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Prohibited Acts by Traders and Landlords

Bobby Maharaj is the chief executive of the Fiji Commerce Commission. This is a regular column from the Commission in the Fiji Sun. Fiji Commerce Commission (“FCC”) is an independent
15 Feb 2016 11:19
Prohibited Acts by Traders and Landlords
Bobby Maharaj

Bobby Maharaj is the chief executive of the Fiji Commerce Commission. This is a regular column from the Commission in the Fiji Sun.

Fiji Commerce Commission (“FCC”) is an independent government statutory body established under Section 7 of the Commerce Commission Decree 2010. Its function is to ensure the integrated framework for the regulation of monopoly market structures; encourage competition, prevent restrictive trade practices, ensure consumer protection, and undertake pricing of public utilities and other price controlled items. The Commission principle agency for all competition and consumer protection issues enforcement in Fiji. Let’s begin this week by looking at the Prohibited Acts under CCD2010.

 

What is Prohibited Acts?

Prohibited Acts as covered under Section 52 of the Commerce Commission Decree 2010 (“CCD2010”) means certain acts or conduct of traders and landlords that are forbidden, restricted or not allowed to be carried out.

It forbids the traders or landlords from engaging in certain conduct. Should the trader or landlord refrain from engaging in such conduct, it is deemed illegal and on- spot penalties under Section 59 of CCD2010 is issued by the Commission.

Prohibited Acts makes is unlawful for any person or corporation, knowing, or under circumstances to engage in conducts which are declared as forbidden.

While Section 52 of CCD2010, specifically outlines four categories of prohibited acts, it is important to note that other Sections of CCD2010 also puts restrictions on other conduct of the traders and   landlords.

However, for the purpose of this week’s column, only the prohibited acts under Section 52 will be covered.

Other provisions of the CCD2010 will be covered in the weeks to follow.

 

What is prohibited under Section 52?

Section 52 prohibits the following conduct:

r Selling/buying or offering to sell/buy at prices above the maximum prices authorised by the Commission for price control items;

r Applying different methods of fixing or calculating prices other than the method(s) prescribed under CCD2010 or via an Order;

r Selling or agreeing to sell goods or provide any services on the condition requiring the buyer to buy other goods or services as well.

Let’s now look at each of this prohibited act in detail.

 

Selling or offering to sell at prices above the maximum prices authorised by the Commission for price control items.

Section 52 (a) and (b) restricts or prohibits any trader from selling/buying or offering to sell/buy price control items at prices above the maximum prices authorised by the Commission.

This offence is commonly known as Overcharging.

It is very important to note that the prohibition under sub-sections (a) and (b) applies on two types of conduct:

(a) Selling or buying- this would apply in cases where the transactions have taken place or is taking place.

For example, if the maximum retail price authorised by the Commission for 425 grams of tin fish is $2.80 and the customer is charged $2.81, this will mean selling the tin fish at a price above the maximum authorised price and deemed to be an offence under Section 52 (a) and (b) of CCD2010. Commonly this will be known as overcharging by 1 cent.

(b) Offering to sell or buy- this would apply in cases whereby the goods may be on the shelves, racks, or displayed for sale.

For example, if the maximum retail price set for 10 Kg rice by the Commission is $13.50, and the trader has displayed/marked the price as $13.51, this would amount to offering to sell the rice at prices above the maximum price set by the Commission and deemed to be an offence under Section 52 (a) and (b) of CCD2010.

Commonly this will be known as overcharging by 1 cent

Section 52 (a) and (b) also makes reference to buying or offering to buy. What this implies is that apart from selling or offering to sell, a trader is also in breach if he/she or the body corporate buys or offers to buy price control items at prices above the maximum prices authorised by the Commission.

Let’s see the application of this via a hypothetical case study:

 

ABC Ltd is an importer and wholesaler of tea leaves in Fiji. The Commission has authorised a Maximum Wholesale Price of $1.10 VIP for a packet of 100 grams tea leaves. XYZ Ltd is a retailer and buys tea leaves from ABC for retail.  XYZ Ltd agrees to buy a packet of 100 grams tea leaves for $1.15VIP from ABC Ltd.  In this case ABC Ltd can be spot fined $3000.00 for selling at prices above the maximum price authorised by the Commission while XYZ Ltd can be spot fined $3000.00 for agreeing to buy at prices above the price set by the Commission. Both the traders are in breach of Section 52 (a) and (b) of CCD2010.

 

However, it should be noted that selling below the prices authorised by the Commission is not illegal and traders are free to do so.

