The Competition and Fair Trading Commission (CFTC) Tuesday faulted Illovo Sugar Malawi for hiking sugar prices in September last year.
CFTC has since recommended to the Director of Public Prosecutions (DPP) that Illovo be prosecuted over the matter.
But Illovo Corporate Affairs Manager Olive Kawelama Tuesday said her firm has noted the decision and is considering its options.
illegal smuggling
CFTC Executive Director Lloyds Nkhoma told reporters in Lilongwe on Tuesday that Illovo stated that devaluation of the local currency resulted in a reduction in the cost of exports, including Illovo sugar, and that, as such, some traders in neighbouring countries were smuggling the product from Malawi.
According to Nkhoma, the commission found that the reason for the price increase was unjustifiable, irrational and adversely affected consumers, adding that Illovo’s conduct was in contravention of Section 43(1)(g) of the CFTA.
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The commission has, according to Nkhoma, since recommended that the investigations report be submitted to the DPP for possible prosecution.
Nkhoma added that CFTC has resolved that the commission should issue an advisory note to the Ministry of Trade and Industry, as a policy holder, to compel Illovo to reduce sugar prices, taking into account that the firm does not have the mandate to control smuggling using price or any other means.
“During consideration of the findings of the secretariat, the commission noted that Illovo Sugar Malawi did not dispute that they increased the price of sugar because they wanted to reduce illegal smuggling of sugar.
They also noted that Illovo did not dispute that the price increase was not as a result of production costs.
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“In its assessment, the commission established that as much as the reasons for the price increase were communicated to the public through a press release, the reasons given were not justifiable and, consequently, the increase substantially infringed on consumer welfare,” Nkhoma said.
He added that the commission reasoned that, if the increase was, indeed, meant to protect and control the availability of sugar in Malawi so that consumers are, in the end, protected, Illovo should have engaged the rightful authorities to curb smuggling, and not take it upon themselves to increase the price of sugar under the notion of curbing smuggling, which is not their mandate.
“The commission also noted that, from the submissions, it appeared that ISM benefited and took advantage of consumers by using a purported fear of shortage of their product on the market to effect unjustifiable increase of sugar price,” Nkhoma said.
In an interview Tuesday, Consumers Association of Malawi Executive Director John Kapito said he expects the price of sugar to fall by 25 percent.
“We appeared before the commission and made recommendations. If they are unwilling to change their policies, especially on pricing, then the government should open the market for other players.
“Secondly, we asked for the removal of 25 percent increase that Illovo effected on sugar prices, which was only meant for border monitoring to control smuggling— which was not the mandate of Illovo,” Kapito said.
Tuesday, CFTC also faulted Zamm Investment for supplying a contaminated batch of Cool Drop bottled water to the market.
CFTC has since recommended the prosecution of Zamm Investment to the DPP.
The commission also resolved to refer the matter to the Malawi Bureau of Standards for necessary regulatory actions and also to conduct a recall of all the products from the affected batches that may still be on the market.
The commission further resolved to issue an advisory note to the National Water Resources Authority and the Ministry of Water and Sanitation to conduct a due diligence on water abstraction and proximity between the source of water.
