Powers vested in Consumer Affairs Authority to regulate trade

There are several provisions in the CAA Act to regulate internal trade. These regulations are listed in Part ii of the Act. This set of articles attempts to review in what ways the Authority has exercised those powers in order to promote effective competition in the market and to ensure that the consumers are protected from unscrupulous traders.

Powers envisaged by Section 10

For the protection of consumer, the Authority can issue directions to manufacturers or traders in respect of labeling, price marking, packeting, sale or manufacture of any goods. Every directive issued by the Authority must be published in the gazette in at least one Sinhala, one Tamil and one English newspaper.

The details of some of the directions issued by the CAA under Section 10 are as follows.

Direction No 2,3 and 4

As per these directions the manufacturers and traders have to mark the following details on the article or on the pack or on the container or on the wrapper for the selected 54 items.

* Maximum Retail Price (MRP)

* Batch Number

* Date of Manufacture

* Date of Expiry

* Weight/ Volume

The 54 items are listed below.

1. Flour (Powder made from any grain or pulses) sold in packs or containers;
2. Soap (Toilet, Medical, Carbolic, Shaving, Soft, Liquid, Baby Laundry);
3. Laundry Powder (Flakes and Chips);
4. Baby products (Shampoo, Oil, Talcum Power, Lotion);
5. Confectioneries such as cakes and sweets sold in packs or containers;
6. Toothpaste;
7. Batteries (Torch and Transistor);
8. Sugar sold in packs or containers;
10. Bread sold in packs;
11. Dry Fish and Maldives Fish sold in packs or containers;
12. Cheese sold in packs or containers;
13. Eggs sold in packs or containers;
14. Curd sold in packs or containers;
15 Liquid milk (Plain, Flavoured or sweetened) sold in packs or containers;
16. Powdered Beverages sold in packs or containers;
17. Bottled Water;
18. Noodles sold in packs or containers;
19. Soya Products sold in packs or containers;
20. Raw, Roasted, Salted or Spiced Tubers, Nuts, Legumes and ready to eat food preparations sold in packs or containers;
21. meat and Meat products sold in packs;
22. Fish and other Sea foods sold in packs
23. Edible Oil in packs or containers;
24. Tea in packs;
25. Coffee seed and power in packs;
26. Chocolates;
27. Chutneys Pickles and Sauces;
28. Powered Milk (Full Cream, Low-fat, Infant and Malted);
29. Condensed Milk;
30. Infant Foods;
31. Invalid Foods;
32. Biscuits;
33. Cement;
34. Agricultural Fertilizer;
35. Agro-Chemicals;
36. Aerated Water;
37. Canned Fish;
38. Ice Cream;
39. Chillie Power in packs or containers;
40. Coriander Power in packs or containers;
41. Curry Powder in packs or containers;
42. Pepper Powder in packs or containers;
44. Paints, Varnishes and Solvents used in the building industry;
45. Domestic Antiseptics in containers;
46. Pharmaceuticals and Vitamins sold in packs or containers;
47. Margarine;
48. Butter;
49. Canned Fruits;
50. Fruit Juice and Cordials;
51. Jams, Jellies and Marmalade;
52. Yogurt;
53. Food Preservatives;
54. Natural Yeast Extracts Products

Furthermore, any person who removes, alters, obliterates, erases, or defaces any label, description or price mark on any goods in respect of which a direction under subsection 1 has been issued, or sells or offers for sale any such goods from or on which the label, description or price mark has been removed, altered, obliterated, erased or defaced, shall be guilty of an offence.

Powers envisaged by Section 11

As per Section 11, any person who sells or offers to sell any goods above the price marked on the goods in accordance with a direction issued under Section 10 shall be guilty of an offence.

Any person who acts in contravention is liable to a fine not less than Rs. 1000 and not exceeding Rs. 10,000 or to an imprisonment for a term not exceeding six months where such person is a not a body Corporate. Where such a person is body Corporate, is liable to a fine not less than Rs. 10,000 and not exceeding Rs. 100,000 for a first offence.

The Consumer Affairs Authority receives complaints daily on the violations of these sections by the traders and most of these complaints are against super markets selling food items. According to our observations there are instances where one product/pack carrying 3 different prices; the MRP marked by the manufacturer/ Importer, Price marked by the retailer and the price mentioned in the purchase receipt.

To control this errant practice, The Authority conducts frequent market investigations and the action taken by the Authority for the violation of Section 10 and 11 are as follows.