It is also legal for traders to offer discounts to customers on price control items.

 

Applying Different Methods of Fixing Prices

Section 52 (c) of CCD2010 prohibits a trader in the course of business to apply different methods of fixing or ascertaining the prices of goods or services with the intent to evade the provisions of CCD2010.

This section prohibits traders from computing prices or applying a different method of computing the prices than that prescribed under the CCD2010 or an order made under CCD2010.

As an example the Counter-Inflation (Price Control) (Stationery and Text Books) (No.24) Order 1993 provides the approved method of costing and pricing of selected stationary items at the wholesale and retail level.

Any trader that does not compute prices using the prescribed method in the order is in breach of Section 52(c) and an on-spot penalty of $3000.00 can be issued for a body corporate and $1000.00 for a natural person.

The two common situations in which Section 52(c) is applicable under CCD2010 are:

 

r Proportionate Prices (Section 50 of CCD2010)

Section 50 states that if a trader is selling or offering to sell the quantity of goods which is either greater or less than the quantity specified in the order, such goods should be sold or offered for sale at a proportionately increased or diminished price as the case may be.

In simple terms, it means that if a trader is selling goods which are either more or less in quantity than the quantity specified in an order or price authorisation by the Commission, the prices needs to be adjusted proportionately to the quantity being sold.

 

A trader/customer can calculate proportionate prices as follows:

 

Examples to illustrate the application of Proportionate Prices is as follows:

 

rRent on Residential Properties

Under CCD2010, there are currently two methods of setting rent for residential properties and the ground rent. These methods are:

 

r Base Rent during the Rent Freeze Period

The rent freeze has been in place from 2 March 2007. What this means for the Fijian landlords and tenants is that the rent that was applicable on a property as at 2 March 2007 becomes the base rent and this is the rent that should continue until the end of the year 2016.

Any landlord that charges a rent which is different from the base rent is deemed to be applying a different method of fixing rent with the intention to evade the Rent Freeze Order and is in breach of Section 52 (c) of CCD2010.

12 weeks written notice to be given to the Commission for any proposed increase and the same to be assessed and approved by the Commission via an order made by the Minister. This does not apply during the rent freeze period.

 

rSelling or agreeing to sell goods or provide any services on the condition requiring the buyer to buy other goods or services as well.

 

This is also known as conditional sale, bundling or tying.

Section 52 (d) prohibits a trader from selling or agreeing to sell any goods or provide or offer to provide any services subject to a condition requiring the buying of any other goods or the provisions of any other services.

This means that the trader imposes a condition that a particular good will only be sold or a particular service will only be provided if other goods or services bundled with the good(s) or service(s) is/are also obtained.

That is Good A will not be sold unless Good B is also purchased.

Some common examples of bundling includes:

  • A condition that butter will only be sold if the customer also buys bread from the trader;
  • A mobile handset will only be sold if the a particular service providers sim card is also purchased;
  • A condition from the wholesaler/distributor that goods will only be supplied if all the product line supplied by the wholesaler/distributor is purchased;
  • A condition requiring customers to buy more than one product of the same type when the same can also be sold separately. For example during a special 2 Men’s shirts are selling for $49.00 and the customer is deprived off the opportunity to buy only 1 unit.

Trader should sell the shirts as individual unit as well at a fair and reasonable price for 1 unit.

 

What are the Penalties for Breaching Section 52 of CCD2010?

 

Some Important Tips for Traders/Landlords or Agents:

  • Do not overcharge consumers on price control items.
  • Do not buy goods at prices above the prices authorised by the Commission.
  • If the quantity specified in the order is not available, price all other quantities of the same goods/services proportionately.
  • If you are a landlord, do not increase rent during the rent freeze period under any circumstances.
  • Do not engage in conditional sale, bundling or tying.

 

Some Important Tips for the Consumers/Tenants:

  • Report any case of over-charging to the Commission.
  • If your landlord has increased the rent from 2 March 2007, notify the Commission.
  • If the quantity specified in the order is not available, and other quantities of the same goods are available, demand for proportionate pricing. Report any non-compliant traders to FCC.
  • Do not be forced to buy bundled goods.

 

Next Week: Price Marking/Display and Invoices

 

For more information/details on price regulation in Fiji, visit our website on www.commcomm.gov.fj  or join us on Facebook as Fiji Commerce Commission.

If there are any topics you would like for the commission to address, please email your queries to: rachnal@fijisun.com.fj.

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