BCEN backs moves on pricing, questions consumer protection effort

The Barbados Consumer Empowerment Network (BCEN) has thrown its support behind the government’s new transfer pricing review, but is expressing disapproval over how consumer protection is characterised.

On Wednesday, Minister of Commerce and Consumer Affairs  Kerrie Symmonds indicated moves to clamp down on supermarket chains’ internal pricing practices alongside a national conservation push, as the government targets both corporate structures and household habits blamed for keeping the cost of living high.

Transfer pricing – the way companies set prices for goods and services exchanged between different parts of the same corporate group – has been identified as a potential driver of higher supermarket shelf prices, especially where the same group controls importing, distribution and retailing and can add mark-ups at each stage.

Symmonds, who is also senior minister of energy, business development and commerce, disclosed that officials are now considering reforms to require more transparent, arm’s-length pricing between related entities, in a bid to ensure consumers are not paying for hidden “padding” in the supply chain.

BCEN executive chair Maureen Holder said her organisation recognised this as an important step towards understanding some of the structural factors contributing to the high cost of living in Barbados. But she indicated she was not happy with how Symmonds framed his ministry’s pursuit of consumer protection.

She said: “BCEN also heard the minister responsible for consumer affairs told the nation that the Government of Barbados intends to pursue consumer protection primarily through a conservation-focused public education campaign and called upon the Fourth Estate to assist in educating Barbadians. While BCEN welcomes initiatives that encourage responsible consumption and nationwide stewardship, we are concerned that this approach mischaracterises what constitutes consumer protection and risks creating confusion about the role of government in protecting consumers.

“Before the minister ever made his announcement, it is worth noting that BCEN has consistently argued for consumer protection and is fully aware that consumer protection is much broader than consumer education or conservation. The Government’s proposals contain some positive elements, particularly the willingness to examine transfer pricing and provide temporary relief on electricity and fuel costs.

But Holder pointed out “there is also a need to distinguish between policies that help consumers cope with high prices and policies that actually protect consumers from unfair market practices. BCEN also maintains that the cost of living cannot be addressed solely by encouraging consumers to shop differently or conserve more resources. Therefore, it is prudent that the pricing environment itself also be examined”.

The BCEN leader argued that if related companies involved in importing, wholesaling, distribution, and retailing are able to transfer goods among themselves at prices that do not reflect normal market conditions, there is a legitimate public interest in ensuring that those transactions are transparent and conducted on an arm’s-length basis.

She said: “Greater transparency would strengthen confidence that consumers are paying prices based on genuine costs, rather than unnecessary mark-ups within corporate groups. BCEN welcomes the government’s willingness to initiate a national conversation on transfer pricing and encourages broad consultation with the Fair Trading Commission, the Barbados Revenue Authority, consumer organisations, economists, the private sector and competition experts before any legislative reforms are introduced.”

BCEN said it was important to distinguish between consumer education, consumer conservation and consumer protection.

Holder was of the view that encouraging Barbadians to conserve electricity, water and fuel is “unquestionably” good public policy:

“Efficient use of resources benefits households, reduces national import costs and contributes to environmental sustainability. Likewise, promoting energy-efficient buildings and encouraging the gradual transition to electric vehicles are worthwhile long-term policy objectives. However, these initiatives should not be described as consumer protection.”

Consumer protection exists to safeguard consumers from unfair, deceptive or anti-competitive business practices, Holder said, including “ensuring fair pricing, transparent contracts, effective product safety standards, accessible dispute resolution mechanisms, fair financial services, accurate advertising and strong regulatory oversight of markets.

She continued: “Consumer education empowers consumers to make better choices.  Conservation encourages behavioural change. Consumer protection, however, places legal and regulatory obligations on businesses and governments to ensure markets operate fairly. While education is an important component of consumer protection, it cannot substitute for robust enforcement of consumer rights.”

BCEN also acknowledged the government’s interventions to cushion consumers from rising fuel and electricity costs through the continued absorption of part of the Fuel Clause Adjustment and the reduced VAT rate on the first 250 kilowatt-hours of electricity consumption.

The consumer body said these measures have “undoubtedly” provided temporary financial relief for many households amid elevated global energy prices.

But it added: “Subsidies should not become a substitute for addressing the underlying structural causes of high living costs. Long-term affordability requires competitive markets, greater transparency in pricing, efficient regulation and stronger consumer protection laws. BCEN has consistently advocated for a modern consumer protection framework that goes beyond temporary fiscal measures.”

Holder said Barbados still requires comprehensive consumer protection legislation, stronger competition policy enforcement, enhanced market surveillance, and greater transparency in pricing across sectors that significantly affect household expenditure.

“The proposed review of transfer pricing should therefore form part of a much wider agenda aimed at improving competition, preventing excessive market concentration where it harms consumers, increasing price transparency and ensuring regulators have the necessary powers to investigate unfair market practices. BCEN also believes this presents an opportunity for greater coordination among the Fair Trading Commission, the Barbados Revenue Authority, the Central Bank of Barbados and other regulatory agencies to strengthen market oversight and consumer confidence.”

Holder said BCEN looks forward to participating constructively in any consultation process and remains committed to working with the government, regulators and the private sector to develop policies that promote competitive markets, protect consumer rights and improve affordability for all Barbadians.

(EJ)