Business consumer Affairs

Food: Do you get value for money?

Food is an essential requirement for living. Life cannot be maintained without it. It is just important as oxygen or water. Hence, it is obvious without food we cannot survive. How many of us is aware of what we consume is safe food.

The customer/consumer and the public should know what they are buying. It is an offence to sell any food with a label or publishes an advertisement which falsely describes quality foodstuff or which is sometimes misleading, claims as to nutritional or dietary value of foods.

Food standards assure the customer the nature, substance and quality food one buys with confidence. Correctly labelled foods offered for sale is assured by standards.

The label may be considered as a self advertiser for the manufacturer while for the consumer it assures quality or warns of potential hazards from preservatives, other additives, colouring matter, contaminants and age of the product.

‘Label’ includes any words, particulars, trade mark, brand name, pictorial matter or symbol relating to the food and appearing on the packaging of the food or any document, notice, label, ring or collar accompanying the food.

When a name incorporates the name of a food it must be present in a significant quantity. For instance ‘milk food’ should contain at least 70 per cent dried milk. If the food includes the names of two or more ingredients, the ingredients present in the greatest quantity should be named first, e.g. ‘malt extract and cod liver oil’ not ‘cod liver oil extract and malt extract’.

Pictorial designs should not be employed to suggest natural origins in food which contain only artificial products, e.g. lemons on the label of an artificially flavoured lemonade powder containing citric acid only. Another example is a picture of a bunch of grapes on a bottle containing imitation wine or imitation brandy.

Foreign words should not be used on labels to give false impression that the food originated from the country indicated by the language, e.g. ‘Chinese noodles’ in Chinese or ‘Italian Spaghetti’, ‘Italian Macaroni’ in Italian when these are made locally.

If a label has a nutritional claim, the substance on which the claim is made should be present in a nutritionally significant quantity. Labelling and advertising has now become so complicated and scientific that they offer almost unlimited scope for misrepresentation to the consumer.

Sometimes standards also require specific processing requirements, precautions about the storage and details about the contents. Some standards prescribe minimum limits, others maximum limits.

The primary objective/purpose of the standards is to ensure the health and safety of the consumers. Food regulations stipulate standards for many foods.

The labels should inform the consumer what the food is, what is in it and how long it will remain in good condition.

In general the label should include the name of the food, a list of ingredients, minimum durability, storage conditions if any and conditions of use, the name or business name and address of registered office of the manufacturer or packer or seller, the place of origin of the food, if failure to give this misleads this customer regarding the true origin of the food, and instructions for use if failure to give these may mislead the customer regarding appropriate use.

The name of the food, weight and minimum durability shall appear on the label in the same field of vision.

Offences:

It is an offence under the Consumer Affairs Authority Act No. 9 of 2003, (i) to have false, misleading claims/statements regarding nutritional uses and medical claims unless the food is capable of fulfilling the claims; (ii) to remove, alter, obliterate, erase or deface any label, description or price mark on any goods in respect of which a direction has been issued under Section 10 (1) 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. Also offences under respective regulations such as (iii) to sell any food which is not labelled in accordance with the labelling regulations; and (iv) to sell any food which violates the food standards or non-compliance with standards.

At present there are about 85 items that come under the Sri Lanka Standards Institution (SLSI) mandatory import inspection scheme. Those who import these said items have to obtain a clearance certificate from the SLSI to sell their goods.

There is a discussion within some sections of the health sector to introduce a labelling requirement for imports of Genetically Modified (GM) Food. A draft regulation has been prepared and discussed with key stakeholders.

The regulations under the Food Act No. 26 of 1980 came into effect on April 1, 2004 govern the information that should appear on a label of any pre-packed food product offered for sale, transported or advertised for sale in Sri Lanka. This includes all imported food items as well.

The directions issued under the Consumer Affairs Authority Act No. 9 of 2003 include the new features such as maximum retail price, date of expiry and the batch number for 54 items and standards for few items.

There should not be fundamental divergence of interest between the consumer and supplier. The best option is the dialogue between consumers, industry and regulators to protect the welfare of the consumers. If consumers are not satisfied producers/traders cannot continue to be in business.

The purpose of this article is to make the consumers aware that the price and weight of measurement are not the only criteria for you to consider while purchasing. If you are to get value for your money spent, then check on price, weight, standard (quality) and the labelling instructions on your purchases, whenever you do so.

Shanthini Neelakandan,
Director, Competition Promotion, CAA

Regulatory Agencies

This article highlights key issues relating to independence of regulatory agencies by giving an account of some civilised countries in the West.

The notion of an independent regulation system is an important theme in regulation literature. Although it is accepted that independence is necessary to attribute for an effective regulator, the concept is difficult to define because it has multiple admissions.

Moreover, to be independent, a regulator should not only be physically and operationally separated from those it regulates, but also be empowered to effectively carry out policy.

This can be done by making objectives, well-reasoned, written decision arrived at through transparent procedures and based on a complete public record. Regulators should be free from undue political influence during this process, and impartial decisions, based on public record, should not be undermined for political reasons.

Finally,the scope and substance of a regulator’s jurisdiction should be clearly worded by statute, and there should be adequate funding to carry out its responsibilities.

Successful regulatory policy improves both efficient and private investments.

The way a country’s political and social institutions interact with regulatory processes and its economic conditions, influence the confidence of investors and performance of privatised utilities. Good governance of the regulatory agency can improve sector performance.

The existence of poor governance structures is a relevant feature to be taken into consideration in the institutional environment. The existence of political instability demands independent institutions and professional and competent administration to ensure policy stability.

Creation of regulatory agencies accompanied the process of opening infrastructure sector markets to the private sector, either throughout privatisation or throughout partial privatisation or by means of mere permission for private organisations to enter the market without privatising the state enterprise.

