|Monday, 10 November 2003|
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Protecting the consumer
It is generally accepted that prices of most goods fluctuate in a free economy, due to variations in supply and demand as well as changes in currency rates, in the case of imports. Modern governments have distanced themselves from draconian central pricing laws, allowing market forces to determine price levels. They have also given up most state-owned goods and services monopolies to make way for more private competitors to enter the fray. The resulting competition should ideally benefit the consumer by way of lower prices and efficient service.
This does not always happen in the real world. There often are private companies that attempt to exploit the consumer through arbitrary price increases or other unfair trade practices especially in the case of essential goods. That is why governments should have a regulatory and monitoring role for internal trade to protect the consumer. In Sri Lanka, the newly established Consumer Affairs Authority (CAA) handles this onerous task. Last week, we heard the good news that the CAA has turned down a request by a gas importer to raise the price of its 12.5 Kg domestic gas cylinder by Rs.19. Such a price hike would have affected a large number of middle class and lower middle class households that use gas as a primary source of cooking fuel. The CAA ruling could be seen as a major victory for the populace already burdened by the escalating cost of living.
Liquefied Petroleum Gas is among the several 'specified goods' considered essential to the community, under Section 18 of the CAA Act No. 9 of 2003. No manufacturer or trader can increase the price of any specified good or service without the prior written approval of the Authority. Some traders might perceive this as a form of 'interference' with market forces, but a government has an obligation to protect its citizens from corporate entities whose sole aim is gaining more profits through every possible means.
Inviting more competitors in is another way of ensuring a fairer deal to the consumer. For example, at least two more foreign companies are expected to enter the local gas market soon, thus giving a wider choice to the housewife. No company would want to raise prices unrealistically, lest they earn the consumer's wrath. Indeed, the consumer need not be a passive spectator. Rather, he is at the very centre of trade. He has a voice, but unscrupulous traders gain the upper hand if he keeps silent. Consumers must know what their rights are and should not hesitate to act accordingly if they are cheated or exploited. The CAA must educate the public more actively on consumer rights as well as remedial and legal measures that can be applied to counter malpractices by traders.
The gas price issue amply demonstrates how the government machinery can step in to protect the consumer, should the need arise, without necessarily raising the spectre of centralized price controls.
The CAA, the Sri Lanka Standards Institution and other government agencies must keep an eye on unwarranted price hikes, the sale of sub-standard goods and other forms of consumer exploitation. Stern action must be taken against companies or traders that engage in such practices in defiance of the country's trading laws. Such extreme action will not be necessary if traders maintain a constant dialogue with the CAA on vital issues such as price hikes. Then it will truly become a 'middleman' that both the trader and the consumer can equally trust without any reservations.
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