He also gave an update on the agency’s recent clampdown on
digital money lenders.
Consumers have experienced an exponential increase in the
prices of products in recent times. As a consumer protection agency, what are
you doing to ensure that consumers pay the appropriate prices for goods?
Mr Irukera: So we’re not a price regulator. Nigeria is a
free market economy with only one limited provision in the FCCPC Act. It even
allows the government to get involved in price. That is based on a lot of work,
studies, research, a report and a recommendation to the president by the FCCPC
for a limited time of controlling price in a specific sector, based on
competition issues, not just increasing prices. Then, that decision when the
president accepts the recommendation and adopts it, it will be gazetted. It
will only be for a limited period of time. Other than that, we don’t regulate
price.
Now, there are provisions in the FCCPA that prohibit
exploitative or reasonable, manifestly unjust contract terms, including price.
Does that give us the authority to just say this thing is too high, this price
is going too high? No, it doesn’t. What is not reasonable is not a subjective
thing. It’s based on objective standards. What is unjust and manifestly so is
based on objective standards not arbitrary. And it’s not just a number. That
something cost N100,000 doesn’t make it unreasonable or unjust. And our
regulatory approach must be methodical, and must be transparent and clear.
So, I’ll give you one example, when we used that provision,
about unreasonable pricing. On February 27, 2020, the Minister of Health
announced the index case of COVID in Nigeria; it was discovered in Ogun State.
We anticipated immediately that there would be a race to the bottom with
respect to key public, private hygiene, and public health materials that were
relevant to controlling the spread of, particularly, things like hand
sanitisers and face masks.
That’s what happened, prices just started going up. We put
out a statement to businesses not to do this. We went in and investigated. We
investigated one popular supermarket and what they had done, a hand sanitiser
that was sold for N490 in the morning by noon, the price had increased to
N1,400. By 5pm it was N3,400.
We looked at their inventory, it was showing that they had
45 pieces left, but we couldn’t find it on the shelf or store. They hoarded
that for the next day when the prices will keep going up. It wasn’t difficult
to come to a determination that was exploitative, manifestly unjust and unreasonable,
because there was no rational explanation for that progressive increase. You
could find a circumstantial evidentiary basis, which is important for
controlling COVID-19 and COVID-19 is now in town. So, there’s a method and a
matrix to decide whether something is excessive.
Take for instance if there is a rule of thumb for a business or a market, that there’s a 30-35% margin generally with respect to your business; for instance, you own a supermarket, and you say, once what I’ve done my 30 -35% margin, I’m fine. But in a certain product, we see, the prices have just gone up, anyhow, and you’re now doing 2,000-3,000%.
That’s what we found
out with hydroxychloroquine. The myth at the time was that chloroquine or
hydroxychloroquine had proved efficacious with respect to COVID-19 indications.
We saw that happen, your other paracetamol, all the other things you sell,
still maintained the same margin, but all of a sudden, this particular drug.
When you see things like that, you can tell that there’s been what ‘s called
price gouging.
In the absence of that, and more directly to your question,
the number one mechanism for fair pricing is competition. In a fiercely
competitive market, where the businesses are competing for the business, and
the custom and patronage of consumers, whatever price you pay, is likely to be
the fair price.
I’m using the carbonated soft drink market as an example,
where the competition was fierce. Is Pepsi much more expensive than Coca Cola,
and Biggi is much cheaper than any of them? They’re all about the same price.
They couldn’t raise the price for years. None of them could move, because
they’re easily substitutable. If Coke goes this way, I go to Pepsi. If Pepsi
goes, I just go to Biggi.
Isn’t that the case? Do you know how bottling companies
started competing? They moved from 33cl to 50cl. They were competing on value.
They are trying to get the business but they couldn’t move the price. On that
one, we don’t need to worry about who’s increasing the price or not. We know
that the system, if you make the mistake of hiking your price, it will remain
on the shelf. So that’s what we are doing to address pricing, fighting hard on
competition. That’s why we raided shipping companies, tobacco companies. That’s
why we have investigations open in multiple industries right now as we speak,
that’s why we went after airlines. I don’t know if N50,000 is fair or not, and
we’re not saying it is excessive.
The moment you guys come together to say N50,000, the price
is not fair. Because the most important stakeholder, the consumer, you’ve taken
him out of the meeting when you guys got together to say let’s do this thing
together, you took competition. The most important stakeholder in determining
fair price was thrown out of the meeting.
