Commodity Trading on the International Market-A short history of the competition law |15 February 2008

The proposed law is one of the measures to tackle the cost of living issue.
President James Michel said prices that were increasing all over the world automatically caused a rise in the cost of living here in Seychelles.

He added: “Unfortunately, there are traders who use this increase to exploit Seychellois consumers.”
Laws governing competition law are found in over two millennia of history. Roman emperors and mediaeval monarchs alike used tariffs to stabilize prices or support local production. The formal study of “competition” began in earnest during the 18th century with such works as Adam Smith’s The Wealth of Nations.

An early example of competition law is the Lex Julia de Annona, enacted during the Roman Republic around 50 BC. To protect the corn trade, heavy fines were imposed on anyone directly, deliberately and insidiously stopping supply ships. Under Diocletian in 301 AD, an edict imposed the death penalty for anyone violating a tariff system, for example by buying up, concealing or contriving the scarcity of everyday goods.

Legislation in England to control monopolies and restrictive practices were in force well before the Norman Conquest. The Domesday Book recorded that “foresteel” (i.e. forestalling, the practice of buying up goods before they reach market and then inflating the prices) was one of three forfeitures that King Edward the Confessor could carry out through England. But concern for fair prices also led to attempts to directly regulate the market. Under Henry III an act was passed in 1266 to fix bread and ale prices in correspondence with corn prices laid down by the assizes.

A 14th century statute labelled forestallers as “oppressors of the poor and the community at large and enemies of the whole country”.

Under King Edward III the Statute of Labourers of 1349 fixed wages of artificers and workmen and decreed that foodstuffs should be sold at reasonable prices. On top of existing penalties, the statute stated that overcharging merchants must pay the injured party double the sum he received, an idea that has been replicated in punitive treble damages under United States antitrust law.

In 1553 King Henry VIII reintroduced tariffs for foodstuffs, designed to stabilize prices, in the face of fluctuations in supply from overseas.

So the legislation read here that whereas, “it is very hard and difficult to put certain prices to any such things… (it is necessary because) prices of such victuals be many times enhanced and raised by the Greedy Covetousness and Appetites of the Owners of such Victuals, by occasion of ingrossing and regrating the same, more than upon any reasonable or just ground or cause, to the great damage and impoverishing of the King’s subjects.”

The two largest and most influential systems of competition regulation are the United States antitrust law and European Community competition law. Protecting the interests of consumers (consumer welfare) and ensuring that entrepreneurs have an opportunity to compete in the market economy are often treated as important objectives. 

The Seychelles Nation of 28th December 2007 published a breakdown of the costs of bread, which has been going up because wheat and fuel on the international market have been costing more. In the name of transparency, accountability and democracy such exercises in costs breakdown should be held more often because consumers have a right to know where their money is going. Under the future competition law, it should be possible for an authority to seek information on the costs for comparison and to determine if the final price is reasonable or not.

Is there really competition in Seychelles when almost at the same time most bakeries and shops increase the prices of bread, cakes and other flour-based products to almost the same level?

Yet, according to STC’s (formerly SMB) price list effective 21st January 2008, the price of a kilo of high-protein flour is R8, which is R1 cheaper than before!
There is the smell of collusion.      

Fuel price revision due beginning March

Increases unlikely

Although the average costs of both petrol (bennzin) and diesel have been hovering above R5.00 cif during the past three months, it is unlikely that prices for the fuel at the pumps in Seychelles will increase at the time of the next revision beginning March.

As at 7th December 2007, during the week of the last increase to R12 a litre at the pumps for both fuel, the price of petrol alone stood at R4.82 a litre cif. It reached the highest cif value (unloaded in Port Victoria) at R5.36 a litre at the start of January when crude oil on the international market reached the feared 100 dollars a barrel.   
                         
The average cif value of bennzin in Port Victoria during the period was R5.20, representing an increase of 37 cents on the price during the week of the last revision. The price of petrol today is 25 cents more than it was on 7th December last year. 
Diesel, which is more expensive than petrol, reached its highest cif value of R5.88 a litre at the end of November 2007.  The cif value was R5.42 a litre on 7th December 2007.

The average increases in cents may not be enough to warrant a price revision upward.
It is up to SEPEC to decide.

Fuel prices

As at 14th February 2008

Petrol (Bennzin)    R 5.17 a litre cif

Diesel                    R 5.81 a litre cif