In markets such as air transport telecom services in Sri Lanka where there was no longer any direct state participation, the trend was toward allowing new competitors to enter these sectors, and to introduce or strengthen competition.

Executive Director Consumer Affairs Authority

Functions of Consumer Affairs Council

There are both imported and locally manufactured goods in plenty in the market today. Among them may be goods that are not up to the mark quality wise. A housewife may be duped by a vendor or she may have purchased an item of food which may have an ‘expiry date’ which is already past.

There is legislation to give her relief. There is also a moral duty cast on the prevailing Government to see that essential items necessary for the day-to-day life of the ordinary citizen, not be sold at exorbitant rates and that goods be available in plenty at all times.

Consumer Affairs Authority Act No. 9 of 2003 has been enacted to give protection to all consumers resident throughout the length and breadth of Sri Lanka.

The Consumer Affairs Authority Act has come into being for the establishment of a Consumer Affairs Authority and a Consumer Affairs Council, for the promotion of effective competition, protection of consumers and for the regulation of internal trade.

This Act repealed some of the earlier Acts which had been in force earlier for the protection of the consumers like the Consumer Protection Act, Fair Trading Commission Act and the Control of Prices Act.

The Consumer Affairs Council is a tribunal comprising a Chairman and two members appointed by the Minister for a period of three years.

It is cast with the duty of hearing and determining all applications and references made to it either by the Consumer Affairs Authority or by the Director General of the Consumer Affairs Authority.

Where it appears to the Director General of the Authority, that there are instances where goods are being sold or any services are being provided by a manufacturer or trader:

At an excessive price or there is any market manipulation or there are any other market imperfections, the Director General may, in consultation with the Authority and having regard to whether a) the sale of such goods or the provision of such services is of general economic importance or b) any category of consumers are significantly affected by such excessive price refer such matter to the Consumer Affairs Council for investigation and report. (Section 19 of the Act).

The Consumer Affairs Authority Act interprets the word ‘goods’ to mean any food drink, pharmaceutical, fuel and all other merchandise.

‘Manufacturer’ under the Act means any person who -

a) makes any article or any goods

b) assembles or joins any article or any goods whether by chemical process or otherwise or

c) adapts for sale any article or any goods.

Trader means any person who is:

a) a wholesaler

b) a retailer

c) an importer

d) provides services for a consideration

‘Services’ under the Consumer Affairs Authority Act includes a whole lot of services and includes the following:

a) banking, financing insurance, shipping and entertainment

b) the construction, production, manufacture, supply, storage, maintenance, repair treatment, cleaning, processing or alteration of goods

c) services in connection with the import, export or distribution of goods

d) the transportation of goods and passengers

e) the cleaning of buildings and building premises

f) the sale and supply of any utility services including electricity, water, gas and communications

g) the provision of information technology and communications.

h) professional services such as accounting, auditing, legal, medical and health, surveying, architecture and engineering.

At the conclusion of the investigation the Council has to forward a report to the Director General of the Authority.

If the Council concludes that the goods are being sold or the services are being provided at an excessive price, it shall recommend to the Authority in writing:

a) the maximum price above which such goods should not be sold or such services should not be provided or

b) the price structure in accordance with which such maximum price shall be fixed.

How, when and by whom, may the public refer a complaint to Consumer Affairs Council

If there is a complaint regarding goods being sold or services being provided at an excessive price, any member of the public, or any association of persons or any organisations wish that Council should investigate into such matter, such member of the public, association or organisation can request the Director General of the Consumer Affairs Authority to refer the matter to the Council for investigation. (Section 22 of the Act).

An anti-competitive shall be deemed to prevail -

a) in the course of business conduct

b) It could be pursued by one person or by a group of persons

c) Such anti-competitive practice will restrict, distort or prevent competition

d) Such practice is likely or it intended to have the effect of restricting or distorting or preventing competition in connection with the production, supply or acquisition of goods in Sri Lanka or the supply or securing of services in Sri Lanka.

The Act does not describe a list of practices that would amount to anti-competitive practices. This definition recognises the importance of taking into consideration the individual circumstances of each practice by basing its test on whether a practice is anti-competitive and not on the form of practice, but on its effect, or whether it is likely or intended to effect competition.

By doing so it enables proper considerations to be given to the individual circumstances of a practice, which may frustrate competition in one set of circumstances and may not be so in another. Upon the conclusion of an investigation by the Authority, the Authority may make an application to the Council for purposes of determining on such matter. (Section 37 of the Act).

When a reference is made for a determination regarding the existence of an anti-competitive practice, the Council shall on being satisfied that:

An anti-competitive practice exists but such a practice does not operate against public interest, authorise such anti-competitive practice or the anti-competitive practice exists and it operates against public interest, by order made in that regard provide for -

1) the termination of such anti-competitive practice in such a manner as specified in the order and

2) such other action the Council may consider necessary .

Where an application is made to the Council regarding an anti-competitive practice it is the duty of the Council to make its order within one month of its receipt.

However if at the conclusion of an investigation by the Authority into the prevalence of an anti-competitive practice, the Authority does not decide to refer the matter for a determination, the person, any organisation of consumers or association of traders, who made the complaint or requested for such investigation, may request the Council to -

a) call upon the Authority to submit to the Council its report on the investigation and

b) hear and determine such application, where the Council is of the opinion that there is sufficient material in the report to warrant the Council taking up such application for determination.

The above are the salient provisions of the Consumer Affairs Authority Act in relation to the Consumer Affairs Council. At present the Consumer Affairs Council has its office and holds inquiries in the first floor of the CWE Secretariat Building, No. 27, Vauxhall Street, Colombo 2.

Manel Wijesingha
Kalawila, former Secretary, Consumer Affairs Council