If you decide to price your Lagos to Abuja N300,000,
proceed. If I decide I’m going to do mine at N42,000. The only time that a
competition regulator generally intervenes in price is when you strike price
too low. When the price of something seems to be below a reasonable cost, we go
in. It’s called predatory pricing. And you’d have thought that that doesn’t
make sense, is it not when the price is high that you can see this as like a
predator, preying on people? Correct? Or no, in competition analysis, it’s when
you floor prices to push your competitors out of the market. That’s predatory
pricing. We’re going to come and say no.
And we would look. So sometimes you might find a business
that is subsidised by the government. Sometimes you might find someone who
strategises, you know what, I don’t mind losing for the next two years. Let me
chase everybody away. If the fair price of certain thing is N100, as I’m
selling my own N50, you know that nobody can do that business profitably at
N50.
What that person wants to do, drag everybody to sell at N50.
Those who can’t do it at N50 would die a natural death. Then this gentleman
would go from 50, straight to 200, because he’s now the only one in the market.
So that’s the time we intervene in prices. But what we’re
doing is working hard every day to make sure that there’s fairness. Now,
reducing quantity is not a problem. A company must be allowed to determine what
quantity it wants to sell. We also cannot restrict a company’s prerogative to
fairly price its product to make a profit.
But if you keep it at the existing size, and increase the
price, that’s okay. If you reduce the quantity and sell at that existing price,
that’s okay. So we are holding them responsible to tell consumers about the
changes they effect on their product. Each time you increased the value you
were giving you always made them know. So why would you be quiet when people
are getting less. So those are the ways we’re combating. I’ll tell you that one
of the companies that we have fought on this, instead of facing retribution,
they said, you know what, we’ll go back to the former volume.
Meaning that they’re going to now give more for the same
price. So those are the initiatives. There are many of them. This is just an
example. Once we ensure that the advert is not misleading consumers, you’re not
cutting corners, and competition in the market is fierce, whatever price that
comes out of that is typically that optimisation or equilibrium point that has
captured inflation, devaluation, and all the supply chain issues.
So that’s the work we’re doing. It is only after we’ve done
that, that we can now begin to say, okay, what are the problems? Because when
you’ve eliminated the barriers, most of the market is corrected, then whatever
is left uncorrected, you can begin to think of targeted specific action. So
that’s what we’re doing. We’re making sure that as much as possible, businesses
don’t come together to fix prices.
The agency began an investigation some time ago on shipping
companies after the FCCPC visited some of the marine companies and discovered
shady activities, now, when will the exercise be concluded?
Mr Irukera: I can’t tell. Investigations of this nature
sometimes will take years and can be very expensive, all over the world.
Investigations about anti-competitive conduct are very intricate, very
extensive. But there’s one thing that is helpful to know; it’s that just the
courage to open a broad investigation in itself starts to address behaviors.
I give you an example. In barely six months now, we’ve come
back from about 14,000 per container to about 10,500. Because everybody knows
the regulator is looking. We raided five out of many shipping companies. Those
five, they’re very worried about what we will find from what we took. We took
emails, data, all kinds of things, about 7.5 terabytes of information, hundreds
of 1000s of emails. They’re very worried about what we will discover.
The ones that we haven’t been to are very worried about
whether we are coming or not. So right in that space, if I’m modifying their
behavior, and once you’ve raided, nobody trusts each other again, they will not
go to those secret meetings to discuss anymore, because they don’t know who has
already entered into leniency and is cooperating with the authorities and
coming to sit in the meeting, just to gather the information and implicate the
orders. So you can see that when they were not able to get together when they
became worried about getting together to decide, prices by itself just started
coming down.
Because we couldn’t agree and say okay, tomorrow, let’s move
to 16,000. Tomorrow, I’ll do mine in the morning, you do yours in the
afternoon. You do yours at night. Once you couldn’t have that agreement
anymore, you are not trying to outplay each other, which is how it should be.
And that is what is bringing prices down already.
The FCCPC invaded the offices of some digital money lenders
in Lagos due to the unethical conduct and abuse of consumer privacy. What is
the update on the situation?