Offence No of raids/ Fines imposed by

prosecutions Courts

Violation of section 10 1988 Rs. 6,389,350

Violation of section 10 & 11 26 Rs. 327,000

Violation of section 11 930 Rs. 3,848,500

Chandrika Thilakaratne, Director Consumer Affairs and Information

Environment and healthy living

It is the duty and the mandate of the CAA to pave the way for healthy food of standard and it is also within the mandate to help maintain the environment in the interests of consumers for healthy living.

The authority will act as a catalyst to promote to live with the nature for a healthy and long life. Apart from the destruction of nature by cutting down the forests, carbon emissions have become the next danger as a result of industrialisation. In Britain the Government is very conscious about this man made disaster.

Across Britain businesses are responsible for 40% of the carbon dioxide emission. London produces 50,754,000 Tons of Carbon Dioxide annually. How much carbon Dioxide is emitted in Sri Lanka has not been computed, but it appears that routine climatic system has been changed.

British Foreign Secretary Margaret Becket, has urged the United Nations World Environmental Day to urge businesses to carry out joint attempts to combat climate change and ensure that Britain has low carbon emission.

There is a regulator in the UK who are working with the energy saving trust to determine a set of criteria under which the best schemes will be awarded 5 Stars.

A report from the National Consumer Council in England found that some green tariffs were not delivering the environmental benefits they claim to. In other parts of the world more and more people want to go green but they want to go assure what they are doing is making a real difference.

It is time for us too to go green to save the planet and to save us being a part of the planet.

The Consumer Affairs Authority is one of the main regulators in Sri Lanka and it is time for the Environmental Authority and the other regulators to draw out a plan to prevent toxic limitations and the destruction of forests which results in erosion of land in addition to paving the way to provide healthy food of high standards at reasonable prices which is the motto of the Consumer Affairs Authority.

Regulating service providers to ensure protection of consumer interests

Provision of telecommunication services:

A talk delivered at a recent seminar held at OPA Auditorium, Colombo on “Consumerism and Regulatory Powers” by Mrs. Pushpa Rene Amarasiri, Director of Legal Affairs, Telecommunications Regulatory Commission of Sri Lanka

Continued from last week

In order to enforce the provisions in Section 9 of the Act the Commission appointed a Committee to inquire into and resolve complaints made by consumers and the public. Under these provisions the telecommunications regulator has the power to investigate the actions and records of all service providers in addition to the authority it has to impose sanctions and penalties for violations.

Violations come to the attention of the regulator when a complaint is filed by an operator, a consumer, a member of the public or by any other interested party. In addition, self-initiated investigations are conducted in order to ascertain compliance.

In this regard it is necessary to highlight a few examples of the enforcement powers used by the regulator to resolve complaints made by consumers and members of the public. The Commission, on several complaints made by the public, initiated a process under Section 11 of the Sri Lanka Telecommunications Act in May 1999 - with regard to delayed telephone installations.

According to the tariff determination made in the year 1999 April, Sri Lanka Telecom was required to pay an applicant for a telephone who had not received service within 30 days a complete refund or a credit of Rs. 1000/= for every week without service commencing from the 30th day after the installation fee was paid.

In this process we even considered unjust enrichment on the part of the service provider having charged an installation fee, depositing it in a bank and generating interest for a service which was not provided as agreed. The Commission ordered Sri Lanka Telecom to pay the penalty as indicated in the determination for all those who had to wait for telephone connections.

Sri Lanka Telecom had to pay Rs. 68 million to the public as a result of this enforcement action taken by the regulator.

We resolved complaints made by subscribers with regard to Modem Hijacking Internet dumping and it is also known as Trojan horse virus. There are websites which usually deliver entertainment, sports, music, content and also dumps into the user’s computer without the consent of the user, modem hijacking dialler software.

This dialler software lay dormant in the computer and it becomes activated if a switched-on computer is not used for a specific time, assuming that lack of activity means the user is not around the modem hijacking occurs.

To resolve this complaint a notice was published in the newspapers that international direct dialling facilities to certain countries in the pacific region would be temporarily stopped for 3 months and advising as to how a person could take care to avoid being a victim of this virus which is similar to a biological virus i.e. to block the IDD facility with the secret code when using e-mail facilities or browsing the Internet.

We have not received complaints after this action was taken but the financial loss was felt by the Pacific Islands Telecommunication Association. They finally admitted that after the blocking of IDD calls to the countries in the pacific islands these illegal practices moved to another international jurisdiction which is not blocked or to another type of fraud.

