INTRODUCTION
Consumer protection safeguards consumers from low-quality or dangerous products and advertisements that deceive people and protect consumer rights. Consumer protection in India is under the purview of the Consumer Protection Act of 2019[1]. There are various grounds on which a consumer’s safety can be violated and as per the Consumer Protection Act, it could be a defect in goods, deficiency in services, unfair trade practices, restricted trade practices, deceptive pricing, misleading advertisements, product liability, consumer rights violation and failure to adhere to the E-commerce rules.[2] The Act aims to protect consumers against all possible offences mentioned above. Out of these, unfair and restrictive trade practices are two important problems often faced by consumers in many forms. Unfair Trade Practices(UTP) include false representation of a good or service in terms of its grade and quality, targeting vulnerable populations, false advertising, tied selling, false guarantee of free prize or gift offers, and deceptive pricing among other possibilities. Restrictive Trade Practices(RTP) on the other hand include purposeful delay in the supply of a commodity by a trader which would then see a rise in its price, and imposition of a condition precedent to buy a good or avail a service to buy another good or hire/avail another service. [3]
The problems of UTP and RTP arise when the trader has an unfair advantage, information asymmetry, or power to exercise express or implied coercion over the consumers. Such a situation is seen in a monopoly.
“A monopoly is when a single company or entity creates an unreasonable restraint of competition in a market.”[4]
A monopoly is a market condition in which a single entity has the market power and is the sole price-setter. In such a market, there are no competitors to a single powerful entity; what is more intimidating is that there is no possibility of a potential competitor. Once a firm or entity becomes a monopoly, it assumes market power, increasing the cost of becoming its competitor, which disincentives any other producer to compete. Thus, this can be highly unfair and disadvantageous to other entrepreneurs, making competition in a market extremely important. However, an underestimated impact of an anti-competitive firm in a market is on the consumer. Hence, the Competition Act of 2002 (earlier Monopoly and Restrictive Trade Practices Act of 1969)[5] regulates different markets to promote competition and prevent anti-competitive practices in India. In the Excel Crop Care Limited V. Competition Commission of India And Another [2017], it was stated by the Competition Commission of India that,
“The ultimate goal of competition policy (or for that matter, even the consumer policies) is to enhance consumer well-being.” [6]
This blog intends to describe their cohesive role in an attempt to enhance consumer welfare, while also identifying certain grey areas in their intersection.
AN EFFECTIVE COLLABORATION OF FORCES ADDRESSING ANTI-COMPETITIVE PRACTICES
Section 8 of the Competition Act, 2002[7] outlines the responsibilities of the Competition Commission of India, which include preventing practices that negatively impact competition, fostering and maintaining competition, safeguarding consumer interests, and guaranteeing the freedom of trade for all players in Indian markets. The Competition Act safeguards consumer rights such as the right to information, the right to be heard, and the right to choose by discouraging companies that engage in price-fixing, output limits, abuse of dominance, and anti-competitive combinations. Similarly, the Central Consumer Protection Authority was created by the Consumer Protection Act of 2019[8] to conduct investigations, submit complaints to the National, District, or State Commission, conduct and support consumer rights research, raise awareness of consumer rights, and persuade non-governmental organizations and other organizations to collaborate and work with consumer protection agencies. Consumer rights are safeguarded by the agencies and bodies of both Acts working together.
The Competition Act, 2002[9] itself was formulated to ensure a fair and competitive environment in different markets, to avoid giving rise to the possibility of the formation of a monopoly.[10] It ensures free trade and promotes competition. Mergers and acquisitions, dominance, and agreements made by companies are closely monitored by the Competition Commission of India, to prevent any anti-competitive practices. The Consumer Protection Act of 2019[11] on the other hand, protects consumers from the effects of such practices upon consumers in the form of Unfair Trade Practices, Restricted Trade Practices, misleading advertisements, unfair pricing, etc. In the case of Builders Association of India v. Cement Manufacturers’ Association and 11 Ors.[12], the Competition Commission of India held that the cartelization of the cement manufacturers amounts to an anti-competitive agreement, and imposed penalties accordingly. This cartelisation had also subsequently led to inflated prices and any consumer affected by the exorbitant prices could file a consumer complaint at an appropriate forum.
GREY AREAS IN THE INTERSECTION OF THE TWO LAWS
- Regulation of Misleading Advertisement:
Even though misleading advertising is not specifically addressed by the Competition Act, of 2002, section 18 of Act [13]should consider them to be anti-competitive practices if they are made in a way that disparages another competitor or is likely to have an impact on other businesses. However, one of the most well-known offences under the Consumer Protection Act of 2019[14] is still deceptive advertising. The Central Consumer Protection Authority’s authority to issue directives and impose sanctions against deceptive or fraudulent advertising is explicitly mentioned in Section 21 of the Consumer Protection Act of 2019[15]. In the cases of Colgate-Palmolive (India) Ltd. v. Hindustan Unilever Ltd. (2017)[16] and Patanjali Ayurved Ltd. v. Hindustan Unilever Ltd. (W.P. (C) 4375/2020)[17], despite advertisements affecting the plaintiffs as competitors, there was no readily available legal remedy and hence, the issues were resolved through provisions of the Consumer Protection Act of 2019[18].
In Reckitt Benckiser (India) Ltd. v. Hindustan Unilever Ltd. (2014)[19] was dealt with under Section 29(8) of the Trade Marks Act, 1999[20] for commercial disparagement, and in Horlicks Ltd. v. Zydus Wellness Products Ltd. (AIRONLINE 2020 DEL 701)[21], the matter was dissolved by provisions for misleading advertisement in the Consumer Protection Act and the Advertising Standards Council of India guidelines. The reason for this is that misleading advertisements do not have a direct impact on the competitiveness of the market, which is essential to file a case under the Competition Act, of 2002[22]. Apart from that, the major problem with a misleading advertisement is often the effect on consumers. However, the Competition Act, of 2002[23] deals with the effect on the market as a whole, and not specifically on the individual consumer. This is yet another reason for the fact that no legal action is usually taken against advertisements even if they affect competition.
