By Emmanuel Phiri
In our previous article we discussed ‘reference pricing’. This week’s article looks at ‘full disclosure in selling consumables at a discount’.
Just like in reference pricing where traders set their prices in reference to competitors’ and just below their competitors’ , traders are supposed to act in good faith by giving full disclosure on why the price of products have been reduced. A discount is a reduction in the basic price or list price of goods and services. The price reduction is meant to ensure that the goods and services in issue are sold off within a specified period. A discount could be looked at as a promotion meant to secure customers for a new product on the market. It could also be looked at as a way of selling off products before their best before/expiry date.
It is a well-known fact that when products are being sold at a discount, the majority of consumers and businesses will rush to purchase as much as possible given the reduced price which is deemed affordable. The real question however is, have you as consumers and businesses taken time to verify the reasons for a discount and further checked the best before/expiry date and/or expiry period from date of purchase?
The focus of this week’s article is to look at discounts in relation to consumables. Consumables are goods that are intended to be used up within a specified timeframe. This specified timeframe is called the shelf life of that particular product. The shelf life indicates the date after which the particular commodity is considered unfit for consumption.
In case of consumables, a discount maybe a last minute resort to sell off products that will expire on the shelves if not sold off immediately. Instead of entirely losing out on them, traders would try to get a return through offering a discount.
While the product can still be consumed as the expiry date is yet to come, the challenge is that traders do not communicate and fully disclose to the buyers the number of days remaining before the product is unfit for consumption. Furthermore, because the products price has considerably been reduced, consumers focus is on savings due to price reduction at the expense of their health and safety.
Full disclosure entails that the sale of consumables at a discount is done with honest intentions, informing the buyers about the approaching expiry date and related health risks if the buyers choose to use or resell the product after the indicated expiry date.
The Competition and Consumer Protection Commission’s (‘the Commission’) position is that businesses must exercise full disclosure of relevant information when selling consumable products at a discount. While it is true that the expiry date is in the near future, it is the seller’s obligation to inform the consumers and other buyers of the expiry date. It is also the consumers right to ascertain and ensure that the reasons for offering a discount are known and understood.
Therefore, while emphasising the benefits of price cuts traders should also engage consumers and other buyers on matters of product safety. The consumers on the other hand should understand their right to receive accurate and truthful information about discounts. Anything short of full disclosure with respect to shelf life dates in selling consumables at a discount will be looked at as having the intention to mislead and deceive, which is punishable under the Competition and Consumer Protection Act, No. 25 of 2010 (the Act).
Specifically Section 45 (a) states that, “a trading practice is unfair if it misleads consumers..” and section 50 (1) states that, “a product that is sold in Zambia shall have a label to clearly indicate the product name, the ingredients used in the product, date of manufacture and expiry date, the manufacturer’s name, the physical location of the manufacturer, the telephone number and any other contact details of the manufacturer”.
Therefore, the Commission would like to implore traders offering discounts to consumers to ensure full disclosure and avoid breaching the Act, and subsequently, being fined or prosecuted.