The Department of Trade and Industry has swept in to implement urgent price controls on a range of goods that consumers have been stockpiling since the outbreak of coronavirus was first confirmed in South Africa.
Since President Cyril Ramaphosa declared a state of on Sunday, 15 March, panic buying ensued - with even more shoppers flocking to the tills after national lockdown was announced on Monday night. This has prompted some businesses and online stores to hike prices of on-demand items by multiples of their usual price.
The DTI stepped in on Thursday last week, saying it has started working with retailers and large food producers to ensure that goods are available to consumers - but at the same time, it had to address "anecdotal evidence" of price spikes on products such as face masks and hand sanitisers.
The department also put price controls on several other basic household items, including cleaning products, canned foods, baby formula and most gains.
Retailers pledge support
Massmart, which owns brands including Game, Makro and Cambridge Foods, said while stockpiling by consumers created problems with supply, the group was determined to re-double efforts to re-stock shelves without hiking prices. The retail giant said the gazetting of purchase limits on products affected by price controls will help it meet all customers’ needs, particularly over the pay day and month end shopping periods.
"We were impressed with the Department of Trade and Industry’s consultative approach and we are supportive of the measures that have been announced. In our opinion this initiative will assist to ensure fair availability of high demand products for all South Africans," said the company in an emailed response.
Shoprite promised to continue "working around the clock to feed the nation" and re-stocking basic household items without changing its prices "until the coronavirus is stopped".
The company said it is working closely with suppliers to ensure that additional stock is secured at affordable prices.
In a statement to customers, online retail giant Takealot said the new regulations will empower it to enforce stricter pricing rules to its third-party Marketplace platform participants. These are sellers who use the Takealot platform to market and distribute products which are usually marked "fulfilled by Takealot" But they are independent sellers who set their own prices.
"We will at all times adhere to the new regulations when selling products via our retail model; however, as Takealot does not manage the relationships and procurement processes between third-party sellers and their suppliers, pricing regulation in the marketplace model can be difficult.
"Takealot is therefore proactively monitoring and regulating Marketplace products and prices to ensure their compliance with the directives and regulations under the Disaster Management Act," read the retailer’s statement.
Will government be able to police price controls?
The Competition Commission has promised to prioritise and fast-track complaints relating price gouging whether by retailers or their suppliers. It has also asked However, economist Mike Schussler, owner of Economists.co.za, said it remains unclear how the price controls will be implemented and policed, given that prices vary for most of the items that are included in the list.
"I think it’s more of a warning to say ‘don’t do this’ and I think it’s not mainly for the big chains. They are not going to want to damage their reputation like that. But I really don’t know how they are going to do it because each retailer will have a different price. When you go to buy toilet paper at Pick n Pay and then go to Clicks and hypermarkets, you get different prices," said Schussler.