- The Ex-Post nature of the Competition Act, 2002:
The Competition Act, of 2002[24] is based on an Ex-Post framework, where legal action is taken against a party only after anti-competitive agreements and abuse of dominance take place. If consumer’s welfare is being impacted as a result of the same, that would also be taken into consideration. This is a conflicting area, as it would mean that only if a firm becomes a monopoly or becomes involved in abusing its dominance over other enterprises and consumers, would the Competition Act of 2002 apply to the firm. This implies that future threats to consumer safety may not be addressed. With this perspective, the Competition Act puts the consumers at risk, especially when the matter does not come under the purview of the Consumer Protection Act, 2019[25] as well. Damage caused due to certain actions such as predatory pricing and inflated prices due to cartelization cannot be reversed, or compensated for after the damage is done, even if the Competition Commission orders a penalty.[26] Even once information is filed against a certain entity, the investigation against the respondent party takes time, and both the competitors and consumers must inevitably suffer losses in that duration. Emerging markets with new and modified ways of monopolizing techniques cannot be tackled by Competition laws if they remain ex-post.
CONCLUSION
The rapid development in digital markets saw a rise in apprehension in the field of Competition Law. Especially, considering that the Competition Act, of 2002[27] was ex-post, the concerns were at an all-time high and the Digital and Marketing Association of the UK passed the Digital Markets, Competition, and Consumers Act on 24th May 2024. This was to regulate digital firms whose activities have “strategic market status” (SMS), broaden the CMA’s consumer protection powers, etc.[28] In India the Competition (Amendment) Act, 2023[29] also brought out a few changes. The threshold for Deal Value in Mergers and Acquisitions (M&A) and the time limit to review mergers are examples. However, these steps only look into mergers and acquisitions and are meant to solve problems in the digital markets.[30] However, other problems such as cartels, predatory pricing, or exclusive agreements continue to be addressed after harm is detected,i.e., ex-post as it was before. Thus, there is an urgent need for a multidimensional approach that augments both consumer welfare and market fairness. Both the statutes have been widely employed for different purposes, but the clashes and sometimes overlaps, lead to the formation of grey areas which might affect not just players in a market, but also consumers.
Author(s) Name: Namratha M (School of Law, CHRIST(Deemed to be University), Bengaluru)
References:
[1] Consumer Protection Act 2019.
[2] Consumer Protection Act 2019 to Strengthen Provisions for Consumer Protection Consumer Protection Act, 2019 Protects Consumers Involved in Online Transactions (Ministry of Consumer Affairs, Food & Public Distribution 2023) <https://pib.gov.in/PressReleasePage.aspx?PRID=1945167> accessed 4 January 2025.
[3]Consumer Protection Act 2019.
[4] ‘Monopoly’ (LII / Legal Information Institute, July 2023) <www.law.cornell.edu/wex/monopoly> accessed 4 January 2025.
[5]Competition Act 2002.
[6] Excel Crop Care Limited v. Competition Commission Of India And Another [2017] 8 SCC 47 (SC).
[7] Competition Act 2002, s 8.
[8] Consumer Protection Act 2019, s 10.
[9] Competition Act 2002.
[10] Competition Act 2002.
[11] Consumer Protection Act 2019.
[12] Builders Association of India v. Cement Manufacturers’ Association and 11 Ors.[2016], (Case No. 29/2010)
[13] Competition Act 2002, s 18.
[14] Consumer Protection Act 2019, s 89.
[15] Consumer Protection Act 2019, s 21.
[16] Colgate-Palmolive (India) Ltd. v. Hindustan Unilever Ltd. [1999], AIR 1999 SUPREME COURT 3105,
[17] Patanjali Ayurved Ltd. v. Hindustan Unilever Ltd., W.P. (C) 4375/2020
[18] Consumer Protection Act 2019.
[19] Reckitt Benckiser (India) Ltd. v. Hindustan Unilever Ltd. [2014], C.M. APPL. 17116/2008
[20] Trade Marks Act 1999.
[21] Horlicks Ltd. v. Zydus Wellness Products Ltd. [2020], AIRONLINE 2020 DEL 701
[22] Competition Act 2002.
[23] Competition Act 2002.
[24] Competition Act 2002.
[25] Consumer Protection Act 2019.
[26]Singh VK, ‘Consumer Protection Under Competition Law’ [2024] SSRN <http://dx.doi.org/10.2139/ssrn.4930056> accessed 06 January 2025
[27] Competition Act 2002.
[28] ‘UK Government Passes the Digital Markets, Competition and Consumers Act’ (Davis Polk, 28 May 2024) <www.davispolk.com/insights/client-update/uk-government-passes-digital-markets-competition-and-consumers-act> accessed 06 January 2025
[29] Competition Commission of India, “Competition Commission of India, Government of India” (Competition Commission of India, April 11, 2023) <https://www.cci.gov.in/legal-framwork/act> accessed January 4, 2025
[30] K&C, ‘Competition Amendment Bill, 2023: More Than Just a Facelift of the 2022 Bill’ (Mondaq – Law Articles and Insights, 15 February 2023) <www.mondaq.com/india/cartels-monopolies/1282640/competition-amendment-bill-2023-more-than-just-a-facelift-of-the-2022-bill> accessed 09 January 2025
