Journey towards a competitive market
The Competition and Fair Trading Commission (CFTC) is an autonomous agency of the government established with a mandate to regulate, monitor, control and prevent acts, or behaviours, which would adversely affect competition and fair trading in Malawi. GRACE THIPA recently caught up with CFTC Executive Director, WEZI MALONDA, to find out if Malawi is making headway on these issues. Excerpts:
Can you update us on how we are doing in terms of promoting competition and consumer welfare?
We are doing fairly well on competition enforcement and we have a strong enforcement mechanism. The market is responding well as evidenced by the increase in [case of] complaints that are coming to us. There is high awareness and more people are now conscious of their rights. This gives us a lot to do, to regulate markets.
But there are also disappointments because there are repeat offenders on business practices that we have been regulating over a long period. We expected that people or traders are now aware of what is acceptable but there is slow progress on issues such as displaying disclaimers, a malpractice that we have regulated for a long time but is still continuing.
Some traders are resisting change and we are now moving towards imposing fines on industries that are resisting change and refusing to comply with the law. Another common malpractice is where traders will display a price but charge a different price at the till. This issue on misleading prices is an area we have regulated for a long time as well [as well as that] quoting prices in foreign currency. These are blatant violations of the law. We have been talking about them for a while but there are some industries that are still resisting the winds of change. We have to escalate our enforcement model and move more towards imposing fines.
So, what do you make of these developments?
It is a mixed bag. In one area, we are happy because there is increased awareness but we are also seeing that we have to be more vigilant and have a more robust enforcement system, especially for industries that are not complying.
You have talked about misleading pricing, a which is common among retailers despite CFTC earlier indicating that it would name and shame the perpetrators. What do you plan to do to address this malpractice?
Because there are repeat offenders, we are now moving towards imposing fines to force compliance. Indeed, there are some reputable retailers, where these practices are still rampant. But we are receiving a good response even from the retail market. When we enforce or during our investigations, they do cooperate with our investigators.
We also understand that, in this sector, there is high employee turnover, in terms of the front line staff and you will find that it is not the same people that interact with consumers. But it is not just retail shops that are perpetrating this practice. What is needed is that our mentality has to change towards a mentality and spirit of compliance because, sometimes, it is the people who are operating the tills that are perpetrating this practice and not necessarily the policy of the owner not to give change. We are going to try as much as possible to continue enforcing. Enforcement is not a once off thing, it is an ongoing initiative, but we are going to be more strict and we are going to be more robust, particularly with repeat offenders.
There have been some serious breaches of the Consumer Protection Act and the Competition and Fair Trading Act, where water boards have effected tariff increases without notifying consumers and defective products being released to the market. What picture are these incidents portraying as regards consumer welfare?
We are moving forward because, had it been in the past, people would not have complained, they would have just absorbed the price increase without reporting to any regulator and it would have become a normal practice for these enterprises. So, we are quite happy, because we got this information from consumers.
This shows that consumers are more aware of their rights and are more alert on their expectations from service providers. We are very happy because, on the issue of price increase, we got the complaint from a consumer and they provided us with all the information and, on the part of the business entities, they cooperated and there was also some level of admission particularly in terms of the water boards that there had been errors in the implementation and we are satisfied that they have provided a remedy to consumers so that they do not need to suffer in silence and absorb the increase, which was done without following the necessary procedures.
So, we are happy with companies because they have not resisted but made all the necessary disclosures to us and other regulators. Even the issue of Castel products, the company has cooperated with regulators responsible for testing products. We are satisfied with the level of compliance but, at the end of the day, we want to see a remedy that satisfies the law and those affected by the malpractice. We will continue to follow up with the parties so that consumers are happy that there is somebody who is keeping these entities in check.