And how do we apply it?
It sounds like an open and shut case of unfair treatment by big companies that can be easily remedied. But not so quick. As Andrew Leicester explains (Fair’s fair. But what do we mean by ‘fair’), just as fairness itself is a tricky concept, identifying and implementing remedies is not straightforward. After all, one man’s loyalty penalty is another man’s introductory discount: restrict one and you will restrict the other.
One reason why fairness is such uncomfortable territory is that the overriding goal of modern regulation has been to maximise economic efficiency, not to achieve particular distributional outcomes, argues Antti Lemberg (Fairness in Pricing).
To that end, regulators have typically sought to sharpen competition by providing consumers with maximum information and making it easy for them to switch suppliers, the hope being that this will result in better, hence “fairer”, outcomes.
But, Clive Kenny argues, (Fair questions online) competition is not a magical solution to fairness. The two are not synonymous.
Dan Elliott makes a similar point (What is a fair level of service in the water sector?). Paradoxically, competitive markets are not guaranteed to produce outcomes that are seen as fair from a wider policy perspective. Other policy tools are needed in the quest to satisfy society’s desire for fairness without gumming up the gears of the market.
For instance, it may be that changes to taxes and benefits are the best way of addressing distributional concerns – the path that Macron has taken in a bid to quell the protests that have rocked his presidency.
The growing clamour for “fairer” markets makes new demands of companies, especially those providing essential services. Ticking the fairness box by taking a few steps to protect the vulnerable will no longer suffice. Companies need to engage closely with their customers to determine what measures they support to achieve more-just outcomes and how they should be paid for. And executives, alert to the importance policymakers are attaching to fairness, need to be able to defend their pricing policies not just to regulators but also in the court of public opinion. That sounds fair, doesn’t it?