Price Fixing - Inputs on Solutions
Dear Friends,
Based on your inputs, here is a summary of Root Causes of Price Fixing. Kindly review those and help identify solutions that can be implemented to address this issue.
Once we have finished the solutions discussion, we will compile the whitepaper and submit to the consumer and competition bodies for due action.
Thanks for your participation!
Rajendra Pratap Gupta
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Price Fixing – Root Causes
1. Retailers and wholesalers both want to maximise their profits
2. Medicine manufacturers try to give more profit margins to the retailers so that they push their brands in the market
3. Suppliers try to use the law of supply and demand to their advantage
4. Brands try to take a psychological advantage over the consumers by printing a higher rate and then offering discounts
5. Mediators earn commission by mediating between two parties
6. Farmers don’t have direct access to the market
7. Companies are not honest to the customers about the actual cost of the product
8. No guidelines made by the authorities to keep a cap on the profit that can be made on a particular product
9. Producers collude with officials to fix a higher MRP
10. There are no stringent rules and monitoring agencies which can penalise the culprits immediately on receiving complaints
11. People caught in the net easily get away by paying bribes
12. Markets are unregulated
13. Absence of healthy competition
14. Monopoly/near monopoly of certain brands in many products and services
Price Fixing – Issues
1. A nexus between wholesalers and retailers
2. The price of medicines are set high, which makes affordability difficult for the masses
3. No control on the prices of fruits and vegetables
4. Hoarding of items like grains, pulses and spices also leads to fixing of prices
5. It is a normal practice to offer 30% to 90% discount on crackers during Diwali on MRP. So MRP has no meaning
6. Mostly prices om imported computer items like hard disks pen drives memory cards etc. is always too much
7. Mediators play a major role in fixing prices
8. A farm produce becomes 10-20 times costlier when it reaches the retail customer
9. Customer has to shell out more money to buy a product that its actual cost
10. Goods become costlier and inflation rises more
Based on your inputs, here is a summary of Root Causes of Price Fixing. Kindly review those and help identify solutions that can be implemented to address this issue.
Once we have finished the solutions discussion, we will compile the whitepaper and submit to the consumer and competition bodies for due action.
Thanks for your participation!
Rajendra Pratap Gupta
-----------------------------------------------------------------------------------------------------------------------------------------
Price Fixing – Root Causes
1. Retailers and wholesalers both want to maximise their profits
2. Medicine manufacturers try to give more profit margins to the retailers so that they push their brands in the market
3. Suppliers try to use the law of supply and demand to their advantage
4. Brands try to take a psychological advantage over the consumers by printing a higher rate and then offering discounts
5. Mediators earn commission by mediating between two parties
6. Farmers don’t have direct access to the market
7. Companies are not honest to the customers about the actual cost of the product
8. No guidelines made by the authorities to keep a cap on the profit that can be made on a particular product
9. Producers collude with officials to fix a higher MRP
10. There are no stringent rules and monitoring agencies which can penalise the culprits immediately on receiving complaints
11. People caught in the net easily get away by paying bribes
12. Markets are unregulated
13. Absence of healthy competition
14. Monopoly/near monopoly of certain brands in many products and services
Price Fixing – Issues
1. A nexus between wholesalers and retailers
2. The price of medicines are set high, which makes affordability difficult for the masses
3. No control on the prices of fruits and vegetables
4. Hoarding of items like grains, pulses and spices also leads to fixing of prices
5. It is a normal practice to offer 30% to 90% discount on crackers during Diwali on MRP. So MRP has no meaning
6. Mostly prices om imported computer items like hard disks pen drives memory cards etc. is always too much
7. Mediators play a major role in fixing prices
8. A farm produce becomes 10-20 times costlier when it reaches the retail customer
9. Customer has to shell out more money to buy a product that its actual cost
10. Goods become costlier and inflation rises more
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View all 31 comments Below 31 comments
1. if shops are over charging do we have any mechanism to stop---NO 2. There is no grievance cell to raise complain and take action on such shops 3. Shopkeeper has guts to tell customer to purchase from another shop, he will given in the price he wants...do a consumer has any choice. 4. Consumer court is time consuming and very complicated 5. Consumer court don't entertain with out documents, there is no team with whom you can talk and clear your doubts IN INDIA CONSUMER IS NOT KING ... IT'S RETAILERS,WHOLESALERS AND SHOP KEEPERS more
Dec 02
In Kolkata, some Pharmacies offering 15-18% discount on purchase of medicines from them. If you buy through Credit Card they reduce the discount by 2%. Some others are allowing 10% for cash payment and 8% discount for Credit Card payment. These pharmacies are only few. But most of other pharmacy out lets and not allowing any discount for the same medicines, for which the discount is allowed by some. It means the cost of the medicines as printed on the Medicines is atleast 20% high than the actual. Otherwise how can some offer 15-18% discount. Those who are not offering discount pocket the whole amount, without giving any benefit to the consumer. This has to be looked into and the profiteering shops should be punished and a norm has to be fixed for all the shops to give discount. more
Dec 02
The only known method to avoid price fixing is by increasing competition and enforcement of existing laws. All other type of controls will eventually lead to corruption or black-market. As long as there are open channels of communication where people can file their grievances and get a fast resolution the system will self-govern more
Nov 13
MRP is the maximum price at which the product can be sold. Most of the Cosumer products are subject to excise duty based on the MRP printed on the package. Therefore, the manufacturer has no interest to print a higher MRP on a product and sell it at much lower retail price. However, the practice of printing very high MRP is prevalent in products exempt from excise duty. As regards the price of the drugs, a significant percentage of the price paid by the consumer is paid illegally to the doctors by almost all the drug manufacturers illegally. A strict forensic audit of the drug companies would show that payments being made for services or promotioins actually are bribes paid to the doctors for prescribing the drugs. The marketing professional of the drug companies justify their illegal conduct by taking a stand that you cannot run a drug manufacturing company in India without bribing the doctors to generate prescription for the drugs. more
Nov 09
Many packed food items indicate a certain weight on the pack, say 100 gms, 200 gms, 1 kg. etc. but after purchasing if weighed at home the actual weights are less. Some shops offer discounts on the MRP. Similarly in respect of medicines also some shops allow discount in the bill upto 10%. When enquired how they allow the discount, the reply I got was that the pharmaceutical companies allow the retailer a much higher discount. One medicine for high blood pressure used to cost Rs.52 plus some peise for ten tablets. Possibly due to government intervention the same tablet is now being sold at Rs.39 plus some paise for 15 tablets. In the stock market, shares of pharmaceutical companies are sold at very high prices. One Hyderabad based company's shares were being traded about one year ago at around Rs.200/-. Now these shares are being traded at over Rs.950/- Some American companies sell their medicines at very very high prices claiming patent rights. Some anomalies are existing mainly because of laxity in enforcement. Now-a-days many businesses make a hue and cry about inspector raj. It is very doubtful how many inspectors discharge their duty honestly and efficiently. If a business is run in a fair manner why should it cry about inspectors. more
Nov 04