Mr Irukera: We’re talking about investigative hearings, and
some of the sharks, some that we raided, and even some that were not raided,
have immediately come up. Let me tell you two things when we raided about two
weeks ago. It was the product of three months of surveillance, trying to find
location, trying to find where they are, and those types of things. We gave
orders to two banks to freeze maybe six different accounts. Because that’s what
we had discovered. But as at last week, we entered orders to about four or five
banks to freeze up to 30 accounts.
When you put what we were doing out, the response of
citizens told us more about the companies’ bank.
Even on Twitter, people shared details. Now, we are far more
addresses without leaving our office than what we got being on the road, doing
surveillance for three months, so we’re freezing more accounts. And they’re
coming in, because once you restrict the ability to do business, they’ll come.
They’re making commitments. It’s likely that there’ll be
further regulatory action. But we’re getting interim commitment now that they
would stop contacting third parties, stop defamatory messages and stop
intimidating borrowers.
And once we begin to see that bear fruit, we must be
careful. We are not looking to close the money lending space. They fill a
critical void, so in a society such as ours, access to soft or consumer loans
that traditional financial institutions will not give is important. All we need
or always say is that this business must be ethical.
The interest rate calculation and the loan repayment
strategies must be transparent, fair and must not damage reputations. If they
could come in and do business in that way, we welcome them for the critical
service they’re providing, so that’s why we’re engaging in the manner that we
are. The guidelines will be out soon.
The intelligence we are gathering from our investigation
also shows us that there are certain things that need to be in the guidelines.
For instance, in speaking with a foreign national, I have one of those
companies. During the interrogation yesterday, we discovered that the company
on ground is usually owned by a different company staffed by a different
company and gets the working capital from a different company. And so just
understanding all of that are important for the guidelines, to be able to
identify everyone in the value chain for each business.
Just that visibility allows us to know who Nigerians are
dealing with, so the information we’re receiving and gathering in the course of
investigation is also important to the guidelines. We’ll develop, but they’re
coming shortly. Who are we working with? Now the raid was conducted by a joint
regulatory and Enforcement Task Force. We started a joint team when we met
towards the end of last year. The agencies involved the Central bank, the EFCC
ICPC, FCCPC, NITDA and the National Human Rights Commission. We are working
with people.
Some of the service providers are usually taken to court
when they are found wanting. Regarding the abuse of human rights, how many
cases are being prosecuted in court?
Mr Irukera: I don’t have them offhand, but in Uyo, I’m
prosecuting five rice smugglers, then in Abuja we have Faxx, H-Medix and five
other supermarkets, so that’s already 10 cases, we have other lawyers who are
prosecuting different cases.
We’ve got quite a number of cases. Matter of fact, we have
plea bargains waiting to be signed and accepted by the court in about three of
our cases. I’m prosecuting a shipping line right now for obstruction of
justice, and a large multinational for obstruction. We have quite a number of
cases that we’re prosecuting. And these are criminal cases, civil cases, a
totally different thing.
Nigeria imported bad fuel which damaged cars and caused
scarcity of petrol across different states in the last few months. No proper
explanation has been given for the scarcity, what has the FCCPC done concerning
this?
Mr Irukera: Immediately it happened, we engaged the primary
regulator, that is the Nigerian Midstream and Downstream Regulatory Authority,
the NNPC, which is the government owned business that imports, and we addressed
a few things. First, we realised that we don’t test for methanol, because we
don’t even import petroleum products with methanol. There are parameters that
we check. But there are parameters we don’t check because they’re not
applicable and methanol is not applicable. But immediately what we did on our
engagement with the NNPC and the regulator was, can we increase the testing
parameters now that we’ve had this experience, and that is how the regulatory
system works?
Even with your best effort when something goes wrong, you
realise, you increase. It’s just like aeroplanes as safe as they are today,
they still crash. They’re safer today than they were many years ago. When each
crashes, there’s something we learn to make it safer. But it still doesn’t
prevent it.
So now what we do as regulators is plugging gaps as we go
and strengthen the regulatory framework, that has happened now. The system has
worked. They’re now checking far more parameters to ensure that this kind of
thing doesn’t happen again. Now the question of holding those who imported this
accountable, I believe that that is happening.
The NNPC — we’ve met with them, we’re still meeting — are
pursuing remedies where applicable. We’re supporting that process in a way we
can. But we’re not in the front seat of that, because we’re busy doing other
things anyway.
