Monopolistic behaviour by multinationals and their effects on consumers


Undesirable Monopolistic Practices

I write to express my opinion on an industrial matter which affects me as a consumer directly and impedes economic growth in our country. This is in regard to the ever increasing prices of basic essential commodities such as Milk, Bread Flower, Sugar and other essential commodities traded by the locally based manufacturing sector. In addition to these processed foods are commodities such as Cigarettes, soaps and other essential products sold in our local markets; by unfair practices.

My concern is in regard to monopolistic tendencies which I have observed are being perpetrated mostly, by Multi-Nationals and in some cases by Zambian owned companies. The monopolistic behaviour in regard to the supply of essential commodities, especially for the rural areas is very worrying and is creating a situation by which the Rich are getting richer while the Poor and getting poorer. This is an unacceptable condition in a country that always talks about poverty reduction. How do we expect the poor and vulnerable consumers to survive when the big companies are allowed to virtually fix prices in the market? 

What is happening!

What is happening in our country is that most Multi-National companies are allowed by the Zambia Competition Commission (ZCC) to appoint only one Distributor or Agent in the rural areas. These distributors then act both as wholesalers as well as retailers, thereby creating a vertical integrated market in a particular commodity. In addition, these sole appointed distributors/agents are then given the selling price of the commodities by the respective manufacturing companies. Throughout the country, the distributors are given a selling price. However, in Lusaka, the distributors being more than one, the prices come down due to competition. In the rural areas, throughout the country, the distributors take undue advantage because they are the sole agents and do not face competition. This has the same effect as imposing direct price controls on basic essential commodities by the private sector. First and foremost this is illegal. But more importantly, from an economic point of view, and resulting from this predatory behaviour by conglomerates, there is no effective competition at the trading and supply level to ensure a downward pressure on prices.

Price Fixing by Private Companies is not Right

This price fixing by companies is not right and government should urgently do something about it. Why should this price fixing by companies punish only those of us in the rural areas when more than one agent or distributor is allowed in Lusaka? This is not fair on the rural population, especially for a government that claims to be for the poor. This behaviour denies the consumer choice to decide where to buy and at what price. Why should Multinationals and foreign owned companies be allowed to practice monopolistic behaviour when local companies, such as Trade Kings, does not. I know for a fact that Trade Kings manufactures their products and many agents and distributors go and buy at the same price, then they sell these commodities in their outlets at whatever price that suits them. Trade Kings does not dictate prices to wholesalers. Because of competition by many distributors/agents, the prices of Trade King goods throughout the country are affordable. That is why I call it a pure Zambian company. This is the way all essential commodities should be sold. I fail to understand why the Zambia Competition Commission is allowing cartels and monopolies to be created by Multi-National Companies in Zambia.

Why are these Monopolies and Cartels being allowed by ZCC?

Why are multinational companies that produce or import to come and sell in Zambia essential commodities, which a family needs every day, allowed to create cartels or monopolies over their products? Why is it that when complaints are taken to the Zambia Competition Commission, their answer is that this is being done within the limits and terms of the distributor agreements and when complaints are taken to the same multi-national companies, you will find that the marketing departments of the same are very resistant. What does this mean? There must be something wrong or they must be safeguarding some interest which nobody knows. If this is the truth, then why should the Zambia Competition Commission even pretend to be doing their jobs? Then what enhancement of competition is there in the country? As a concerned citizen and as a consumer, I urge the government to amend the competition commission law as soon as possible so as to prevent this dangerous monopolistic behaviour. This loophole creates an opportunity for massive white collar corruption. The PF government promised the Zambian people to fight this type of corruption and to stop the cheating of the powerless, innocent and poor consumers. I urge the PF Government to strengthen The Zambia Competition Commission law.  In its current form, The Zambia Competition Commission law is weak and is of no help to the poverty stricken consumers.

I cannot understand why such uncompetitive behaviour in our small market should not be prevented. In fact, I believe that if salt was manufactured in Zambia, it would be very expensive with such practices being allowed by the ZCC. This tendency has now even been allowed in the logistics industries in which certain companies have been given virtual transportation corridors by themselves. This is unacceptable.

Recommendations by a Victimised Consumer

As a victimized consumer, I strongly wish to urge the government to force the Multi-National companies to stop appointing just one agent or distributor in the provinces. Government should compel the companies to appoint a minimum of two agents per province and disallow this tendency in which wholesale and retail prices are set by the manufactures. This is the only way in which prices of basic commodities can begin to ease and take a downward trend. This is in the best interest of both the common man and the government. Please let us take note that exorbitant prices set by monopolistic practices have elsewhere caused massive corruption and have brought down governments. We do not want this to happen to our country.

Poverty in this country should not just be looked at in respect to the prices of Mealie Meal. I know that many Zambians have applauded the new government for preventing the millers and traders from exploiting the poor through exorbitant pricing of mealie meal by setting a guiding price.  As a result, the prices of mealie meal have stabilized. However, the situation of mealie meal prices would be a lot worse if distribution of mealie meal was given to one agent throughout the provinces. Because of this flexibility in the Mealie Meal prices, one can find Mealie meal cost more cheaply in Chipata (55 kwacha) , than in Petauke (57.5 Kwacha) even though the source of the Mealie Meal is Lusaka. This is what competition is supposed to do.

Please, I urge the government to correct this situation and stop the exploitation of the Zambian Consumer.

Concerned Citizen

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