Focus on Rights

Protecting the consumer - once again!

It has been more than one year since the 2001 draft Consumer Protection Authority Act was withdrawn from Parliament and submitted to revision following adverse political pressure and protests from consumer groups. We now have a new draft consumer law placed on the Order Paper, numbering one of the many bills that are due to be considered by the House during 2003. This Bill, (thankfully not stipulated as an urgent Bill unlike its predecessor), was preceded by a period of public consultation, which is undoubtedly to the good. Analysis of its substantive provisions with those of the old may be relevant to those of us who remain hopeful of measures bringing about substantive consumer protection in this country.

The Draft Act provides for the establishment of a Consumer Affairs Authority consisting of a Chairman and ten members with the welcome addition that they possess qualifications besides having wide experience in fields such as industry, law, economics and so on. The composition of the body is similar to the nine member Consumer Protection Authority that was sought to be set up by the 2001 Draft Law. Under the revised version, the Chairman and three members hold full time office.

In a welcome addition to the old version, the schedule to the revised draft law prescribes a number of provisions relating to disqualification from appointment as a member of the Authority, termination of appointment, resignation of members, vacation of office and vitally, disclosure of interest by any member into any proceeding of the Authority from which he or she is then expected to withdraw.

There is also a Director General appointed to the Authority designated as the chief executive officer but whose appointment by the Minister continues to be at the unfettered discretion of the latter and whose tenure of office appears to lack some basic conditions of security. Given that the draft law confers a fair measure of authority on the Director General, it would be advisable that this is revised for the better. More so, in fact, given the experience that we have most regrettably had with the not so unforgettable acid disputes involving the Director General and members of the Bribery and Corruption Commission. The new draft law also continues to have no provision for gender representation with regard to the appointments of bodies under it, unlike similar bodies in India.

Like the old draft, this Draft Act collapses the functions of the 1979 Consumer Protection Act, the 1987 Fair Trading Commission Act and the 1950 Control of Prices Act into one law, expanding the whole. The Consumer Authority thus has an overall supervisory power in respect of regulation of trade and prevention of anti-competitive practices. In respect of the latter, the Authority has the power to issue directions to manufacturers or traders in respect of price marking, labelling and packeting of goods, contravention of which directions will amount to an offence under the Act.

The Authority also has the power to determine standards and specifications relating to goods and supply of services and can inquire into complaints regarding the same. Where warranties or guarantees are found to be breached by a trader, the Authority can order the payment of compensation or the refund of the money spent. It may also enter into written agreements with manufacturers or traders in respect of the maximum price, the standard and specification of goods and any other conditions as to manufacture, transportation, etc.

Traders who have in their possession or custody or under their control, any goods for purposes of trade within Sri Lanka and refuse to sell such goods, are prohibited from doing so. Hoarding goods remains prohibited.

Meanwhile, if it so appears to the Director General that goods are sold or services provided at an excessive price or subject to market imperfections etc, the Director General (in consultation with the Authority, if that is deemed necessary) can refer such matters to a Consumer Affairs Council established under the draft law. The Council (consisting of three members having wide experience in commercial law, business enterprises and trade/consumer affairs), then investigates the matter and submits a report back to the Director General.

Where it is found that the prices are excessive, the Council can also recommend the maximum price above which such goods should not be sold or such services should not be provided. This recommendation is later brought into force by the Authority by order published in the Gazette. The draft Act makes specific provision for interested citizens or groups to refer such matters to the Director General as well.

Part Three of the draft Act gives power to the Authority, either of its own motion or upon a complaint or request made to it, to carry out investigations in respect of any anti-competitive practices and may upon the conclusion of the investigation, make application to the Council, to determine on the matter. Anti- competitive practices has been defined to exist where a party, in the course of business, pursues a course of conduct with a view to restricting, distorting or preventing competition. Standing to make the referral to the Council is also given to the person or body who makes the complaint if dissatisfied with the decision of the Authority on the matter.

Both the Council and the Authority are given considerable powers of investigation, the latter in fact, awarded all the powers of a District Court. Both bodies are also given authority to certify contempt for disobedience etc, which matters are referred to the Court of Appeal. The Authority is, meanwhile authorised to order manufacturers etc furnish returns to it in respect of all matters that the Authority considers necessary. Failure to do so is an offence. Over three full pages of the draft law stipulates offences and penalties for contravention of the provisions of the Act, the latter involving terms of imprisonment ranging from three months to two years.

In comparison with the 2001 draft Consumer Act, the revised version is marginally better but also contains provisions that awaken some of the old fears. Thus, the powers of the Minister regarding price control of any goods or services thought by him to be essential to the life of the community, is left untouched, tempered somewhat though by the stipulation that the declaration should be in consultation with the Authority.

As problematically, the new version also differs from the 2001 version in that it lacks any provision dealing with the prevention of monopolies and mergers. While the old version had specific provision regarding this, it was strongly critiqued on the basis that government organisations and persons to whom the government had granted monopolies (for a period not exceeding three years) were made exempt from challenges made with regard to monopolies and mergers.

Protests were also made that the draft law preserved rights acquired under existing agreements in respect of monopolies and unfair trade practices and did not even militate against renewal of such agreement as provided for in the agreement itself nor specify time limits for the operation of such agreements. This was looked upon as being crucial in the context of the privatisation campaigns carried upon by the then Government, which campaigns have, in fact, been speeded up now. It is debatable whether this critique should have been met by disposing of those provisions relating to the prevention of monopolies and mergers wholesale as the revised version seems to have done. It is also relevant, in this regard that provisions relating to anti-competitive practices that are present in the revised version, are stipulated not to apply to existing agreements between the government and any person supplying goods and services.

The revised version of the Consumer Affairs Authority Act has been placed on the Order Paper of Parliament and the specified time limit for legal challenge has passed. It is now up to consumer rights groups in Sri Lanka to engage in some skillful lobbying with a view to further finetuning some of its provisions during debate in the House.

Back to Columns