But we continue to look out for our consumers who suffered
injury, or the equipment or vehicles were damaged, and we put out a portal to
harvest those complaints so that we can escalate them. There’s a system that
was put in place, and they go back to the filling stations, where they
purchased.
If things are not resolved there, they escalate further up.
Looks like this system has worked substantially because I just keep hearing
about what are you doing? What are you doing, but I’m not getting that many
complaints.
The government introduced metering in the power sector as a
way of improving the services or a way of closing gaps and reducing estimated
billing. However, some Nigerians who paid for the meters are yet to get theirs
after years. As a consumer rights organisation, what have you done to ensure
customers get the meters?
Mr Irukera: I know that the government has changed the
metering policy a number of times. I believe this has happened because each of
the methods adopted just hasn’t provided as many meters or close the metering
gap. I’m not sure that this is a discrimination in the sense that treat some
people this way and treat some people differently.
If there’s evidence then we will go against the DISCOs but I
agree with you that estimated billing, the way it is, is a travesty. Now, I
don’t say that estimated billing on a whole is a problem. I don’t think that
that’s the biggest challenge consumers have. Customers will understand if you
tell them your meter will be ready in 10 months. In the meantime, this is your
estimated bill. If it was reasonable, rational, and a true reflection of use,
then customers pay. It is the fact that this estimated billing is far more
arbitrary than it’s truly estimated.
If you’re going to estimate what I use, when I don’t have
light at all, how do I get a bill? It’s arbitrary people who have had a meter
before. And on that meter, they were paying N300 per month, something goes
wrong, the meter is ticking away to get put on an estimated bill. And then
after getting a bill for N30,000, nothing has changed. How do I move from an
empirical evidence base 300 to 30,000? It’s how arbitrary estimated billing is.
We work with NERC to create a billing cap, estimated billing cap for
residential areas.
What needs to happen is we need to move to enforcing it. We
have to make estimated billing unattractive. It is when it is unattractive that
the Disco’s will rush to meet everybody. But to the extent that they can make
more money from estimated billing than meter, what’s the incentive to meter
everybody? And so it is enforcing the estimated billing cap? That will be, I
believe, the game changer, which we’re working with NERC to see how we can
support that enforcement procedure more.
With respect to Multichoice, there’s been another increase
without increase in the services they render to the consumers, are there any
engagement with commission.
Mr Irukera: We have engaged Multichoice. Interestingly, that
increase came just days after we published the outcome of a long investigation
into Multichoice. I think I’ve explained our rule with respect to price.
However, what we have done is we have actually made some orders. And the reason
why we’re engaging Multichoice, before we even get to this question of
increase, let’s even know that you are complying with orders.
For instance, the point you make about more value for money
increases, that order said that we compelled them to introduce a price lock.
Meaning that you can lock the price that you are on for one year. And I’m sure
there’s, if I understand. Multichoice has been putting some things out now
saying there is now a price lock, if you make the payment of your points as if
you pay your bill, your current bill before the 31st of March. And you don’t
default in any view for the next. It doesn’t matter what the increase is, what
you pay now is what you’re going to pay until next year.
It forced them to introduce some value-based features. We’ve
also asked that the toll-free lines must be across networks, not just winning
networks anymore, and subscribers must be able to suspend their accounts up to
four times. I think you could only do it twice per annum.
But now we’ve increased it to four times. More importantly,
we said there needs to be more transparency in the bouquets. They need to
provide far more options so that people can literally get more of their focused
interests and packages that can be cheaper than getting 100 channels simply because
I want channels in that bouquet. I think that with those things, once we are
able to give consumers more, a broader spectrum of choice, at different prices,
let that happen. And then we begin to talk about how is the pricing after that?
When I first started working at the FCCPC, people complained
so much about Multichoice. They’re too expensive. They’re crazy. I said to
Multichoice the vast majority of these complaint is really because your
services are poor. Complaints are coming in every day. We entered order to get
orders against them, supervise them, and their consumer customer service
improved. Quite frankly, some of the complaints were reduced.
The biggest reason why people complain about price number
one is value. It is after value, that you begin to find questions like
affordability. But number one is value. Most times if people think they’re
getting a fair share, they might be willing to pay. The Nigerian consumer just
kind of understands and quite frankly, we’re so sympathetic with each other.
The first thing is to get value for money.