NTW Competition Laws Consumer Protection Nigeria

8/8/2019 NTW Competition Laws Consumer Protection Nigeria

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Competition law and

consumer protection

Cornelius Dube

CUTS Centre for Competition,Investment and Economic Regulation(CUTS CCIER)


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Outline

Consumer Welfare indicators

Competition law objectives and consumer welfare

Competition law and consumer rights

Competition law and consumer protection frameworks

Factors to determine frameworks

Recommendations


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Consumer Welfare as satisfaction in trade

A consumer is generally satisfied in trade if happy with the following

attributes:

Prices

Choices

Quality

Proximity

These can be used as acceptable measurements of consumer welfare

Can the implementation of a competition law assist in attainment of these

four attributes?

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Consumer welfare as attainment of basic

rights

The Consumers International Charter recognises eight basic

consumer rights as follows:

right to basic needs;

right to safety;

right to choice;

right to redress;

right to information;

right to consumer education;

right to representation; and right to healthy environment

Can a competition law help in the attainment of any of these rights?

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Competition law objectives and consumer

welfare Static Efficiency:

Lower prices

Better quality

More choice

Dynamic Efficiency:

Efficient allocation of resources

Management, processing and technological improvements

Product innovation

These objectives all have consumers as the ultimate beneficiaries andresult in satisfaction in trade (consumer welfare)

Competition laws can be used to attain consumer welfare Consumer interests are specific concern of EU Law

The UN Set of Principles and Rules on Competition has Consumer Welfareamong its Objectives


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Competition laws and consumer rights

The right to basic needs (through the price effects and increased production)and the right to choice are directly enhanced by competition lawenforcement for all jurisdictions.

Some competition laws also include unfair trade practices (UTPs), whichdirectly benefit consumers rather than indirectly.

In addition to the general issues such as bait and switch, misleadingadvertising etc, UTPs provision include issues addressing some basic rightssuch as: obligations to indicate prices and terms of trade and prohibiting misleading

advertising (right to information);

compensation for harmful and defective products (right to safety and right toredress);

Competition laws can also be used to attain some basic consumer rights The recognition of the common objective has also given rise to operational

framework questions


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Competition and consumer protection

frameworks

Hybrid laws, where the competition law also include provisions relating to

consumer protection issues

E.g. Zambia, Zimbabwe and Tanzania also encompassed consumer protection issues

under UTPs in the competition law

Hybrid agency, where there are two different laws on competition andconsumer protection, but the laws are enforced by one institution.

Eg. The ACCC of Australia

Two separate institutions- competition authorities handling competition

issues while consumer protection institutions handle consumer interest

issues, including UTPs

India, CCI and CAT enforces Competition Act, 2002 while COPRA 1986 is enforced by

a Central Consumer Protection Council.

South Africa, the Competition Commission and the Tribunal for competition Act, 1998

while a National Consumer Commission enforces the Consumer Protection Act.

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Factors to determine frameworks

The country size and resources are sometimes used as the basis for

choosing a framework.

For small economies, it is normally recommended that hybrid laws and agencies are

more appropriate

Hybrid laws and agencies also save resources, and are also recommended for poor

countries

Expertise considerations are also important

Most competition authorities lack the technical knowledge regarding the implementation

of consumer laws, e.g. cheating on weights and measures; over-indebtedness of

consumers; small-claims damage actions

Multiple agencies can give rise to conflicts, influenced by vested interestgroups

Absence of perfect or total complementarity between the two policies

imply difficulties in their implementation by one agency; conflicts are

possible, e.g price controls.

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Factors in choosing frameworks (cont..)

Establishing one comprehensive law to cover both competition and

consumer issues is not an easy task- critical provisions in one or both may

be left out.

Enactment might be easier compared to enforcement- having oneregulatory authority in charge of two policies implying a multiplication of

the implementation gaps for the two laws.

Line ministries may be different, e.g while competition authorities are

largely hosted by the Ministry of Industry, consumer protection authoritiesmay fall under the Ministry of social welfare/affairs.

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Pros and Cons (Summary)Competition Authority for both laws Separate body for each law

Pros Cons

Avoidance of unnecessary clashes which delay

implementation.

May result in one party making decisions that negatively

affect the interests of the other party, such as a consumer

authority making decisions that negatively affect firms and

competition.

Allows the institution to make a balanced view by being

conscious of the other law

Costly to implement, as two separate organisations with their

own budgetary requirements would need to be catered for.

A cost saving measure, as it limits dependents on the national

budget

Cons Pros

Lack of technical capacity to handle the two complex issues The set up allows each institution to handle issues for which

it is best empowered. It allows for specialisation for the

authority

Challenges in the enactment of a comprehensive law which

covers both issues without necessarily appearing

contradictory

Allows for extensive coverage of all issues to be dealt with in

the consumer law, as focus would be totally on consumer law

and not competition lawAbsence of total complementarity between the two policies

also compromises their implementation by one institution

Allows for the flexibility in both implementation and

enactment of the consumer law, given that it given the

consumer authority the freedom to act independently of the

competition authority

Consumer issues and competition authorities may not be

under the ambit of the same Ministry

Coordination with line Ministries will be much easier.

Accountability to one Ministry also ensures less variance of

objectives and vested interests.


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Recommendations

Countries should choose a framework that is likely to bring the best

outcome for both competition and consumer protection

The drafting of comprehensive laws is one of the most important aspect in

ensuring better outcomes; this is best if separate laws exist

Ideally, both competition and consumer protection issues are too importantissues requiring specialized skills for agencies- separate institutions could

be better.

For small countries and most developing countries, it might be better to

find ways of creating a hybrid agent which is very competent to handle

both competition and consumer protection issues Funding; separate departments to allow specialization; quality staff etc.

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THANK YOU!

[email protected]@cuts.org

NTW Competition Laws Consumer Protection Nigeria

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