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<\/iframe><\/p>\n<p>You can also listen to this podcast on iono.fm here.<\/p>\n<p><strong>SIMON BROWN: <\/strong>I\u2019m chatting with James Hodge. He is the chief economist at the Competition Commission. James, price gouging \u2013 I\u2019ve been seeing memes going around about diesel and the like. They, to be clear, are memes. They are not actual prices. No one is yet charging R45\/litre.<\/p>\n<p>Before we talk around the process, is there a sort of legal or economic definition for price gouging? It is one of those things \u2013 we see it, we recognise it. But what is the actual definition behind it?<\/p>\n<p><strong>JAMES HODGE: <\/strong>Well, price gouging is almost opportunistic and exploitative behaviour in a crisis, where people use the crisis \u2013 either when there\u2019s a shortage of supply or, in this case, a major spike in the oil price \u2013 to profiteer.<\/p>\n<p>In this case, our concern is really that consumers and even other businesses will be expecting some price increases, obviously at the pump, but also beyond that.<\/p>\n<p>Read\/Listen:<br \/>SA fuel supply stable, but panic buying drives shortages<br \/>Energy prices can reshape monetary policy decisions<br \/>Oil climbs as US, Iran spar over talks and new Hormuz curbs loom<br \/>Stay home to reduce fuel demand, says Mantashe\u2019s department<\/p>\n<p>Fertiliser uses ammonia, which comes from your refineries. Plastic\u2019s the same. And then, of course, your transport services and then even down to food. So you are expecting a price increase, but you don\u2019t know how big it\u2019s going to be.<\/p>\n<p>You therefore easily accept a price increase, but you can be exploited in the process. It\u2019s that profiteering out of a crisis that generally people find unpalatable.<\/p>\n<p><strong>SIMON BROWN: <\/strong>You make a great point there because I\u2019m expecting prices to go up. I know that if I caught an aeroplane there would be a surcharge, and that wouldn\u2019t surprise me in the least. It\u2019s just the abuse of that extra price increase that is the concern. We are happy for businesses to make their money; we just don\u2019t want them to go overboard.<\/p>\n<p>Read: Fuel rationing sets in, some farmers battling supply shortages<\/p>\n<p><strong>JAMES HODGE: <\/strong>Precisely. We know the cost is going to go up and we accept that, but it should be fair. So of the two main instances we see, first we see jumping the gun \u2013 putting up the prices before you\u2019ve actually faced any cost increase.<\/p>\n<p>You\u2019re sitting with stocks at the old price, which you could sell at the old price, but you choose to sell at the new price.<\/p>\n<p>The second is increasing by <em>far more<\/em>. We have precedents on this in the courts that say both of those are considered price gouging.<\/p>\n<p>Of course, there\u2019s a third category, which is, if this Iran war abates and the price comes down, is that cost decrease then passed on and passed on fairly quickly?<\/p>\n<p>Those are the categories we look at. But the commission has the powers to summon financial information on cost margins and to make that assessment, whereas a consumer doesn\u2019t know if that surcharge is fair or not.<\/p>\n<p><strong>SIMON BROWN: <\/strong>That\u2019s a great point, because the way we would spot this would be in the margin. In a business \u2013 again, they make a profit, that\u2019s the purpose of the business \u2013 there\u2019s a margin before the increase. There\u2019s a margin post the increase.<\/p>\n<p>It\u2019s about keeping that margin essentially the same. As I say, we can\u2019t spot it. You can. But that\u2019s what we\u2019re looking for from industries.<\/p>\n<p>Read\/Listen:<br \/>CompCom goes after Corobrik and Smartstone for price-fixing<br \/>Union accuses corporate SA of food price gouging<br \/>Sirius expanding into Euro defence real estate<br \/>CoJ bonds suspended, price gouging warnings, financial planning for entrepreneurs vs employees<\/p>\n<p><strong>JAMES HODGE: <\/strong>Absolutely. We sort of call on consumers to say, \u201cThat looks like a big increase\u201d or \u201cI\u2019m seeing this particular retailer or shop really going high when others are not, and this could be price gouging.\u201d But what we often forget is that within the value chain, with businesses buying from other businesses, they\u2019re experts in this as well, and have a keen eye on what may be unreasonable.<\/p>\n<blockquote>\n<p>So we are calling on consumers, but also on businesses, on farmers that see their fertiliser price go up \u2013 do they question it?<\/p>\n<\/blockquote>\n<p>Do they give us a call so we can investigate? The investigation is very quick, as you pointed out. Let\u2019s look at the margins before; let\u2019s look at the margins after.<\/p>\n<p>If they haven\u2019t changed we\u2019ll move on. But if they have increased substantially then we are interested in why. This could be price gouging, which is an offence.<\/p>\n<p><strong>SIMON BROWN: <\/strong>I\u2019m interested in that part, because I appreciate that the Competition Commission, like many organisations, hasn\u2019t got tens of thousands of inspectors. But the listeners out there, as you say, are smart; they see things and can contact you and act as eyes and ears on the ground.