COMPETITION POLICY AND CONSUMER PROTECTION 31 August 2007 Lilongwe Hotel, Malawi Ms Busi Ngwenya Coordinator: Education & Advocacy Competition Commission

COMPETITION POLICY AND COMPETITION POLICY AND CONSUMER PROTECTIONCONSUMER PROTECTION

31 August 200731 August 2007

Lilongwe Hotel, MalawiLilongwe Hotel, Malawi

Ms Busi NgwenyaMs Busi NgwenyaCoordinator: Education & AdvocacyCoordinator: Education & AdvocacyCompetition CommissionCompetition Commission

Example – Bid RiggingExample – Bid Rigging

• Real Estate Foreclosure Real Estate Foreclosure Auctions – Northern Virginia & Auctions – Northern Virginia & Queens (New York) *US anti-Queens (New York) *US anti- trust trust divisiondivision• Real estate brokers & investors Real estate brokers & investors agreeing not to compete @ auctionsagreeing not to compete @ auctions• One member bidding at lowest price One member bidding at lowest price possible to win propertypossible to win property• After formal auction competitors After formal auction competitors holding second (secret) bidding holding second (secret) bidding processprocess• Winner making illicit commission or Winner making illicit commission or payoffs to compensate otherspayoffs to compensate others

3

Hazel Tau case Hazel Tau case GlaxoSmithKline & Boehringer GlaxoSmithKline & Boehringer

IngelherimIngelherim Denying a competitor access to essential Denying a competitor access to essential

facilityfacility Charging excessive pricesCharging excessive prices Engaging in an exclusionary actEngaging in an exclusionary act

Settlement agreement led to:Settlement agreement led to: Issuing of licences to generic Issuing of licences to generic

manufacturersmanufacturers Reduction in ARV pricesReduction in ARV prices Competition for Aspen (main generic Competition for Aspen (main generic

producer)producer)

Hazel Tau & TAC CaseHazel Tau & TAC CaseHazel Tau & TAC CaseHazel Tau & TAC Case

4

SAA offering travel agents incentive SAA offering travel agents incentive to detriment of consumersto detriment of consumers Consumers flying on more expensive ticketsConsumers flying on more expensive tickets

Consumer choice taken awayConsumer choice taken away

Restriction of new entrants into marketRestriction of new entrants into market

Restriction of existing rivals expansion within marketRestriction of existing rivals expansion within market

SAA/Travel Agents’ SAA/Travel Agents’ CaseCase

SAA/Travel Agents’ SAA/Travel Agents’ CaseCase

• Innovation and developmentInnovation and development

• Empowers consumersEmpowers consumers

• Promotes consumer participation & Promotes consumer participation & consumerismconsumerism

• Put in place mechanisms for Put in place mechanisms for redress redress

• Put in place accountability by Put in place accountability by businessesbusinesses

How Competition How Competition Promotes Consumer Promotes Consumer

WelfareWelfare


WelfareWelfare

• Reduction of barriers to entryReduction of barriers to entry

• Efficiency and transparent marketsEfficiency and transparent markets

• ChoiceChoice

• Competitive pricingCompetitive pricing

• Provides for high quality & serviceProvides for high quality & service

• Prohibits anti-competitive mergersProhibits anti-competitive mergers


ProtectionProtection


ProtectionProtection

What do What do consumers do for consumers do for

competition?competition?

What do What do consumers do for consumers do for

competition?competition?Competition – Consumer interfaceCompetition – Consumer interface::

““We have all observed markets where We have all observed markets where consumers seem entirely capable of driving consumers seem entirely capable of driving competition…without consumers activating competition…without consumers activating competition, you don’t have competition. As competition, you don’t have competition. As Ron Bannerman has put it so concisely Ron Bannerman has put it so concisely [Consumers not only benefit from [Consumers not only benefit from competition, they activate it, and one of the competition, they activate it, and one of the purposes of consumer protection law is to purposes of consumer protection law is to ensure they are in position to do]” ensure they are in position to do]”

Excerpt taken from speech made by Louise Excerpt taken from speech made by Louise Sylvan, Deputy Chair at ACCCSylvan, Deputy Chair at ACCC

How to achieve How to achieve this?this?

