Professional Documents
Culture Documents
BUSINESS LAW
UNIT III
CONSUMER PROTECTION
Uncompetitive Practices
The Act renders unenforceable any provision in an agreement which has the purpose of
substantially lessening competition in a market or which is exclusionary. Agreements
which contain provisions that directly or indirectly fix purchasing or selling prices; or
provisions that limit or control production are likely to be considered unenforceable
under the law for being uncompetitive. Provisions in agreements which are meant to
prevent, restrict or limit supply or acquisition of goods and services from any particular
person or class of persons are void for being exclusionary if the agreement is between
persons or businesses that are in competition with each other.
Prohibited Practices
Exclusive Dealing: Exclusive dealing may be prohibited upon investigation by the
Commission. Exclusive dealing is any practice whereby a supplier of goods imposes
conditions either that the customer deals or primarily deals in goods supplied or
designated goods; or that the customer refrains from dealing in a specified class or kinds
of goods except as supplied by the supplier; and the supplier agrees to supply goods to
the customer on more favourable terms if the customer agrees to comply with the
conditions.
Tied Selling: Tied selling is prohibited. Tied Selling is any practice whereby a supplier
of goods as a condition to supplying the goods require the customer to purchase another
item from the supplier or to refrain from using or distributing along with the item
supplied another item that is not the brand designated by the supplier; and the supplier
agrees to supply goods to the customer on more favourable terms if the customer agrees
to comply with the conditions.
Market restriction: Market restriction may be prohibited upon investigation by the
Commission. Market restriction is any practice whereby a supplier of goods as a
condition to supplying the goods requires either that the customer supplies the goods only
in a defined market, or imposes penalty on a customer who supplies the goods outside of
a defined market.
The Commission will not take any action if in its opinion the exclusive dealing or market
restriction will be engaged in only for a reasonable period to facilitate entry of a new
supplier of goods into the market; or to facilitate the entry of new goods into the market.
Note- The provisions of the Act on exclusive dealing and market restriction is not
applicable to exclusive dealing and market restriction between or among interconnected
companies.
Offences against Competition
Price Fixing: It is an offence for two or more suppliers of goods or services to agree to
control price of their product. Price fixing is an artificial means of raising or lowering
prices when two or more businesses agree to control or fix price of their goods and
services.
Horizontal price fixing occurs when business competitors agree to set a common price for
their products by agreeing on a minimum price to supply or by agreeing to charge a
higher price for their product or by a group setting prices for its members.
Vertical price fixing / Resale price maintenance occurs when suppliers attempt to
influence their distributors and retailers to charge a minimum resale price by inducing
retailers not to sell below a specified price or by threatening to stop supplying retailers to
undertakes to supply equivalent article at the bargain price within a reasonable time after
he becomes unable to supply the article advertised.
Other Offences under the Act
Obstruction of investigation: It is an offence to impede, prevent or obstruct
investigation or any authorized officer in the execution of his duties.
Destruction of records: It is an offence to refuse to produce, destroy, or alter document,
record, information or anything when required to produce same, or where warrant has
been issued to produce a document under this Act.
Giving false or misleading information to the commission: It is an offence to fail to
appear and give evidence before the commission without reasonable excuse, or to refuse
to take oath or make affirmation as a witness.
Penalties
Failure to attend and give evidence before the commission attracts a fine of $20,000 or
two years imprisonment or both. The Resident Magistrate Court has jurisdiction over
this.
The commission has the power to commence legal action against any individual or
organization that has violated the Act and penalty for individual is $1,000,000 fine and
for an organization it is $5,000,000 fine. An order of injunction may also be made by the
court.
Appeal A defendant has 15 days of finding of the commission within which to appeal
to a judge of the Supreme Court in chambers.
Consumer Affairs Commission
See the Consumer Protection Act 2005. the Act established the Consumer Affairs
Commission. The focus of the agency is on consumer education by providing a
variety of information to better equip consumers to cope with a liberalized market
driven economy.
Functions of the Consumer Affairs Commission:
1. Investigating complaints made by consumers in respect of unfair practices by
suppliers of goods and services and advising consumers.
2. Educating consumers on their rights and responsibilities.
3. Settling disputes between consumers and suppliers through moral suation.
4. Referring matters if necessary to the Fair Trading Commission and other
consumer protection agencies.
5. Providing consumer information on a variety of subjects as relates to consumers.
iv.
notice stating amongst other things that hirer may put an end to the agreement
by giving notice of termination in writing to the necessary party (applies to
conditional and Hire-Purchase agreements).