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Proposed Competition and Consumer Protection Bill faced with gaps-Observes CUTS-International
August 10, 2010, Lusaka

Consumer Unity and Trust Society (CUTS) International welcomes the recognition by Zambia to enhance consumer protection through the enforcement of the provisions in the Draft Competition and Consumer Protection Bill.

For sometime now, consumers in Zambia have relied on the Competition and Fair Trading Act (Cap 419) of 1994 for their protection against violations emanating from Unfair Trade Practices (UTPS). However, the Act has not been adequate in terms of explicitly protecting consumers as it has most been purported to focus more on competition issues.

Critical provisions on consumer protection were left out. Chapter 12 in the entire Act is the only section that highlight some of the consumer protection provisions such as misrepresentation, hoarding warranties, defective products and misleading advertisements to mention a few. Thus the scope was only limited to unfair trading practices (UTPs), when protection goes beyond such issues.

In the proposed Competition and Consumer Protection Bill, it is worth acknowledging that consumer protection statutes have been enhanced as compared to the current Act. However, while other countries opt for two separate laws, the Bill has combined competition and consumer protection issues; hence the proposed law is known as a hybrid law. Having two issues being sorted out by one law/commission has its negatives and positives.

On one hand, it is important to acknowledge that there are several areas in which competition and consumer protection policies/laws may interact. For instance, freedom of choice, adequacy of information and misleading advertising does not only affect consumers, but also competition, hence are essentials for both policies/laws. In other words, it can be said that achieving of right functioning markets is paramount in both competition and consumer protection policies, given their common public interest goal. Thus having them under one law might result in the harnessing of this overlap to the benefit of the consumer.

On the other hand, the rationale behind having separate policies/laws is that market failures or anticompetitive conditions may, under some circumstances, not only be issues for the enforcement of competition law but could also harm consumers’ rights, for which protection might best be under the consumer protection policy.

The benefit of a hybrid law is that it is less costly than having two separate laws, which would imply having two separate authorities handling two different issues with different budgets. Realising Zambia’s economic size, it can not afford to have two separate authorities having to deal with issues that have overlaps.

However, due the lack of perfect complementarities between the two laws, and the importance that each law has in the economy, one law to cater for both issues might entail omissions of other key provisions in making a condensed law. Both competition and consumer protection laws have huge dimensions, and simplifying them to make them fit in one law is not an easy task. This brings to the fore the need for a hybrid agency option. A hybrid agency exists where two separate laws would exist but the mandate to enforce these laws being given to one institution, in this case the Zambia Competition Commission (ZCC).

This type of enforcement recognises the benefits of having two separate legislations as well as the need for one agency due to budget limitations. One good example of a country that has embraced such kind of a regulatory framework is Australia, and the country has got a very effective competition and consumer enforcement. A similar arrangement could also work in Zambia.

Further, observing the proposed Act also reveals some shortcomings. The Bill recognises consumer protection only within the context of UTPs, though, as has been mentioned, the scope of should be beyond this. A consumer protection law generally not only outlines the eight basic consumer rights, but also have provisions explaining how the law helps to ensure that such rights would be met. Given that by its name the Bill purports to be a consumer law, it is not likely that another consumer protection law would be put in place as long as it exists; hence it has to be comprehensive for it to be in the interest of consumers.

The definition of a consumer in the Bill is also limited. It should be wide enough to include not only direct consumers but also other beneficiaries. Any other user other than the buyer, purchaser or partly promised person of a good-service is also considered as a consumer. A good example of an Act that has recognised a consumer in this sense is the Indian Consumer Protection Act of 1984.

Secondly, the composition of the Commission itself needs to be clear. It provides that 5 members with relevant experience will be appointed by the Minister of Commerce Trade and Industry (MCTI). But as experienced in Africa as a whole, if there is no clear mention of criterion of selection, such posts are filled up on political basis. So there should be mention of the criterion and it will also be good if space is created for representation of CSOs and other none state actors.

Thirdly, part VII on consumer protection of the Bill mentions about penalties for violation of provisions related to consumer protection but lacks any mechanism for grievance redressal. It should clearly outline how any consumer can file complaint, where this could be done (jurisdiction), the manner or procedure to file the complaint as well as procedure of disposal of complaints. The role of other stakeholder such as consumer organisation should also be highlighted in the whole Redressal process.

It is therefore imperative that these issues are taken into account if consumer protection is to be enhanced in Zambia. Once such issues are addressed, ZCC will have the muscle to protect consumers and legitimate businesses will have somewhere to turn to when they fall victim to these fraudulent practices.

It is also important for consumers to be proactive and also to take time to understand some of the statutes that are being constituted and those that are being enforced. Consumers need to be aware of all the provisions in the Act, and also the entire constitution which is the mainstay of the legal structure and all pieces of the legislation.

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