CONSUMER welfare can be addressed by looking at the subject through various perspectives and angles in the prism. And specifically, consumer protection, a significant aspect of consumer welfare, can be achieved by dual approach of bottom up — through the activities of consumer-focused bodies — and top down, through laws as well as government measures.
This article sheds light on the top-down approach for achieving consumer protection and here too, from an enforcement of competition norms, or an anti-trust perspective.
The Competition Ordinance 2007 re-promulgated in November 2009, is the single, most significant and comprehensive charter or a sort of Magna Carta for protecting the consumer from anti-competitive behaviour. In a holistic fashion, this law sets out principles and norms of sound competitive behaviour as well as the mode in which these norms are to be enforced.
The Ordinance is inspired by the principles enshrined in the Treaty of Rome and global best practices, known to mankind. Our law is really at the cutting edge because it has benefited from “late-mover advantage” i.e., learning from the mistakes and successes of other jurisdictions over the past several decades.
First, ex-ante, it tries to prevent competition reducing mergers and acquisitions through a mandatory mergers clearance regime. Second, ex-post, the law provides for action against abuse of dominance by a single business undertaking as also collusive behaviour or cartelisation on the part of several undertakings. Third, the law makes adequate provision for action against deceptive marketing practices.
All this is apart from the positive steps required to be taken to create an awareness of competition issues and a culture of competition through advocacy and persuasion i.e., try to promote competition norms through means other than law enforcement.
It is obvious that all these operational provisions in the law, if properly implemented, would effectively protect the consumer from anti-competitive behaviour as well as benefit the consumer by way of enhanced productive efficiency arising out of greater competition on a level playing field.
Action against abuse by undertakings dominant in the market as well as action against instances of collusive behaviour or cartelisation are certainly beneficial for the consumer, and the benefits derived are both direct and indirect. Equally beneficial and protective for the consumer are actions against deceptive marketing practices, the impact of which is usually more direct and obvious. These issues are important to “put the consumer first”.
The inclusion of deceptive marketing practices completes the picture with respect to enforcement of competition norms and is covered by Section 10 of the Competition Ordinance. The CCP “Office of Fair Trading” addresses issues related to deceptive marketing practices.
The Commission has dealt with several cases of deceptive marketing including three landmark orders. These orders have laid down certain principles that constitute important elements of our jurisprudence on this subject. Our orders demonstrate the progressive and enlightened approach and are wholly in keeping with our law and our circumstances, tilting in favour of the consumer.
Some of the principles in our orders are as follows:
First, in the matter of deceptive advertisements, CCP has kept the onus squarely on the undertakings that publish the impugned deceptive advertisements This has been done by construing the word “consumer” in its widest amplitude as the “ordinary” consumer and not qualified the term “consumer” by the prefixing of words like “reasonable” or “prudent” or any other expression that would pass on some duty of care or diligence or caution to the consumer and thus provide an escape route for the undertaking. Under our law, the duty not to deceive the consumer is unfettered and absolute, and must not be diluted.
Second, we have held that in cases of deceptive advertisements, actual deception need not be established or proved. It is sufficient if it can be shown that the advertisement has the tendency or potential to deceive and the capacity to mislead. Also, that disclaimers in fine print are insufficient to rectify or correct deceptive impressions in the main body of the advertisement. Incomplete or half statements in advertisements could also be tantamount to being misleading or false.
Third, as opposed to other jurisdictions (e.g., the US), it is not necessary to show that the claim being made in the deceptive advertisement was in any way material to the consumer’s decision to consume the product in question nor it is necessary to determine what would be deduced from the advertisement if the consumer was reasonable.
Fourth, the word “goods” used in Section 10 of the Ordinance extends to both goods and services.
Fifth, we have held that actual harm need not be established in order to be culpable in cases of deceptive advertising.
Sixth, we have held that advertisements pertaining to financial products must, as far as practicable and applicable, use the US Truth in Savings Act as a benchmark. There must be no lack of clarity regarding the rate of return being offered.
Returning to a more general note, there is considerable empirical evidence to show that competition in the marketplace is beneficial for consumers and good for business. Competition between different companies and individuals through free enterprise and open markets is the basis of a robust economy. When firms compete with each other, consumers get the best possible prices, quantity, and quality of goods and services. Anti-trust laws encourage companies to compete so that both consumers and businesses benefit.
The Commission has, over the past two years of its existence, successfully implemented the competition law in its entirety and this has been recognised in global competition forums and networks. The Commission has moved decisively against cartelisation in various sectors, collusive tendering, abuse of dominance, unacceptable concentrations, and deceptive marketing practices.
The parties affected include several banks, cement companies, sugar mills, the largest refinery, all three stock exchanges, cellular companies, a leading business school, a government sponsored trust, several leading newspapers, a professional association, PIA, a leading Islamic insurance company, TCP, and two fertiliser companies held by an Army Trust.
As a consequence, there is a lot of bitter opposition to the competition law, and the Commission, by rich, powerful and influential parties -- those that have been adversely affected or are likely to be adversely affected by the Commission’s proactive actions in favour of the consumer.
Given our cutting edge law and its benefits to business, consumers and retail consumers, it is imperative that our law continues to be enforced. Otherwise the country’s economic productivity will continue to stagnate as it has for the past many, many years.
Efforts are being stepped up to either destroy the law or weaken the Commission. The big question is: will the influential succeed? The people against the competition regime are powerful whereas those supporting it are weak. The media, the civil society, right-thinking business elements, and above all, the government need to lend full support to continued enforcement of the competition law in its present shape and form.
The writer is the Chairman of the Competition Commission of Pakistan.
Source: http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/in-paper-magazine/economic-and-business/consumer-comes-first-930
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