CFTC punishes companies for overpricing Covid -19 materials

CFTC punishes companies for overpricing Covid -19 materials
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Competition and Fair Trading Commission has announced has penalised eight companies who are alleged to have been overcharging the covid – 19 PPEs.

CFTC Executive Director James Kaphale speaking at a press conference said the companies were taking advantage of the Corona Virus to make profits which he said was against the laws of Malawi.

“The Board of Commissioners of the Competition and Fair Trading Commission (CFTC) held an Extra Ordinary Board Meeting in Lilongwe on 24th April 2020, to consider and adjudicate over cases. Specifically, the meeting was convened to deliberate on cases of alleged unfair trading practices in relation to the supply of essential protective and preventive equipment used in the management of the global COVID-19 pandemic.
In total, the Commission considered and adjudicated over a total of 16 cases. During the meeting, the Board imposed fines to eight pharmacy shops for unconscionable conduct, specifically excessive pricing, which is against Section 43(1) (g) of the Competition and Fair Trading Act (CFTA).”

Some of the companies penalized include Maula Pharmacies.

Kaphale said the Commission imposed a fine of MK2 million to Maula Pharmacy Ltd for excessively pricing N95 face masks and also made an order to issue a warning to Maula Pharmacy for failure to furnish CFTC with information as required.

He said an inspection conducted on 21st March 2020 by the CFTC Secretariat showed that Maula Pharmacy Ltd in Lilongwe were charging MK3,500 for N95 face masks whose benchmark price was around MK750 representing an estimated margin of 367%.

“The trader was issued an interim cease and desist order, which required them to provide written justification for the price which was suspected to be excessive and an infringement of Section 43(1)(g) of the CFTA.” He said.

Kaphale said Maula Pharmacy neither formally responded to the interim cease and desist order nor reduced their prices, as confirmed during a follow up inspection conducted on 16th April 2020.

He said during an inspection on 16th April 2020, the trader provided false information to the CFTC, claiming that the masks were supplied at a higher price. However, the supplier disputed the claims stating that the items were supplied to Maula Pharmacy at a price of MK750.

The Commission has also imposed a fine of K2 million fine to MaxiCare Pharmacy for excessively pricing 400ml Romeo hand sanitisers and also made an order to issue a warning to the respondent for failure to furnish the Commission with information as required.

An inspection conducted on 21st March 2020 by the CFTC Secretariat showed that MaxiCare Pharmacy in Lilongwe were charging MK14,500 for 400ml Romeo hand sanitisers whose benchmark price was around MK5,000; representing an estimated margin of 190%.

He said the trader was issued an interim cease and desist order, which required them to provide a written justification for the price which was suspected to be excessive and an infringement of Section 43(1)(g) of the CFTA.

The respondent neither formally responded nor reduced their prices.

According to Kapahale, the Commission has imposed a fine of MK2 million to Excel Pharmacy for excessively pricing N95 face masks and also made an order to issue a warning to the respondent for failure to furnish the Commission with information as required.

He said an inspection conducted on 23rd March 2020 by the CFTC Secretariat, showed that Excel Pharmacy located in Blantyre were charging MK3,000 for N95 Face Masks whose benchmark price was around MK750 representing an estimated margin of 367%.

“The trader was issued an interim cease and desist order, which required them to provide written justification for the price which was suspected to be excessive and an infringement of Section 43(1)(g) of the CFTA. The trader neither formally responded to the interim cease and desist order nor reduced their prices, as confirmed during a follow up inspection conducted on 21st April 2020.” He said.

Other companies punished include Farmer Life , Life Style and CNC Health all penalised with K750,000 on similar offences of overpricing the PPEs.

CFTC already issued a warning against overpricing of any covid -19 equipment.

Kaphale said in the wake of the Corona Virus, there are some unscrupulous traders and companies that are taking advantage of the situation to promote certain products as cure or treatment for the Corona Virus.

He said according to international health authorities, there is no medically tested and approved product which can cure the Corona Virus.

Kaphale has since warned that CFTC will punish any merchant found pricing excessively infringing the law.

“Section 43(1)(d) of the CFTA states that a person shall not, in relation to a consumer, engage in conduct that is likely to mislead the public as to the nature, price, availability, characteristics, suitability for a given purpose, quantity or quality of any products or services.
The Commission will impose stiff sanctions against any business person found engaging in deceptive practices or any other trade malpractices such as excessive pricing in the supply of products intended to fight the Corona Virus.” He said.

Kaphale has since appealed to all consumers to observe laid down health rules including washing hands and reducing unnecessary travel as ways of mitigating the spread of the Corona Virus.

Malawi Exclusive

383 thoughts on “CFTC punishes companies for overpricing Covid -19 materials

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