How to achieve How to achieve this?this?

United Nations Guidelines for United Nations Guidelines for Consumer Protection:Consumer Protection:

The right to be informedThe right to be informed Right to chooseRight to choose Right to be heardRight to be heard Right to satisfaction of basic needsRight to satisfaction of basic needs Right to redressRight to redress Right to consumer educationRight to consumer education Right to a healthy environmentRight to a healthy environment

Competition & Fair Trading Competition & Fair Trading Commission - MalawiCommission - Malawi• The Competition & Fair Trading Act (1998)The Competition & Fair Trading Act (1998)

To encourage competition and efficiency in business by To encourage competition and efficiency in business by prohibiting anti-competitive conduct and to protect the prohibiting anti-competitive conduct and to protect the interests and welfare of consumers in their dealings interests and welfare of consumers in their dealings with producers and sellers in relation to price, quality with producers and sellers in relation to price, quality and serviceand service

Australian Competition and Consumer Australian Competition and Consumer Commission - AustraliaCommission - Australia

• Trade Practices Act of 1974 (as amended)Trade Practices Act of 1974 (as amended)

• Ministry of Economy & Commerce Ministry of Economy & Commerce (Direction of competition & consumer (Direction of competition & consumer protection) – Luxembourgprotection) – Luxembourg

• Competition Act of 2004Competition Act of 2004

Hybrid Laws and Hybrid Laws and AgenciesAgencies


• Ministry for Competitiveness and Ministry for Competitiveness and Communications - MaltaCommunications - Malta• Competition Act of 2007Competition Act of 2007

Office of the Competition and Office of the Competition and Consumer Protection (UOKIK) - PolandConsumer Protection (UOKIK) - Poland• The Act on Protection of Competition of Consumers of 2000 The Act on Protection of Competition of Consumers of 2000

(Journal of laws of 2004, 130)(Journal of laws of 2004, 130)

Office of Fair Trading - UKOffice of Fair Trading - UK• Enterprise Act of 2003Enterprise Act of 2003



Fair Trading Commission - BarbadosFair Trading Commission - Barbados• Fair Competition Act Cap 326C & Consumer Protection Act Fair Competition Act Cap 326C & Consumer Protection Act

Cap 326DCap 326D

Commission for Free Competition & Commission for Free Competition & Consumer Affairs – PanamaConsumer Affairs – Panama

Fair Trade Commission - KoreaFair Trade Commission - Korea• Working together with Korean Consumer Agency & NGOs on Working together with Korean Consumer Agency & NGOs on

consumer law (work started on 7 June 2007)consumer law (work started on 7 June 2007)



Right to equal accessRight to equal access• Supplier unfairly discriminating against Supplier unfairly discriminating against

consumers , e.g. race, genderconsumers , e.g. race, gender Pricing, supply, service, e.g. allocation of facilitiesPricing, supply, service, e.g. allocation of facilities

Confidentiality and privacyConfidentiality and privacy• Suppliers from using consumers’ information Suppliers from using consumers’ information

without permission including electronic without permission including electronic communicationcommunication

ChoiceChoice• Right to choose what, where to buy & pay, Right to choose what, where to buy & pay,

facilitating cooling off periods, compulsory facilitating cooling off periods, compulsory quotations, right to cancel transaction quotations, right to cancel transaction

Disclosure and informationDisclosure and information• Price display, agreements in plain language, Price display, agreements in plain language,

supplier ID, product labels, sales records, state supplier ID, product labels, sales records, state whether goods are reconditionedwhether goods are reconditioned

Unfair Trade Unfair Trade PracticesPractices


Unjust transactionsUnjust transactions• Transactions being excessively one sided Transactions being excessively one sided

against consumeragainst consumer• Terms of transaction so adverse to be Terms of transaction so adverse to be

inequitableinequitable• Limiting legal right to cancel, to remediesLimiting legal right to cancel, to remedies