<\/p>\n<p><strong>JAMES HODGE<\/strong>: Absolutely. So it\u2019s essential that consumers are active in this whole process, and businesses. When we\u2019ve had price gouging in the past, it has precisely been consumers and businesses that alert us and point us in the right direction.<\/p>\n<p>Often, the companies are a bit surprised that they\u2019ve been contacted so quickly. But it\u2019s consumers exerting their rights and businesses exerting their rights.<\/p>\n<p>Listen: CompCom warns against price gouging amid fuel concerns<\/p>\n<p><strong>SIMON BROWN: <\/strong>Another very important point \u2013 and you\u2019ve alluded to this already \u2013 we already know prices are going up. We know we\u2019re getting a frankly terrifying fuel increase at midnight on Tuesday.<\/p>\n<p>At some point oil prices [should] come down, diesel prices come down. We need to see a commensurate decline in price post the event as well. That\u2019s the other side of the price gouging coin.<\/p>\n<p><strong>JAMES HODGE:<\/strong> Exactly. We\u2019ve talked about this in the past through Covid and the supply chain shocks that followed the Ukraine war. We have seen what we call the rocket-and-feather effect, which is prices being too quick to go up and very slow to come down.<\/p>\n<p>We are facing a serious price increase on a basic commodity. It is going to harm the economy. It is going to harm growth. Obviously, we try and mitigate that, but we don\u2019t want this all exacerbated by price-gouging behaviour by businesses. They must cover their costs but not exploit.<\/p>\n<p>Read:<br \/>R10k return to Cape Town this Easter?<br \/>Government \u2018closely watching\u2019 the oil price and jet fuel situation \u2013 Creecy<br \/>Oil shock: Brace for R5\/l to over R8\/l SA fuel spike<br \/>The week ahead: Severe pain at the pumps as the economy takes strain from Middle East war<\/p>\n<p><strong>SIMON BROWN: <\/strong>It\u2019s like that \u2013 don\u2019t exploit. You also make a really good point there. This is a basic commodity. This isn\u2019t fine red wine, which truthfully is a niche product I can live without.<\/p>\n<p>This is diesel. This goes, as you said up front, into absolutely everything \u2013 my transport to work, my plastics, my food ultimately as well. This really is a broad swath of the populace who are going to be impacted \u2013 if not everybody.<\/p>\n<p><strong>JAMES HODGE: <\/strong>Yes. Look, not all of that effect will happen on Wednesday. That happens at the pump. But any feed through \u2013 say to a food price increase \u2013 may be quite delayed and that\u2019s why I think consumers and businesses that see almost derived products going up quite quickly may rightly question whether that is really the fuel price or something else and exploitative.<\/p>\n<p>The other area, Simon, that we have seen in the past is in the transport industry \u2013 air, land and sea \u2013 where fuel surcharges are applied. That is the form it takes because they\u2019re directly impacted as a transport service.<\/p>\n<p>Read\/Listen:<br \/>Fuel and food pressures mount as prospects for rate cuts dim<br \/>Cargo cartels: CompCom accuses eight shipping giants of price-fixing<\/p>\n<p>But there is quite a long record of what we call \u2018umbrella pricing\u2019 or tacit collusion, where someone moves first and says this is a surcharge, and everyone follows. That\u2019s also something we\u2019re looking out for in this period, because that\u2019s the form it\u2019s going to take in your transport industries rather than further downstream.<\/p>\n<p><strong>SIMON BROWN: <\/strong>Absolutely. And that further downstream \u2013 if we\u2019re talking fertiliser, my Christmas lunch is probably being planted in the next month or so, so the impact might be quite far down the line.<\/p>\n<p>We\u2019ll leave it there. James Hodge, chief economist at the Competition Commission, I appreciate the time.<\/p>\n<p>Listen to the full MoneywebNOW podcast every weekday morning <span draggable=\"true\">here<\/span>.<\/p>\n<\/p><\/div>\n<p><script data-cfasync=\"false\">\n !function(f,b,e,v,n,t,s)\n {if(f.fbq)return;n=f.fbq=function(){n.callMethod?\n n.callMethod.apply(n,arguments):n.queue.push(arguments)};\n if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';\n n.queue=[];t=b.createElement(e);t.async=!0;\n t.src=v;s=b.getElementsByTagName(e)[0];\n s.parentNode.insertBefore(t,s)}(window, document,'script',\n 'https:\/\/connect.facebook.net\/en_US\/fbevents.js');\n fbq('init', '779812924991616');\n fbq('track', 'PageView');\n <\/script>#Opportunistic #price #gouging #rising #fuel #prices<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You can also listen to this po… <\/p>\n","protected":false},"author":1,"featured_media":29174,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[5277,16790,10466,100,397,165],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/29173"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=29173"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/29173\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/29174"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=29173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=29173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=29173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}