Government steps in to secure fair, equal availability of essential goods to prevent shortages
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PRODUCERS, distributors and retailers of basic food, fuel and medical supplies have been given the green light to communicate and co-ordinate with each other, to prevent possible shortages, after the widespread looting across the country.
Trade, Industry and Competition Minister Ebrahim Patel on Thursday published Block Exemption for the Security of Supply of Essential Goods Regulations, in terms of the Competition Act 1998.
Patel said the regulations exempt a category of agreements or practices amongst firms in the supply chain for essential goods, from the application of sections of the act, in response to disruptions to the supply chains of essential goods within the country.
However, he indicated that the regulations were promulgated only to prevent critical shortages of essential goods within the country and promote equitable distribution of scarce essential goods to consumers, especially poorer households, customers and small businesses.
Patel warned that the regulations do not exempt price-fixing and collusive tendering in respect of essential goods and inputs used in their production.
They also do not authorise any discussion of the pricing of essential goods and inputs used in their production.
In addition, Patel also cautioned against any price increases of essential goods or the supply of inputs, saying these must be cost justified and not raise the net margin or mark-up for that good, above the average margin or mark-up for that good, in the three-month period to March last year.
Essential goods include basic food, consumer items, emergency products, medical and hygiene supplies including pharmaceutical products, refined petroleum products such as petrol, diesel and paraffin, as well as emergency clean-up products.
According to the regulations, essential goods include the final good itself, as well as all inputs in the supply chain required for their production, distribution and retail.
The regulations apply to essential goods suppliers, who have notified the Department of Trade, Industry and Competition and the Competition Commission of the actual or anticipated shortages, and the need to engage in the exempted communication and coordination.
Producers, distributors and retailers of essential goods will be able to communicate with each other in relation to the loss of stock or capacity in general, and in particular areas of the country, in order to determine the extent and location of likely shortages of essential goods.
They will also be allowed to communicate with each other on the availability of stocks and capacity in general, and in particular areas of the country, in order to determine the overall capacity for supply and the ability of different firms to supply different areas, as well as the timing.
Patel has allowed them to “communicate with each other, as to the extent of demand for essential goods in different parts of the country, in order to determine the extent of shortage and an equitable distribution of available supply across the country, to consumers and customers, including small businesses”.
They will be able to coordinate the allocation of inputs across producers to reduce anticipated or actual shortages in general or in particular areas, ensure an equitable distribution of essential goods across the country, including the transfer of inputs between producers.
In terms of the regulations, producers, distributors and retailers can coordinate the distribution of essential goods to different geographic areas, to ensure an equitable distribution of essential goods across the country to consumers especially poorer households, customers and small businesses, and to implement measures that may expand stocks or capacity, in order to relieve anticipated shortages in general or in particular areas.
The regulations will remain in operation until August 15, which Patel can extend, or until he withdraws them, whichever comes earlier.