Page 41 - August-2020-Issue

ARTICLE

Act, 2009 requires packaged com-
modities to bear a maximum re-
tail price (MRP), charging above
which is a punishable offence.
This ensures that uninformed
consumers are not exploited at
the hands of retailers but this,
however, cannot remedy exploit-
ative pricing. Other than enlisting
products/services under Essential
Commodities Act, exploitative
pricing can have remedy under
the Consumer Protection Act and
the Competition Act, to the extent
that exploitation is by a dominant
undertaking, thereby affecting
competition in the larger market. is likely to be on a first-cum-first
In the context of the Competition Like some of the other basis or only to those who could
Act, although in normal market competition agencies globally, afford it at the price level deter-
conditions finding a “dominant it could be an easy choice mined to be “reasonable”. This
position” would be the first road- situation can also lead to parallel
block for the CCI before it can for the CCI to intervene now or black markets involving infe-
initiate an inquiry into excessive and gain reputation as the rior products/services. Thus, this
pricing, in the current times a champion of the exploited would lead to undesirable out-
dominant position could be rela- comes. Third, there is no objective
tively easier to establish. The CCI consumers, however, it criteria of determining what price
could, for example, find an un- would be best advised to level qualifies as exploitative in a
dertaking temporarily dominant have a calibrated and careful given case. Merely evaluating the
due to complete dependence of approach towards exploitative price against cost of production or
consumers on the undertaking a comparable product could un-
in a given neighbourhood due pricing. First, regulating or dermine not only demand driven
to movement restrictions in the prescribing caps on pricing higher prices but also the value
lockdown. Alternatively, the CCI interferes with the natural of the product/service in the eyes
may argue that the ability to price of customers, which is higher in
the product/service unjustifiably tendency of the markets to case of dependency in situations
high in itself proves that the un- respond to high prices by such as the present one. At the
dertaking’s ability to act indepen- expanding supplies either same time, intervention, could be
dent of competitors and is, thus, through expanding capacity or necessary especially in the short
an indicator of dominance. term, in certain cases involving
Like some of the other competi- by new entries in the market. products/services with high en-
tion agencies globally, it could be try barriers and where there is a
an easy choice for the CCI to in- to high prices by expanding sup- clear evidence of excessive pric-
tervene now and gain reputation plies either through expanding ing being not a result of higher
as the champion of the exploited capacity or by new entries in the costs or other market develop-
consumers, however, it would be market. Although, such correc- ments. The CCI should strongly
best advised to have a calibrated tions would be slower in markets consider putting its interim relief
and careful approach towards ex- with high entry barriers. Second, framework to good use to inter-
ploitative pricing. First, regulat- and somewhat related problem vene in the short term while bal-
ing or prescribing caps on pricing is that if supply expansion is af- ancing intervention with the abil-
interferes with the natural ten- fected due to price regulation ity of the markets to self-correct
dency of the markets to respond then the availability of product themselves.

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K aleid O scope May , 2020 41 41