Conundrum of the Consumers during COVID-19

“Toilet paper has separated the masses into the haves and have nots.”

― Steven Magee

When the clamour for essential goods and services grows louder and frenzier, does one realize the sagacity and truthfulness of Steven Magee’s words?

Magee, a world renowned expert and authority on radiation and human health, latches on to the monstrous and mammoth proportion of the 21st century’s first global health emergency (and hopefully, the last) – COVID 19.

It is disheartening to see the rising trajectory of the ‘infected’ worldwide, as I embark on this article.

Black Marketing and Hoarding of Essential Commodities

In the wake of the pandemic, we have witnessed disruption in food supplies, shortage of Fast-Moving Consumer Goods (FMCG) and essential commodities, interruption in the services of online marketplaces, all accompanied with a sudden increase in demand for some medical and healthcare products, such as ventilators, face masks, sanitizers, disinfectants etc.

Taking cognizance of the situation, the Supreme Court on April 3, 2020, in a petition filed by the Justice For Rights Foundation, asked the government to take strict action against those indulging in hoarding and black marketing of essential goods, including face masks and hand sanitizers.

The Court further asked the government to take steps to issue directions regarding the availability and distribution of surgical/N95 masks as well as hand sanitizers and liquid soaps at the maximum retail price (MRP) fixed by the government.

Recently, the Ministry of Consumer Affairs, Food and Public Distribution declared hand sanitisers and protective masks to be “essential commodities” and capped their MRP under the Essential Commodities Act, 1955 (EC Act) until June 30, 2020.

This is likely to enhance the availability of both these commodities to the general public at reasonable price or under the MRP.

However, this alone will not suffice. The governments, both central and state, must step up their efforts to curb black marketing and hoarding. Statutory provisions already exist in this regard; adequate publicity ought to be given to the same and sufficient task force must be constituted at district levels to take appropriate action under law.

There are sufficient safeguards available in the EC Act for controlling the rise in prices or preventing the hoarding in any locality, prohibiting the withholding from sale of any essential commodity, requiring their sale to the government or for requiring its producers, suppliers, distributors and traders to maintain and produce for inspection their business books, accounts and records. Any violation of the order made u/s 3 of the EC Act attracts imprisonment up to seven years and fine.

It is pertinent to mention that concomitantly, the Prevention of Blackmarketing and Maintenance of Supplies of Essential Commodities Act, 1980 empowers the government to detain a person who is found to be committing or instigating any offence punishable under the EC Act, or dealing in any essential commodity to make gain.

Therefore, it does not behove the concerned authorities to gripe about the lack of statutory backing to penalise the black marketers and hoarders. The intent must be shown. The allowance given by the government to the consumer companies and their retail partners to restrict the sale of essential commodities in order to prevent customers from buying in excess during the lockdown is a step in the right direction.

E-commerce giants such as Amazon, Flipkart, Big Basket, Grofers etc. have laudably adopted pre-emptive steps by monitoring the sale and listing of essential items on their platforms to prevent price gouging, and to ensure adequate availability and uniform distribution of essentials.

Relaxing the curbs of Competition Law

In these unprecedented times of burgeoning demand for daily essentials, governments across the world are implementing measures to remedy the supply concerns by relaxing competition law provisions and rules for companies engaged in providing such essential commodities using the aid of competition law.

To cite a few cases, in America, the Department of Justice has published an advisory announcing that individuals or companies that fix prices or rig bids for personal health protection equipment such as sterile gloves and face masks could face criminal prosecution.

In the United Kingdom, the government has temporarily relaxed strictures of competition law to allow supermarkets to work together, allowing them to share data with each other on stock levels, cooperate to keep shops open, share distribution depots, delivery vans and pool staff.

Similarly, the South African government has issued COVID-19 Block Exemption for the Healthcare Sector Regulations, exempting the healthcare sector from the rigours of competition law to promote access to healthcare, prevent exploitation of patients, enable the sharing of healthcare facilities and reduction of prices.

In India, as of date, neither the Competition Commission of India (CCI) nor the Ministry of Corporate Affairs (MCA) has issued any guidelines that temporarily relax any form of collaborative effort among the companies, including competitors.

In the absence of any specific guidelines from the CCI or the MCA, the companies would need to align their business practices in consonance with existing competition law principles in India.

However, as it is often said, desperate times call for desperate measures. Some leeway to the healthcare and consumer staples sector could address the problems of shortages. A monitored system to facilitate communication and coordination between the medical suppliers, hospitals, clinics, laboratories, FMCG, supermarket, dairy sectors and other consumer staples may be put in place in order to ensure that access to essential goods and services is not disrupted, and resultantly, does not cause harm to the public at large.

The industry, on the other hand, would need to resist the temptation to collude, fix the prices and/or supply, rig public procurement system, form cartels, and lastly, ensure that any modification to their existing business practices are legally compliant. The Competition Act, 2002 is well endowed with provisions to prohibit any anti-competitive agreement or prohibit the abuse of dominant position by any enterprise.

Consumer Protection Act to the rescue

The newly enacted Consumer Protection Act, 2019 has the potential to supplement the foregoing measures to deal with the COVID-19 crisis. The legislation, for the first time, catches E-commerce transactions in its net, and confers authority on the Central government to take measures and make rules to prevent unfair trade practices in e-commerce.

This will act as a propellant for online markets like Amazon, Flipkart etc. to disclose sellers’ details, such as their address, website, email, etc and other conditions related to refund, exchange, terms of contract and warranty on their website to increase transparency, and ensure that no counterfeit products are sold.

It is noteworthy that the act of hoarding, refusal to sell the goods or make them available for sale or to provide any service with an intention to raise their cost or that of similar goods or services amounts to an ‘unfair trade practice’ and kickstarts the redressal and penal mechanism under CPA 2019.

Also, misleading the public concerning the price at which a product or like product is ordinarily sold or provided is included in the ambit of ‘unfair trade practice’, exposing the offenders to inquiry, investigation or complaint under the Act and consequent actions by the Central Consumer Protection Authority (CCPA).

Under the Act, the district collectors have also been conferred powers akin to that of the CCPA’s. Therefore, the supply chain of essential commodities needs to be wary of the CCPA and District Collector while conducting their operations during these times.

Summing up

It is undeniable that we have been struck by the novelty and originality of the Coronavirus. The world has been compelled to cogitate about its way of life, and has been browbeaten to make sweeping changes in its regular and routine life.

India is no exception, of course. Creditably, she has demonstrated an indomitable spirit to take on the crisis; but a lot still needs to be done. It is time for a more comprehensive and concerted approach to manage the pandemic at reasonable cost and risk to the public as well as the exchequer, that will involve working in tandem with the supply industry, relaxing the rigours of competition law, coming down heavily on black marketing and hoarding and the like.

The government has the paraphernalia for all this, and must act swiftly. We all can defeat COVID-19 together!

The author is an advocate practicing in Delhi. Views are personal.