Price cap on bottled water nothing more than a publicity exercise

Some may have thought that the government had abandoned the ill-conceived plan to impose a maximum price on bottled water at sales outlets where there is no competition. It has not, and the relevant bill, which was submitted to the House last April, is due to be discussed at the House now as the government has asked that it was given priority.

If approved, the law would give the minister of commerce, industry and energy the power to issue a decree setting a maximum price for 500ml and 750ml bottles of water sold at airports, ports, sports venues, beaches, archaeological sites, museums, theatres, cinemas and hospitals. The measure that has not been thought through, but seemed like a good idea to the government at a time when everyone was complaining about rising prices and demanding state protection.

The president of the commission for the protection of competition also gave the green light to this command economy measure, saying in a letter to the legislature, that the bill “related to the issue of the protection of the consumers” and covered specific products “in specific sales outlets, that is, in closed markets” where, “there cannot be adequate competition”. She added that the measure was “restricted to a basic good that was a necessity for consumers”.

This comes across as flimsy justification of the government decision rather than as a rigorous argument for the measure. With the possible exception of the departure lounge at the airports people can take their own bottle of water with them at all the other venues mentioned by the law. Has anyone ever been stopped taking their own bottle of water into the cinema, theatre or the beach? Even at the airports, there are water coolers for people who want to have water free of charge.

By the government reasoning the maximum price could also apply to restaurants at which grossly overpriced water is the norm and there is no competition. And in contrast to the above-mentioned venues, restaurants do not allow customers to take their own water to the table. Why is it acceptable for restaurants to charge whatever they want for water but not for cinemas and theatres and shops in airports which pay a lot of money to rent premises? Interestingly, if there is a maximum price for water, airport shops would not be able sell bottles of imported water, which cost them significantly more than local bottles. Some consumers would not be happy about that.

The reality is that this law is nothing more than a publicity exercise by the government. It will improve nobody’s standard of living or make the slightest bit of difference to their disposable income, but it will create a very dangerous precedent. Once the commerce minister goes down the path of setting a maximum price for water how will similar demands for other products be rejected? Soft drink prices are also too high at airports and soft drinks could also be regarded a basic good, a necessity for many people.

This tampering with the market is a very bad idea and the best thing the government could do now is forget this command economy bill, which will help nobody but create a precedent for market intervention.