Pick n Pay has signed a memorandum of agreement with the Competition Commission to cap its profit on ginger and garlic sales setting an example for the retail sector

The agreement may be the first in a string of promises from other national retailers if the commission has its way in fighting for consumer rights on the issue.

The signing of the MOA follows the commission’s recent  investigation into the spiralling price of the underground stem and root vegetables during the second wave of Covid-19. Demand for the vegetables surged globally during the pandemic due to their well-known health benefits.

The Commission said on Monday that Pick n Pay had agreed to cap its gross profit margin on ginger and garlic as essential food items for the period from 28 January 2021 to 1 April 2021, which may also be extended.

“Pick n Pay has also instructed its franchises, to price no higher than the corporate store price on ginger and garlic. The Commission has commended Pick n Pay for this move and hopes to formalise similar agreements reached with other national retailers,” the commission said.

“In recent months, the commission has received numerous complaints from members of the public, alleging that certain Food Lovers, Spar, Shoprite Checkers and Pick n Pay stores, had increased prices for ginger and garlic.  The Commission expeditiously engaged with all the affected retailers and expressed its concerns that the alleged significant price increases of ginger and garlic in certain retail outlets, could result in contravention of Consumer Protection Regulations and other relevant provisions of the Competition Act,” the commission said.

Garlic and ginger fall under the category of “basic food and consumer items” under Consumer Protection Regulations.

“Whilst wholesale prices for these products had increased due to heightened consumer demand during the second wave of infections, the Commission is of the view that this did not warrant the large increase in absolute margins seen in some instances,” the commission said.

The Commission noted that in the interest of seeking a pragmatic and constructive resolution of the issues raised regarding the affordability of the price of ginger and garlic, Pick n Pay had been the first retailer to sign an MOA.

In terms of the agreement Pick n Pay has promised:

·                         not to increase its corporate stores’ gross profit margin on these product;

·                         to request all its franchisees in writing to price no higher than the corporate store price

·                         in the event that the cost price of ginger and garlic remain materially above the pre-Covid 19 seasonal norms at the end of the commitment period, to extend the above mentioned period for a further four weeks.

Pick n Pay spokesperson Tamra Capstick-Dale said the retailer hoped to set an example for the industry.

“The memorandum formalised what we were already doing, and we were happy to agree a memorandum as an example to the industry. We always price fairly,” she said.

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Presh JM Reporter

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