price Control Order through the approval of the Minister for Industry, Trade and Tourism (MITT) which is then published in a gazette.

Any person or body corporate who sells, offers to sell, buys or offers to buy any of the price-controlled goods or services at a price exceeding the maximum price set by an Order issued by the FCCC, would be in breach of the Order and the FCCC Act 2010 resulting in a possible pros­ecution.

  1. What is a price-controlled item?

A price-controlled item is any item declared to be regulated by an Order under the provisions of the FCCCAct 2010 issued by FCCC and pub­lished in a government gazette for public infor­mation.

  1. Other Related Issues of Price control

Apart from controlling the maximum prices of price-controlled goods and services, FCCC also prescribes by law the manner in which these goods and services are to be traded by way of wholesale or retail.

All price-controlled goods and services sold by way of wholesale should be done with a tax invoice and receipts issued by the seller to the buyer.

Both parties must observe the maximum prices set by Order and should attempt to avoid exceed­ing all those prices at all times.

For a retailer, all the prices of price-controlled goods and services must be displayed clearly and in a prominent position inside the trading premises and those required so, should be clear­ly marked with their maximum retail prices for the information of the public.

Failure to mark and display prices or to issue proper tax invoices and receipts can be liable for legal action under the FCCC Act 2010.

How to know the maximum prices?

The FCCC normally issues the list of all price-controlled goods and also uploads the same on its website.

Emails are sent to stakeholders and personal collection from any FCCC offices can be made.

Other goods and services under percentage mark-up or other forms of control should be en­quired with any of the FCCC offices around Fiji.

Feedback: maraia.vula@fijisun.com.fj

FCCC can impose price control by way of `price ceiling (where price is set below the market price or `price floor’(where price is set above the market price).

 

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