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Stealing from the poor to benefit the rich

By Ido Lekota | Apr 08, 2010 | COMMENTS [ 0 ]

HIS week's raiding of South African Airways and its sister airline Mango by the Competition Commission has once again put in the spotlight the issue of price collusion among companies.

HIS week's raiding of South African Airways and its sister airline Mango by the Competition Commission has once again put in the spotlight the issue of price collusion among companies.

The two companies are under investigation for allegedly colluding in fixing airline prices.

Collusion is an agreement, usually secretive, that occurs between two or more persons (organisations) to limit open competition.

The victim is normally the consumer. For example, if firms collude to increase prices loss of sales is minimised as consumers lack alternative choices at lower prices.

The investigations made under the Competition Act are in terms of the Competition Amendment Act of 2009 which empowers the commission to investigate any uncompetitive behaviour that could eventually disadvantage consumers.

So far several companies, especially in the food industry, have been caught out colluding in the fixing of prices.

Such companies have been fined up to 10percent of their annual income as penalty for their greedy and unscrupulous behaviour.

As Cosatu has pointed out, the collusion seldom happens with luxury goods and services but rather with basic foodstuffs, building materials and medicine - items that people need.

That this happens mostly in industries that provide services for basic necessities really raises questions about how seriously we should take these collusions.

More so because they happen in a country where, according to the South African Institute of Race Relations, at least 4,2million people live on less than R7 a day.

What this means is that dealing with the issue of collusion and price fixing cannot be left in the hands of the commission.

Indeed the commission must tighten the screws when it comes to dealing with colluding companies. In this regard one also agrees with the Black Sash's suggestion that the money collected from the culprit companies should be specifically channelled to providing basic services for the poor.

However, in addition, there must be an element of community activism when it comes to dealing with these colluding companies.

The reality is that through collusions the companies' shareholders are illegally directing more profits into their pockets while taking food out of the mouths of the poor.

During a recent anti-corruption summit organised by the SACP, party general secretary Blade Nzimande described corruption as "stealing from the poor to benefit the rich".

If we agree that price collusion amounts to taking bread out of the mouths of the poor, then collusion is corruption.

This means it must be fought with the same energy parties such as the SACP, Cosatu and other civil society organisations have committed themselves to fighting corruption.

As Nzimande has pointed out, there is large-scale corruption in the private sector.

We need to heed Nzimande's call when he says:

"Crime and corruption have no colour, it is just crime and corruption, and if there is any colour it requires it is red - a red card to end it!"

Consumers must act in a manner that shows they seek to eradicate the culture of collusion that the commission has been able to expose so far.

They must be driven by the same commitment to fighting this scourge that drove Imraahn Mukaddam - an independent distributor from Elsies River in the Cape - to blow the whistle on Albany, Blue Ribbon and Sasko Duens.

This after the bakeries simultaneously raised bread prices by 35c a white loaf and 37c a brown loaf just before Christmas in 2006.

It is not enough for these companies to apologise. They must be made to understand that if they cannot engage in an ethical manner, they will feel the anger of those whose livelihoods they are tampering with.


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