Every time Sri Lanka announces a tax revision, adjusts a levy, or signals a change in import policy, the same thing happens. Prices go up. Not merely among the businesses with a documented cost basis for the adjustment, not merely among those who can point to an invoice, a Customs declaration, or a revised input cost to justify the increase, but across the market, including among traders who owe no additional tax, carry no VAT registration, and have absorbed no new burden whatsoever.
They revise their prices regardless, in the confident knowledge that no statute will inconvenience them for doing so, and they are correct. Sri Lanka does not have a profiteering law. What it has instead is a Consumer Affairs Authority (CAA) that can investigate excessive pricing if someone complains, a Director General who must voluntarily refer the matter upward, a Consumer Affairs Council that will examine the question after the process has run its course, and no criminal sanction at the end of it if the answer comes back wrong. For a business that has decided a tax announcement is sufficient justification to add 15% to its margin, this legislative architecture presents no serious obstacle.
The CAA Act of 2003 is the primary instrument through which Sri Lanka nominally addresses this problem. Section 22 grants the Consumer Affairs Council jurisdiction over goods sold at excessive prices, over cases where market manipulation exists, and over situations where categories of consumers are significantly affected. These are, in principle, the right categories. The difficulty is that the act defines ‘excessive price’ without providing the criteria by which excess is to be measured, which is roughly equivalent to criminalising unreasonable behaviour without specifying what reasonable looks like.
An investigation requires a complaint. The complaint requires a referral. The referral is discretionary. The investigation, when it eventually proceeds, produces civil remedies at best, and the authority conducting it operates under chronic resource constraints, with delayed investigations that undermine whatever deterrent effect the process might otherwise carry. The legal architecture governing market conduct in Sri Lanka has, in other words, been tested and found to contain significant structural gaps, and the 2003 act did not close them.
Countries that have grappled seriously with this problem have taken a different legislative approach. India’s Competition Act of 2002 established an independent commission with enforcement powers and provision for both civil and criminal penalties. South Africa’s Consumer Protection Act of 2008 includes explicit excessive pricing provisions with criminal sanctions applicable during periods of economic hardship. The United Kingdom’s Competition Act provides for proactive enforcement by the Financial Conduct Authority with consequences that register as genuine deterrents. None of these frameworks is perfect. All of them rest on a legislative premise that Sri Lanka’s current framework does not: that the obligation to justify a price increase, particularly during periods of economic distress, sits with the seller rather than the consumer. Sri Lanka has inverted this entirely.
The timing of reform has never been more consequential. Sri Lanka’s salaried households are absorbing simultaneous increases across groceries, utilities, transport, and services while incomes remain stationary. The indirect tax burden compounds at every transaction.
The CAA was established with the right mandate. What it was not given was the independence, the resources, the proactive enforcement powers, or the statutory teeth to execute that mandate against a market that has long understood it faces minimal consequences for overreaching. The authority conducts workshops. It raises consumer awareness. It processes complaints on a timeline that bears no relationship to the pace at which prices move. The gap between what the institution is designed to do and what the problem requires it to do has never been wider, and successive governments have chosen, consistently, not to close it.
Explicit profiteering legislation, with a defined threshold for excessive pricing, mandatory cost justification for increases above that threshold, proactive monitoring of essential goods categories, and criminal penalties for documented violations, is the standard that comparable economies have met and that Sri Lanka has declined to reach.