The Grain Millers Association of Zimbabwe has been forced to terminate the employment contracts of its 200 price monitors across the country and immediately put a stop to the price monitoring system they had in place over the last 10 weeks. This is due to a dispute with the Competition and Tariffs Commission (CTC) which deemed the operation as a restrictive measure.
The GMAZ in association with Confederation of Zimbabwe Retailers and Consumer Council of Zimbabwe launched a project for voluntary price monitoring. It has later been unsurprisingly revealed that it was initiated at the request of the government. The idea was to have price monitors all across the country regularly checking the pricing of specified goods.
According to GMAZ general manager, Lynette Vheremu prices had begun to stabilise over the period owing to the price monitoring exercise and their withdrawal was sure to see the prices of basic commodities skyrocketing. But in reality, the tenure of the price monitoring system oversaw the 175.6% year on year (39% month on month) inflation for June. Food inflation for June stood at 250%. Where prices have somewhat stabilised in the month of July it’s important to note the effect the scrapping of the multicurrency era and the opening up of the interbank foreign currency market have had on the exchange rate and therefore the cost of importing and sometimes purchasing locally.
The CTC however, has deemed the practice as restrictive to businesses and preventing open competition. To understand this argument we would have to look at both sides of it. To call a maximum price (ceiling) on goods restrictive to competition may seem a little out of hand in our situation but if the tables were reversed and they were enforcing a minimum price (floor) you can easily see how this practice can be deemed restrictive. This is the position the CTC has taken saying there is a danger of price collusion with such an approach. This is in violation of the Competition Act (Chapter 14:28).
In spite of their attempts to clear the air with the CTC and clarify their operation as not being restrictive the GMAZ claims, they have received hostile treatment from the CTC. One would’ve thought the price monitoring exercise would fail for other reasons such as the complexity of monitoring all retailers and the possibility of products being sold on the black market which had been done before.
Perhaps the GMAZ have given their price monitoring system a little bit too much credit for stabilising prices. Recent policy measures addressed one of the major concerns that retailers as other businesses had, a galloping exchange rate. Since then other challenges have popped up such the need for alternative energy owing to load shedding and a recent increase in shop licence fees. The short-lived price monitoring system and whether or not it played a part in containing price levels is unclear. What is certain is that the challenges retailers and businesses face are mounting.