It is possible that Unilever was fined not for raising prices, but for announcing raising prices in the future. The latter amounts to price communication and coordination and should be monitored. Last year, various companies in the U.S.announced, over a period of time, that they intend to raise their prices (sometimes by how much as well) in the future to cope with higher costs.
I agree with your assessment. This practice has another subtle impact, which is to make price increase “more acceptable” to consumers. The price increase is in the future, so no fuss about it now. But when future comes, you have already been warned (bounded rationality?).
The downside of allowing such price communication is that, companies can also rely on it to collude in the future and it may be difficult to pin down the exact purpose of price communication.
On a separate note, I am a bit surprised that prices have not gone up more. Are companies cutting their margins or are they reducing the quality/cost of goods, or both?
Unless we believe that Unilever has sort of de facto monopoly power, I just don’t understand why the government should intervene and exercise a price control on this. The supply may become even more limited as a consequence of this regulation, which would make things even worse. The government can’t prevent the secondary market from emerging anyway. Simple theory tells us that people would buy less if price goes up, ceteris paribus. A company might use this as a stragety to promote current sales, or whatever, but the market competition will discipline their behaviors. What the government really should do is to find out the true roots behind the inflation and try to eliminate all the policy distortions in the whole process of production, transportation, storage, taxation, sales, and so on. This policy is not only stupid, ineffective, and counterproductive, but also cheating in the vein of pretending the consumers. If such a policy can be rationalized, I think it should be a political-economy story.
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