Focus on encouraging competition to tackle high prices — CPPE tells FCCPC
By Esther Agbo
The Centre for the Promotion of Private Enterprise (CPPE) has urged the Federal Competition and Consumer Protection Commission’s (FCCPC) to focus on encouraging competition amongst organisations.
The CPPE argued that Federal Competition and Consumer Protection Commission’s (FCCPC) recent focus on pricing issues within Nigeria’s retail sector, warning that the commission may be drifting into a counterproductive price control mindset.
This, the CPPE argues, strays from the FCCPC’s core mandate of fostering competition and protecting consumer rights across various sectors.
In a statement released on September 1, 2024, CPPE Director and CEO Dr. Muda Yusuf emphasised that the FCCPC’s current approach, particularly its threats against market leaders, traders, and supermarket owners, could inadvertently suppress the very market forces that ensure competitive pricing.
Dr. Yusuf pointed out that the FCCPC appears to be targeting symptoms of inflation rather than addressing the underlying causes, which are outside the commission’s statutory remit.
He said, “The commission seems to be fighting the symptoms rather than dealing with the causes of the current inflationary pressure in the economy. Even then, the core mandate of the commission is not to fight inflation.
“The fiscal and monetary authorities are statutorily responsible for macroeconomic policy issues and are better placed to deal with the challenge of high prices.”
Dr. Yusuf cited the telecommunications sector as a successful example of how competition naturally curbs consumer exploitation without the need for direct price controls.
“It has been proven, theoretically and empirically, that the best way to protect consumers from exploitation is to diligently promote competition across sectors. Our experience with the telecoms sector amply validates this position.
“The emphasis should not be on pricing but on deepening the culture and practice of competition and a level playing field for all investors.”
The CPPE further highlighted that the retail sector, comprising an estimated eight million retailers and thousands of supermarkets and markets nationwide, is inherently competitive.
The sheer number of players, many of whom deal in perishable goods, makes sustained profiteering and price manipulation difficult, contrary to the FCCPC’s apparent assumptions.
“The truth is that the retail segment of the economy is the least vulnerable to price gouging or consumer exploitation on a sustainable basis, contrary to the thinking of the commission.
“They do not have the monopoly powers to influence prices or perpetuate profiteering sustainably. Besides, many of them are dealing in perishable items which makes supply manipulation difficult because of the inherent pressure for speedy disposal of the products,” Dr. Yusuf explained, urging the FCCPC to redirect its efforts towards fostering a competitive market environment rather than regulating prices.
He warned that the commission’s current trajectory could lead to “market suppression and private enterprise repression,” posing a significant regulatory risk to Nigeria’s already fragile economic landscape.
Dr. Yusuf also urged the FCCPC to collaborate with other government agencies to tackle the fundamental causes of inflation, such as currency depreciation, high energy costs, and logistical challenges, seasonality of food production, high cost of funds, extortions on the highways, high post-harvest losses, high cargo clearing cost, rather than intimidating small and micro businesses.
He argued that addressing these root causes would be a more sustainable solution to rising prices.
“The commission should work in collaboration with the other agencies of government to tackle the fundamental causes of inflation in the economy. The focus should be on causative factors driving prices, not the symptoms. This is a more sustainable approach than resorting to intimidation of traders, supermarket owners and market men and women.”
Additionally, the CPPE called on the FCCPC to focus its attention on sectors where consumer rights violations are more rampant, including aviation, healthcare, energy, financial services, and telecommunications.
According to the CPPE, these areas require more immediate and diligent regulatory oversight than the retail markets currently under scrutiny.
“It is also important to draw attention of the commission to areas where there are frequent consumer rights violations like the aviation, health, energy markets, electricity market, financial services, telecoms and cable Tv sectors. These areas demand the attention of the commission even more than the markets.”
