Summary
In a startling revelation from the Bangladesh Competition Commission (BCC), it has been found that several major bottled water manufacturers have substantially increased their profit margins—up to 420%—by raising the price of half-litre bottles, despite only slight increases in production costs. This conclusion stems from an investigation into the pricing strategies of these companies, which has prompted legal action against seven prominent brands for engaging in price collusion, thereby imposing unreasonably high prices on consumers. The companies implicated in the lawsuit include Coca-Cola Bangladesh Beverage, Transcom Beverage, Meghna Beverage, Partex Beverage, Rupshi Foods (City Group), Akij Food & Beverage, and Pran Beverage Limited. According to BCC member Hafizur Rahman, the investigation uncovered that these firms collectively manipulated the market to ensure elevated profit margins not only for themselves but also for distributors and retailers—fostering an environment of excessive profits throughout the distribution chain. The investigation focused on the abrupt price rise of 500ml bottled water, which increased from Tk15 to Tk20 between January and September 2023. The manufacturers justified these increases by citing external factors such as higher import costs due to fluctuations in the dollar and rising raw material prices. However, the BCC report indicated that the actual production costs had seen only marginal increases. The commission detailed that profits surged by significant margins, with profit increases spanning from 71.23% to an astounding 420% across various brands. For instance, Akij Food & Beverage, noted for its Spa brand, reported a dramatic 420% surge in profits after raising the price by Tk5 despite only an 18.33% increase in production costs. Conversely, Coca-Cola’s Kinley brand saw a 212% increase in profits following a similar price hike, even with production costs escalating by 27.67%. These strategic price hikes across brands were observed despite complaints from retailers about slim profit margins on sales. Additionally, the investigation noted that while Partex Beverage opted to raise distributor and retailer commissions without increasing its own profits, Dhaka WASA maintained its prices for the Shanti brand without raising commission rates, resulting in struggles to compete in the market due to low retailer interest in stocking their products. The BCC determined these practices to be in violation of the Competition Act of 2012, underscoring the illegal nature of such collusion over fair pricing practices. The inquiry was catalyzed by public outcry regarding significant price hikes, which led to calls from the Consumer Association of Bangladesh for regulatory intervention. As the investigation continues, it has been revealed that the bottled water sector in Bangladesh has enjoyed considerable demand, with sales exceeding 552.45 million liters in the fiscal year 2022. Among the firms analyzed, Fresh led the market with a 24.17% share, closely followed by Pran and Aquafina. The BCC’s findings and subsequent actions emphasize the significance of competitive practices within the bottled water industry and the necessity of regulatory measures to ensure fair pricing strategies.
Original Source: www.tbsnews.net
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