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CCPC fines Zambia Sugar K76m for unfair pricingBy Mukosha Funga on 12 Oct 2017
The CCPC Board of Commissioners has fined Zambia Sugar PLC K76,728,650 for price discrimination and unfair pricing.
In a statement issued by CCPC Board of Commissioners Chairperson Kelvin Bwalya Fube today, CCPC stated that after carrying out investigations from 2008 to 2012, it had been revealed that both industrial sugar consumers and household sugar consumers were being exploited.
“The Board of the Commissioners of the Competition and Consumer Protection Commission (CCPC) has fined Zambia Sugar PLC, an Illovo Group subsidiary, a fine of five per cent equivalent to K76,728,650 of their annual turnover as at 2013, for price discrimination and unfair pricing in the Zambia Sugar Industry in Zambia. Further, the Board has ordered them too formulate competitive prices for both household and industrial sugar sold in the domestice market. The decision to fine the company was made during the Third Special Board of Commissioners’ Meeting for adjudication of cases held in Lusaka on 25th September, 2017. This was after a protracted investigation by CCPC which found that Zambua Sugar had engaged in unfair pricing against selected household sugar users as well as price discrimination among industrial sugar users, household sugar users and further, between the domestic household sugar users and regional household sugar users,” KBF stated.
“The investigation that lasted four years revealed that industrial sugar users on contract agreements with Zambia Sugar were categorised as A and B, allegedly based on volumes purchased. Category A was contracted for at least 1000 tons and category B for at most 1000 tons of sugar per year. However, the Commission found that some consumers within category A were still charged lower prices for the same industrial sugar compared to others. Further, the investigation revealed that customers that purchased the highest quantities within category A such as Trade Kings Zambia Limited paid much more than other customers that purchased lower volumes namely, Zambia Breweries PLC and Varum Beverages Limited over the 2008 – 2012 investigation period revealing that industrial customers were not accorded similar discounts even based on volumes. Other customers that were discounted included Californian Beverages Limited, Invesco Zambia, Musa Biscuits and Parmalat Zambia Limited…the Commission found that Category B customers who include Yaffico Industries, Specialty Foods were charged an average of 22 per cent more than some category A customers. Such a percentage difference was mot justified by any cost difference by Zambia Sugar PLC as the cost of supply to a customer whether Category A or B was the same. This was therefore established to be discriminatory.”
He stated that it was established that household sugar consumers paid more per kg than industrial consumers.
“…it was established that household customers who were ordinary Zambians were made to pay 28 per cent more than the industrial sugar users over the period of investigation. This implied that household consumers paid more per kg of sugar than industrial users. This conduct was also deemed unfair against household sugar users considering that there was no justification for the high price difference. The investigation also revealed that Zambia Sugar PLC was charging household users in the Zambian market 41 per cent higher compared to what it charged export customers in the Great Lakes Region despite the sugar prices being similar…consumers in Zambia were being exploited because it did not face effective competition in Zambia,” KBF stated.
He warned other businesses to desist from unfair or discriminatory pricing.
“We would like to take this opportunity to warn businesses that are engaged in abuse of dominance of their market positions or any other form of Anti-competitive business practice to desist from such conduct as there will be serious consequences,” stated KBF.
About Mukosha Funga
Mukosha Funga is a Zambian journalist interested in good governance and anti corruption reporting.
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