There are varied types of complaints. Majority of the complaints are related to billing for telecommunication services.

We commenced a public hearing under the provisions in Section 12 of the Act in relation to Improvement of Subscriber Bills and Resolution of Billing Related Disputes.

Issuance of itemized billing information was part of this order. This facility could enable a consumer to ascertain as to whether the calls were in fact originated by him.

In order to encourage re-sellers of telecommunication services to settle dues, Sri Lanka Telecom published a notice in the papers offering a bulk-user discounts scheme and a classification of revenue blocks for the scheme.

For example:

Rs. 15001-Rs.25000/-the discount is 5%

Rs. 25001-Rs.100,000/-the discount is 7%

A consumer made a complaint to the Commission that his company did not receive the discount as indicated in the notice. The Commission ordered that the payment made in excess with effect from the appointed date should be refunded to the complainant giving the full benefit of the scheme.

A complaint from a member of the public could be in relation to an installation of a telephone post or a wire being drawn across his premises. To resolve problems of this nature we have to visit the site and to decide on how best the post could be installed without causing a hindrance to anyone. In all these instances the service provider has complied with our orders.

Complaints are also made by consumers who are not satisfied with the services provided by cellular mobile operators. A complaint was made against Dialog Telekom Ltd, for disconnecting the telephone facility when he had not even reached the credit limit.

On the order made by the Commission, Dialog Telecom agreed to inform the consumer by SMS when he reached 90% of the usage. He was given the package of his choice without an extra payment.

Proper enforcement of the provisions in the Act would help to maintain order in the sector, facilitate stability, progress and encourage investment to maximize social and corporate welfare. Enforcement powers if used properly would help to protect consumer interests, foster competition and efficient use of scare resources.

Regulation is not an end in itself. It is a tool alongside market forces for achieving social, economic and general policy objectives. The individual consumer should be the ultimate beneficiary of technological developments and reforms.

Regulation is not easy. The telecom industry is not yet market driven and we as regulators have to step in to fulfil the void left by the market place.

There were many instances, where regulatory directives were challenged by service providers in Courts. Ultimately, the actions instituted by them were withdrawn by themselves, proposing better settlement terms.

Sri Lanka Telecom filed Writ Applications restraining the regulators’ powers of enforcement.

(i) A directive given by the regulator with tariffs for calls from Sri Lanka Telecom fixed telephone to another fixed telephone. These calls which were in fact local calls were charged at long distance rate. The case was settled and the issue is addressed in the present tariff proposal.

(ii) Sri Lanka Telecom filed action against the directive issued by the regulator to reduce tariffs on CDMA services. SLT has now made a new proposal to reduce tariffs for CDMA Services.

With these actions the overall winner would definitely be the Sri Lankan consumer.

The distrust between regulators and incumbent operators is inevitable and is common to many countries.

As pointed by William Wigglesworth former Chief of Oftel - “The operators’ interests are diverse and they differ from regulator’s interests. There is bound to be conflicts and disputes. We had them all in Britain”.

Therefore, the task of a utility regulator is that which requires wisdom of Soloman patience of job, hide of rhinoceros and the determination of a bulldog.

Solutions to consumer problems

Q: A consumer had purchased a computer and a receipt was issued. The computer went out of order. Despite numerous requests to attend to it the respondent company has made no attempts to repair same.

A: The complaint was promptly attended to and the respondent was invited for a discussion. The discussion was conduced by a Director of the CAA who explained the legal basis to the both parties that the CAA is mandated to look into the complaint and initially settled matters based on consensus.

The complaint should have been reached within the prescribed period of three months for proper execution. Even otherwise, the CAA can initiate proceedings for a settlement. In this matter there was a happy ending for both parties and we advice the consumers to communicate with us for any assistance based on purchases, warrantees or defected items sold.

**************************

Q: A consumer purchased a pair of shoes worth Rs. 1,200 and found that after two days it was not fit to use.

A: There was reluctance initially on the part of the shop owner to repair it. At the discussion with the authority it was agreed to replace the defective pair with a new pair of shoes. This is for consumer to take notice of similar incidents and to communicate with the CAA for redress.

**************************

Q: A consumer has deposited 100,000 as an advance for his daughter’s wedding. Half way it did not materialise and the hotel was reluctant to refund the money.

A: The CAA intervened and advised that it is their duty to refund the advance paid as it is a service and good business practice to refund subject to a nominal adjustment. There was a happy ending and the parties agreed to settle the issue amicably.