Several major food suppliers in the country are reportedly contemplating removing their products from cooperative shelves following disagreement over prices.
The companies said their repeated requested to review the price of their products sold through cooperatives in the country were ignored by the Union of Cooperative Societies and the Ministry of Commerce and Industry (MoCI).
They added that the Competition Protection Authority (CPA), which initially distanced itself from the union’s practices as it was deemed harmful and against the norms of competitiveness in the market, later back-tracked and stated that it lacked jurisdiction to act on the matter.
According to the merchants, the price hikes they had been requesting were necessitated by an increase in the price of products on global markets, as well as the higher cost of raw material and production. The prices at which many of their products are currently sold, were not sufficient to cover the cost price, let alone other additional costs, they complained, adding that the estimated loss for each major food company was close to a million dinars annually.
The companies said that the price increase would provide an atmosphere of competition by leaving the option of choice to the consumer, and would preserve the quality aspect of goods supplied. This, they noted, is the case in all Gulf countries, and countries that follow the free economic system, as well as Kuwait which is a member of the World Trade Organization.
Regarding the CPA announcing its lack of jurisdiction to abdicate on the issue, the merchants pointed out that Article No. 4 of the Law on Competition Protection No. 10/2007 categorically prohibits agreements, contracts, practices or decisions harmful to free competition, and no party may impose price stabilization and prohibit its fluctuation.
They added that, according to the law on Competition Protection, the practices of the Union of Consumer Cooperative Societies, which forces distribution companies to sell products at prices controlled by the union, restricted competition and eliminated free market mechanisms, which are in the interest of the consumer and also to prevent monopoly.
