MTI warns against profiteering from hike in liquor duties

It will monitor market for unfair or coordinated price increases

By Pearl Lee, Laura Ng And Vanessa Chng

THE Ministry of Trade and Industry (MTI) yesterday warned businesses against profiteering from the increase in liquor duties.

MTI will work closely with the Consumers Association of Singapore (CASE) and the Competition Commission of Singapore (CCS) to "monitor the market for any unfair pricing and coordinated price hikes which are anti-competitive", it said in a statement last night.

Meanwhile, four supermarket chains have stopped bulk purchases of the alcoholic beverages at their outlets, for which they have not increased prices.

Yesterday, MTI said its statement was in response to recent media reports that said retailers might raise prices due to the rise in liquor duties. It took issue, in particular, with a comment made last Saturday by Mr Thomas Foo, chairman of Kheng Keow Coffee Merchants Restaurant and Bar-Owners Association, who said the price of a bottle of beer costing around $6 might go up by $1.

Instead, MTI noted that even if the additional duty is fully passed on to consumers, the price of a typical 323ml can of beer should increase by about 20 cents, while that of a typical bottle of beer should increase by only about 40 cents at coffee shops, based on Ministry of Finance figures.

Senior Minister of State for Trade and Industry Lee Yi Shyan said: "While we fully expect liquor prices to adjust as a result of the increase in excise duties, sellers should not take advantage of this to raise prices unreasonably."

MTI will work closely with CASE and CCS to "monitor the market for any unfair pricing and coordinated price hikes which are anti-competitive", he added.

"Consumers should exercise their rights to walk away from merchants pricing alcohol unreasonably," he added.

CASE president Lim Biow Chuan said: "Retailers should not take advantage of the hike in liquor duties to profit by increasing prices beyond the tax amount."

In particular, CCS advised the Kheng Keow association to refrain from making statements which might be seen as encouraging or coordinating among its members to raise prices.

It said this could infringe Section 34 of the Competition Act. All businesses should determine their own prices independently.

FairPrice, Sheng Siong, Cold Storage and Giant have curbed sales of existing stocks of alcoholic drinks since last Friday evening, after a 25 per cent hike in liquor tax was announced in the Budget. Some drinks are being purchased by consumers anticipating future price hikes or retailers re-selling the products.

A FairPrice spokesman said that for now, bulk buying of alcohol products will not be allowed, adding each outlet could decide how much to limit purchases.

Over at Sheng Siong, customers cannot buy more than three cartons of alcoholic drinks at a time, said a spokesman.

A spokesman for Dairy Farm, which runs Cold Storage and Giant, said curbs will be put on retailers who buy "hundreds of cartons" of liquor from Giant stores.

Beer promoter Candy Lee, 39, who works at the FairPrice outlet at Junction 8, said customers were buying more alcohol.

At least 400 of the more than 1,000 coffee shops here are estimated to have raised beer prices, going by checks with the two major coffee shop associations here.

At a coffee shop in Geylang Lorong 27, shop supervisor Ko Sau Siang, 31, said the price of Tiger beer has gone up by 50 cents per bottle to $6.50: "Customers have already been complaining... I foresee sales will drop by about 20 per cent on weekdays."

Mr Dennis Foo, chief executive of St James Holdings, does not expect the alcohol tax to hit clubs much. "The move seems to be targeted at low-end drinkers who consume cheaper alcohol, as the tax hits them the hardest."

Liquor vendors should not unduly raise prices: MTI
Channel NewsAsia, 24 Feb 2014

The Ministry of Trade and Industry (MTI) says businesses should not take advantage of the increase in liquor duties to unduly raise prices at the expense of consumers.

The ministry was responding to recent media reports that some vendors might raise prices due to the increase in liquor excise duties announced in Budget 2014.

These include Mr Thomas Foo, chairman of Kheng Keow Coffee Merchants Restaurant and Bar-Owners Association, who told the media that a bottle of beer that costs around $6 could go up to over $7.

It was announced on Budget Day on Friday that liquor excise duties will increase by 25 per cent across all liquor types, effective on 21 February.

Based on the Ministry of Finance's (MOF) assessment, even if the additional duty is fully passed on to consumers, the price of a typical can of beer (323 ml) should increase by about 20 cents, while a typical bottle of beer (663ml) should increase by only about 40 cents at coffee shops.

Senior Minister of State for Trade and Industry Lee Yi Shyan said: "While we fully expect liquor prices to adjust as a result of the increase in excise duties, sellers should not take advantage of this to raise prices unreasonably.

"MTI will work closely with the Consumers Association of Singapore (CASE) and the Competition Commission of Singapore (CCS) to monitor the market for any unfair pricing and coordinated price hikes which are anti-competitive."

He advised consumers to "exercise their rights" by snubbing outlets which raise prices unreasonably and to report errant sellers to CASE.

CASE president Lim Biow Chuan said: "CASE is of the view that any increase in prices of liquor should be reasonable.

"Retailers should not take advantage of the hike in liquor duties to profit by increasing prices beyond the tax amount.

"Additionally, we urge consumers to patronise liquor stores that continue to offer good value for money.

"Consumers should refuse to buy from businesses that inflate prices and should instead seek alternative supplies from businesses with fair and transparent trading practices."

In addition, the Competition Commission of Singapore (CCS) has advised the Kheng Keow Coffee Merchants Restaurant and Bar-Owners Association to refrain from making statements which might be seen as encouraging or coordinating among its members to raise prices.

Such an act, it said, could be an infringement of section 34 of the Competition Act.

Mr Seah Kian Peng, CEO of NTUC FairPrice, said: "In light of the recent tax adjustment on alcohol, FairPrice is supportive of MTI's stand against profiteering.

"FairPrice is maintaining the prices of current alcohol products as our existing stocks have not been affected by the tax increase.

"Pending a review with our suppliers, we will ensure that price changes for new stocks will be within the new alcohol tax framework.

"In the meantime, we have disallowed the bulk buying of alcohol products."