‘New consumer act tasks firms to build competence’
The consumer rights act has been long in coming. Can you assess the general provisions of the law?
The Act, indeed, has taken some time to come. But it’s here and has taken effect. It repeals the Consumer Protection Act and transfers all the staff and assets of the Consumer Protection Council to the newly created Federal Competition and Consumer Protection Commission.
I must say that the underlying theory of the Act, as a whole is that if market forces determine the prices for goods and services, businesses will be forced to innovate, and customers will receive quality at the best prices.
The regime created under the Act applies to “all undertakings (that is, companies and business ventures) and all commercial activities within, or having effect within, Nigeria.”
To avoid confusion with the likes of the National Communications Commission, the National Electrical Regulatory Commission, the Security & Exchanges Commission or the Corporate Affairs Commission in matters affecting competition, the Federal Competition Commission is given supremacy over the existing government agencies. However, it may designate certain sectors as ‘regulated industries’ and cede regulation to their supervising government agencies.
The dommission has broad discretion to carry out its duties. It is empowered to make regulations: Prohibiting anti-competitive agreements, misleading, unfair, deceptive or unconscionable marketing, trading and business practices; authorising, with or without conditions, prohibiting or approving of mergers of which notice is received.
Other powers conferred upon the commission include, the power to make regulations relating to the charging and collection of fees, levies, fines and the imposition of administrative penalties, as well as the power to prohibit the making or carrying out of an agreement or arrangement which relates to the Act in appropriate cases.
Section 39 establishes the Competition and Consumer Protection Tribunal whose primary purpose is to adjudicate on conducts prohibited under the Act, while Sections 59-69 provide for Restrictive Agreements Prohibited Acts, which include fixing of selling and purchase price; dividing markets; limiting or controlling production or distribution of any goods and services.
The Act provides an outline for authorized agreements, which are authorized by the Commission and do not fall under the restricted agreements provisions. Abuse of Dominant Position
Section 72 of the Act prohibits the abuse of a dominant position and lists factors that are taken into account in assessing market dominance. These factors are the market share of the undertaking or undertakings concerned; financial power; access to supplies or markets etc.
Another area in the Law is the issue of Monopoly. Where the Commission has grounds to believe that a monopoly situation might exist in relation to the production or distribution of goods and services of any description or in relation to the export of goods or services of any description from Nigeria, it will cause an investigation to be held into the sector of the economy or into particular types of agreements across various sectors to determine the extent of the situation in relation to the market. The monopoly provisions in the Act, deal with how the Commission determines what constitutes a monopoly.
To regulate and facilitate competition, the President may from time to time, by order published in the Federal Gazette, declare that prices for goods and services specified in such order shall be controlled in accordance with the provisions of the Act.
Mergers (a) Sections 92 – 103 cover the merger provisions under the Act. The definition of Mergers is comprehensively addressed in the sub sections.
The Act provides that when considering a merger, the Commission will determine if it is likely to substantially prevent or lessen competition.
Parties to small mergers are not required to notify the Commission unless the Commission requires them to do so or the parties of their own accord notify the Commission.
Furthermore, the Act does not directly list the industries, which it regulates; it broadly describes regulated industries as any undertaking that is affected by an order relating to price regulation under the Act. This is basically all undertakings that deal with the provisions of goods or services in Nigeria.
The icing of this Act is its Supremacy. By sections 164 and 165, the provisions of the Act are supreme and shall override any other existing law (apart from the Constitution) on matters relating to consumer protection and competition and the Commission shall have precedence over and above any other relevant government agency in these matters.
By this law, do you think Nigerians can now fully hold companies and government responsible for breaches?
Well, the Nigerian consumer has always been aware of their rights, but most of the time, some sleep on these rights. They perceive seeking redress as a waste of time or decide that the outcome or end would not justify the means.
Consumer rights have been amplified in the new act and it is one area that companies must begin to build competency and processes to ensure compliance.
The Act, for example, lists an array of consumer rights ranging from but not limited to: right to information in plain and understandable language, right to disclosure of prices of goods and services, right to proper labelling and trade description, right to disclosure of re-conditioned or second hand goods, right to cancel advance bookings, right to examine goods, right to return goods and implied warranty as to quality.
Consumers can indeed hold Companies accountable in this regard. Companies must now demonstrate the process, as there would be no presumption of regularity.
One of the major challenges facing law making in Nigeria is enforcement. How do we get relevant agencies to apply this law with minimal inducement?
There is a philosophy for enforcement. It is called engagement. The entire value chain, particularly, as it concerns this Law, must be engaged to understand the focus of what is to be achieved with this law.
Yes, indeed, ignorance of the law is no excuse but more often than not, when it comes to regulating industries and businesses, you must engage. This should be the new face of regulation in Nigeria, particularly, from government agencies. Businesses align faster when they are engaged and enforcement becomes seamless. No doubt, lot of business processes would change following the President’s assent to this law.
A good example is restrictive covenants vs contracts as they affect customers’ relationship with companies or how would manufacturers interpret the powers of the President as provided in the Act, to determine prices of goods and services.
How do you successful enforce some of this provision, if you leave out engagement? When the understanding of engagement has been achieved, the Commission must ensure that the guidelines to implementing this Law are rolled out on time. This would help make the interpretation of the law easier. It would eliminate selective enforcement.
Laws such as this, sometimes, face challenges in the area of onus of proof. Can we discuss this especially given that certain violations may be hard to prove?
Interestingly, the Act departs from the general principle of law that “he who alleges must prove” and places a higher burden of proof on the supplier with a provision that where it is alleged that the goods supplied are defective, the onus of proof shall lie on the supplier — I term it “ he who sells must prove quality.” This is a new jurisprudence but how a consumer plays this out is better left to the tribunals. Proving a case is a matter of evidence to be adduced.
This brings me to the role of the Commission or government as it where — the expectation of the full implementation of this Act depends on how much of funding is given to the Commission to ensure its independence and professionalism. Government must not just be in the business of setting up Agencies or Commissions, they must fund them, else, the agencies begin to sustain their functions on huge fines and penalties.
Are Nigerians aware of this law? If no, what can be done to ensure everyone is hands-on and informed enough to rely on it to pursue rights when reasonably convinced they’ve been breached
This is a niche area of law; more so, it has added competition to the consumer protection part of the law. However, the concerned businesses are indeed aware of this law. I believe the activities of the Commission will foster more awareness.
The Commission is like the consumer’s ombudsman. And you see; the consumer protection practitioners would have to seize this moment of an enabling law to ensure the robust practice of this aspect of law.
With this law in place, what is the next destination for consumer relations and rights in Nigeria?
The success of the Federal Competition and Consumer Protection Commission depends largely on professionalism, capacity building of its workforce. I see that the staff of CPC would subsume into the commission. The knowledge base of this area of law has to be expanded.
A law that has a handful of fines for breach ranging from N5 million to 10 per cent of a company’s turnover to imprisonment should, of course, be taken seriously by any business in Nigeria. Consumer protection processes that redress mechanisms of businesses must now be strengthened.
The consumer space in Nigeria has now been broadened and all players would now have to show to the consumer that their interest, indeed, would be protected and value for goods and services sustained. There is no longer room for manufacturer or seller’s ineptitude over products or services.
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