SUSPECTED EXPLOITATION OF SMALL AND MEDIUM ENTERPRISES (SMEs) IN THE SUPPLY OF IMPORTED SECOND HAND PRODUCTS (KAUNJIKA)

The Competition and Fair Trading Commission (CFTC) has noted with great concern that some dishonest wholesalers are engaging in deceptive and abusive trading practices in the supply of imported second hand products, which are commonly known as Kaunjika.  

An inspection conducted by the Commission in the market for second hand clothes and shoes (Kaunjika) to assess compliance with competition and fair trading laws, showed that there was rampant economic exploitation of Small and Medium Enterprises (SMEs). The economic exploitation of the SMEs manifested itself through numerous deceptive and abusive practices perpetrated by wholesalers, resulting into unfair conditions of trade.

Examples of these deceptive and abusive practices are as follows:

  • Underweight supply – Bales expected to weigh 25kg and 65kg were weighing far less than 20kg and 55 kg respectively in violation of Section 43(1)(d) of the Competition and Fair Trading Act (CFTA).
  • Insufficient labelling – Bales had no price labels; no weight labels; no content labels or description and no quality category labels. This made it difficult for SMEs to make informed purchase decisions.
  • Non issuance of receipts as evidence of purchase in violation of Section 36 (1) of the Consumer Protection Act (CPA).
  • Non display of trading licences and trading names in violation of the Business Licencing Act. 
  • Denying SMEs an opportunity to choose bales of their choice in violation of the Sale of Goods Act which provides for the right to examine the quality and quantity of goods;
  • Refusal to supply bales of second hand products to certain SMEs or class of SMEs.

The economic protection of SMEs is consistent with three of the primary objectives of the Competition and Fair Trading Act, which are: to strengthen efficiency in the production and distribution of goods and services; to secure the best possible conditions for the freedom of trade; and to facilitate the expansion of the entrepreneurship base.

The conduct of supplying underweight products and the failure to supply products with sufficient information constitutes serious infringement of the CFTA. Specifically, Section 43(1)(d) of the CFTA, makes it an offence for any trader to engage in conduct likely to mislead the public as to the nature, price, characteristics, suitability for a given purpose, quantity or quality of any products or services

Likewise, the refusal to sell to certain SMEs or a class of SMEs and the refusal to allow the freedom of choice, infringes on the rights of SMEs to participate fairly in the national economy. It also constitutes unreasonable, abusive terms and conditions of trade in gross violation of Section 43(1)(g) of the CFTA.

In view of this, the Commission wishes to warn dishonest wholesalers that it will take drastic action against anyone found engaging in deceptive or abusive trade practices against SMEs.  

For more information, contact Innocent Helema on 0880 725 075 or email innocent.helema@cftc.mw / competitioncommission@cftc.mw.

JAMES KAPHALE

EXECUTIVE DIRECTOR