Unconscionable conductUnconscionable conduct• Use of force, coercion, undue influence, Use of force, coercion, undue influence,

pressure or harassment, unfair tactics when pressure or harassment, unfair tactics when suppliers market, supply, negotiate, collect or suppliers market, supply, negotiate, collect or recover goods from consumersrecover goods from consumers



Fair and responsible advertising, Fair and responsible advertising, marketing and promotionmarketing and promotion• Misleading advertising like bait adverts, Misleading advertising like bait adverts,

referral selling, overselling and overbooking, referral selling, overselling and overbooking, third line forcing, provision of unsolicited goodsthird line forcing, provision of unsolicited goods

Fair agreementsFair agreements• Suppliers indefinitely tying consumers into Suppliers indefinitely tying consumers into

contracts like automatic renewals (policies), contracts like automatic renewals (policies), disclosure of exemption liability & not to disclosure of exemption liability & not to delegate responsibility, e.g. defectionsdelegate responsibility, e.g. defections

Product quality and safetyProduct quality and safety• Provides for general standard of fair value, Provides for general standard of fair value,

good quality and safety, usability, suitability good quality and safety, usability, suitability for purpose and right for product recallfor purpose and right for product recall



• Consumer choice limited or Consumer choice limited or eliminated eliminated

• Price competition limited or Price competition limited or eliminatedeliminated

• No efficiency or innovation No efficiency or innovation incentive for firmsincentive for firms

• Leads to barriers to entry Leads to barriers to entry

• Firms not worried about losing Firms not worried about losing customers – no other choicecustomers – no other choice

Effect of no Effect of no regulation & regulation &

consumer apathyconsumer apathy

Effect of no Effect of no regulation & regulation &

consumer apathyconsumer apathy

AdvocacyAdvocacy Education/Information campaignsEducation/Information campaigns Intervention/mediationIntervention/mediation Voluntary recall of goodsVoluntary recall of goods Compliance programmeCompliance programme EnforcementEnforcement Merger controlMerger control Co-operationCo-operation

Redress – awarding of damagesRedress – awarding of damages

How to deal with these How to deal with these issues?issues?

How to deal with these How to deal with these issues?issues?

• Consumers can Consumers can lodge complaintslodge complaints if if they notice anticompetitive practicesthey notice anticompetitive practices

• Make submissions towards mergers Make submissions towards mergers that consumer/public interest group that consumer/public interest group concernsconcerns

• Contact the Authority for adviceContact the Authority for advice

• Be proactive & raise their voice Be proactive & raise their voice against unbecoming conductagainst unbecoming conduct

• Name and shame; voice concernsName and shame; voice concerns

• Make submissions/challenge Make submissions/challenge legislationlegislation

What Consumers can What Consumers can do?do?

What Consumers can What Consumers can do?do?

Any legislation will benefit consumers if Any legislation will benefit consumers if they know how to use itthey know how to use it

Helping in identifying unbecoming Helping in identifying unbecoming conduct helps achieve objectives of the conduct helps achieve objectives of the LawLaw

All legislation/policies complement each All legislation/policies complement each other – none can achieve all for other – none can achieve all for consumers on its ownconsumers on its own

Need for correlation between Need for correlation between competition and consumer competition and consumer authorities/policiesauthorities/policies

Consumers must help identify gaps in Consumers must help identify gaps in the regulatory frameworkthe regulatory framework

ConclusionConclusionConclusionConclusion

ZIKOMO/THANK YOUZIKOMO/THANK YOU

QuestionsQuestions

DiscussionDiscussion

ClarificationClarification

Documents

COMPETITION POLICY AND CONSUMER PROTECTION 31 August 2007 Lilongwe Hotel, Malawi Ms Busi Ngwenya Coordinator: Education & Advocacy Competition Commission