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| Sunday, 12 September 2004 |
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Features |  |
| News Business Features Editorial
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CAA powerless against price hikes by Chamitha Kuruppu The recent price increase in LP gas and milk food products has brought to light the lame duck nature of the Consumer Affairs Authority which has been powerless to halt the arbitrary increase in prices of essential goods. Consumer ire has also been directed at the authority, more so after CAA officials and the Minister of Trade and Consumer Affairs went on record admitting that the CAA was powerless to prevent the price hikes. What exactly is the role of the CAA, and the purpose of the existence. Here Chairman of the CAA, Dr. M. I. M. Musheen explains the duties, responsibilities and shortcomings of the authority. Q: The LP gas companies have increased the price of domestic gas once again. This is the second price hike in two months. What measures could be taken to prevent similar price hikes in the future. A: The authority has decided to take legal action against these companies. The CAA is consulting the Attorney General regarding the matter. The present Consumer Affairs Act is not strong enough to take stern action against arbitrary price hikes. Therefore we are looking towards amending the Act in the near future. According to the present Act once a request is made to amend existing prices the CAA should announce the revised price within 30 days - if it fails to do so, the manufacturer is entitled to go ahead with the requested fare hike. This is the exact situation that happened with the gas companies. There is a misunderstanding between the two gas companies and the CAA. Both Shell Gas Company Limited and Laugfs Gas Lanka Limited submitted their requests to raise prices several months ago. As those applications lacked certain information, the authority instructed them to submit supporting documents and additional information in order to study the price revision. Shell Gas submitted the complete application on August 10 but revised prices on September 1. According to the law the price increase should take place on September 10. The situation is same with Laugfs Gas. This is why we decided to take legal action against the two companies. However, gas prices in the world market have increased drastically - the adverse exchange rates added to that - the request made by gas companies to raise prices is not unfair. But the question is whether the consumer can bear such a burden. Q: You said that the present Consumer Affairs Act will be amended in future. What are the amendments? By when do you expect the amendments to take place? A: The main consideration of the CAA is to amend clauses that deal directly with the pricing process. For example - as mentioned earlier there are only 30 days for the CAA to study a request to increase prices. But this time period is not adequate to conduct a comprehensive study. Therefore, Minister of Trade and Consumer Affairs Jeyaraj Fernandopulle has suggested 90 days to complete a study. Another shortcoming of the present act is that no action could be taken against manufacturers who disobey instruction given by the CAA. So we look forward to include provisions that specifically mention legal action that could be taken against errant manufacturers. Under the present Act, new products and services could be priced without consulting the CAA. By merely changing the package size or re-launching an existing product manufacturers increase prices arbitrarily. Therefore, the CAA has suggested that consultation of the authority before pricing any product or service be made essential. The CAA has submitted the proposal to minister Fernandopulle and he will present it before the Cabinet shortly. Q: The CAA was established for the benefit of the consumer. But a common complaint made by the public is that the CAA is unable to prevent price hikes or take measures to control the cost of living. Do you agree? A: The duty of the CAA is not to control prices. It is the duty of the government and the policy makers. On the other hand in an open economy it is impossible to control prices. The CAA is set up to regulate prices - to make sure products and services are not over priced. It is the duty of the authority to provide for the better protection of consumers through the regulation of trade and the prices of goods and services and to protect traders and manufacturers against unfair and restrictive trade practices. It's not just the public, even government ministers blame the CAA for not controlling prices of essential goods and allowing the manufacturers to go ahead with price hikes. But I have to reiterate that the CAA is not there to control prices and we cannot control cost of living. Five products are categorised as essential goods under the Consumer Affairs Act. That is wheat flour, milk powder, LP gas, mosquito coils and box of matches. The manufacturers of these products should consult the CAA before revising prices and it is the responsibility of the authority to study and workout a reasonable price which will not be a burden to the consumer. Q: A separate unit is functioning under the CAA to entertain complaints by consumers. What progress has been made by this unit? A: The CAA receives a large number of complaints daily. And this is not only about consumer products. There are many complaints about telecommunication, electricity and other utility services. And with a limited number of staff and minimal facilities, we have been able to look into these complaints and settle some of the problems with the help of both the parties. The public can make their complaint to the Consumer Affairs Authority, C.W.E. Secretariat Building, Vauxall Street, Colombo 02. The authority is in the process of setting up branches of the CAA at district level. We have already established 65 such units in many districts. Next month another three will be set up in Gampola, Nuwara Eliya and Kalutara. By setting up these units we look forward to educate consumers from the grass roots level about their rights and the functions of the CAA. It has been only a year since the CAA was set up and during that short period the authority has been able to make a 'big progress'. |
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