Crackdown on over-pricing:

CAA fines 196 Colombo traders Rs. 2.1 million

by Rohana Jayala

The Consumer Affairs Authority (CAA) has slapped fines totaling Rs. 2.1 million from 196 traders in the Colombo area found over-pricing consumer goods in breach of CAA regulations. The crackdown comes as the authorities stringently enforce price controls and other CAA regulations in protection of the consumer. Deputy Director of Consumer Affairs and Information Samantha Karunarathne told the Sunday Observer that arrangements have been made to conduct sudden raids in Colombo and other towns across the country to protect consumers from unscrupulous traders. Traders who ignore CAA regulations will be prosecuted in accordance with the CAA Act.

She said the CAA has conducted 454 raids during the past days to nab errant traders who sold 16 items above the fixed price. Legal action has been initiated against 196 traders with a Rs.2.1 million fine on each.According to Karunarathne 821 business establishments were prosecuted for selling goods above the control prices and Rs2.9 Million was recovered as penalty.

From July '16 to August '16, the CAA has carried out 2,044 raids throughout the country. Special flying squads too have been conducting raids to nab errant traders in Colombo and other major towns.In addition, action will be taken against vendors who sell products that has passed its shelf life and for non-display of selling prices, overcharging, selling items without the printed price, misleading the consumer and selling goods without displaying the expiry date and manufactured date, Karunarathne warned. Some traders found to be selling low-quality rice, dhal, green gram, and dried fish were warned that their licences would be cancelled if they continued to resort to such illegal trade practices. Over 200 officials from the CAA have been deployed to nab all unscrupulous traders. The public can lodge their complaints to the Consumer Authority via the Hotline 1977 and 0766 670 670, Karunarathne said.

Nalinda Abewickrama, a former Economics lecturer at the Kelaniya University,said, raids and price controls are an anomaly in a market economy. Raids by officials on hoarders and forcibly releasing stocks on to the market are not practical measures, he said. He pointed out that when prices are controlled it is difficult to prevent the emergence of black markets, hoarding and queues.Under control prices and raids, traders may try to sell low quality products or even create a shortage. If price controls are to be effective, monitoring and enforcement mechanisms should also be effective."The government imposed price controls on commodities, creating fears of unrest among the public," he said.

Chairman, All-Island Traders' Union Collective, Indika Liyanage, expressing his views in reply to our queries said; "the control prices have ruined us."The international goods market change day by day, and we are unable to stick to these prices although the price control authorities take legal actions against us.These control prices must be changed and raids must be stopped. Otherwise, there is no point in our doing business any more. The government must introduce alternate means of relief to businessmen. Many traders say, they cannot adhere to the control prices for many commodities as the initial purchase prices have gone up. The wholesale traders in the Pettah said, they are against the raids and control prices. According to them these prices are not properly executed in the market and when we queried the reasons, they justified the increased prices saying, due to high transport costs, labour charges and other expenses the goods cannot be sold at the control prices. On the other hand, control prices are not seen to be executed even by government owned outlets, the best example being Sathosa, where there are no goods or if there are goods they are not quality goods, they said. We sent our agents to visit several Sathosa outlets in Colombo and the suburbs to have a closer look at their prices, As expected, most of the shelves were empty and the lack of quality was very evident, they said. Some traders in Pettah, the main market in Colombo,said they were against the price controls and raids because they could not sell existing stocks at a loss after buying them at a higher price before price controls were imposed.

K.Rathnayake, a teacher in Kirulapona said, an 'artificial' commodities shortage has been created by a few errant traders, but on the other hand, they are justified because they are doing a business.

Former Central Bank Deputy Governor W.A Wijewardena said, the maximum control price is ridiculous as it has adversely affected onion growers who are unable to sell their produce due to cheap imported onions flooding the market. The concept is wrong. Market forces must be allowed to operate. The maximum price is fixed by manufacturers to restrain retailers from selling at higher prices. The concept put into force without knowing how it operates is a futile attempt to protect consumers. As a result, cheap imported goods will flood the market e.g.Brazil produces a kilogram of chicken at US$ I, Wijewardena said.