Saturday, 29 June 2019
/ 09.45AM / By Oserogho & Associates / Header Image Credit: FCCPC Nigeria
One of the risks with an unregulated laissez-faire capitalist economy is the promotion of domineering, unfair trade practices, which practices inhibit open, free and fair market competition to the detriment of the consumer and the larger economy.
Various jurisdictions have therefore enacted Competition and Consumer Protection Legislations and Regulations of which the Federal Competition and Consumer Protection Act (“FCCPA”) is one of such recent legislation.
Subject to the provisions of the Constitution, the FCCPA is now the supreme, prevailing, overriding Law on all Competition and Consumer Protection matters. The FCCPA has also repealed the Consumer Protection Act.
Application of FCCPA
The Explanatory Memorandum to the FCCPA states that the FCCPA established the Federal Competition and Consumer Protection Commission (“FCCP Commission”) and the Consumer Protection Tribunal (“FCCP Tribunal”), as independent bodies, to among other things promote open, free, fair and efficient competition in the markets; and eliminate Monopolies, Abuse of Dominant Market Position, Price-fixing, Bid-rigging, etc. with stiff penalties for these restrictive trade and business practices enshrined in the FCCPA.
Another innovative provision that the FCCPA has introduced is that its provisions applies to all public and private sector activities and undertakings.
FCCP Commission and Tribunal
The FCCP Commission is an independent body created to carry out a wide range of functions. Central to the statutory functions of the FCCP Commission is its regulation, identification and resolution of all anti-competition and anti-consumer protection business practices, examples of which are misleading, deceptive and restrictive trade and business practices. Such prohibited practices negatively impact the economic welfare of consumers.
The FCCP Tribunal is also an independent body established to hear and deliver judgments on statutorily prohibited anti-competition and anti-consumer protection practices. This Tribunal also hears appeals from the decisions of the FCCP Commission and other Consumer Protection Regulatory Authorities.
Appeals against the decisions of the FCCP Tribunal go first to the Court of Appeal and any further appeal goes to the Supreme Court. The decisions of the FCCP Tribunal are registerable at the Federal High Court for enforcement purposes.
Some of the Consumer Protection specific rights enshrined in the FCCPA include the statutory requirements for the sale price, product labelling, product description, condition, etc. to be mandatorily displayed on all goods. Consumers also now have the right to physically examine the goods that they intend to purchase; and subject to the payment of a reasonable charge, cancel any advance reservation, booking or order.
Consumers further now have the right to receive goods with the Implied Warranty that the goods are reasonably safe, of good quality, not defective and in good, fit for purpose condition. Goods that are otherwise not suitable can now be returned with a full refund demanded.
Dominant Position, Monopoly and Price Regulation
Any practice, agreement or decision intended to prevent, restrict or distort competition in the market place – otherwise known as Restraint of Competition – or the possession of a large market share with strong economic might to undermine open market competition – otherwise known as Abuse of Dominant Market Position or Monopoly – are unlawful, null and void business practices with punitive fines and terms of imprisonment on conviction for any of these offences.
Other practical examples of prohibited competition practices are price-fixing, demand, supply or price manipulations, exclusivity and exclusionary market tactics, price controls, withholding of products from some dealers, etc.
Only the President is authorised to publish in a Gazette time-bound Price Control Regulations for designated goods and services. The gazetted Price Control must however be intended to encourage Competition and protect Consumers.
The common resonating penalty, on conviction, for most of the prohibited Competition and Consumer Protection Offences like Price-fixing, Bid-rigging, False and Misleading Representations, Conspiracy to commit any anti-competition offence, etc. for individuals, is imprisonment for durations ranging from three (3) to five (5) years or the payment of a fine not exceeding various monetary amounts ranging from N5,000,000 to N10,000,000, to N50,000,000; or to both the fine and the term of imprisonment.
Also under the FCCPA, the common penalty for a corporate body, on conviction is a fine not exceeding Ten Per Cent (10%) of the corporate body’s turnover of its previous business financial year-end results.
In severe cases of a repeat and unrepentant offender, the FCCP Tribunal is authorised to, where monetary penalties will not adequately remedy the continuing breach, order an Administrative Penalty of the sale of the assets of the erring corporate body; or the restructuring of the shares or other significant financial asset or interest of the defaulting corporate body.
As laudable as most of the provisions of the FCCPA are, bringing the Competition and Consumer Protection provisions in tandem with the current market practices and realities will require a lot of public education, enlightenment and cultural behavioural changes.
It is also of much concern that a Price Control Regulatory Regime is reintroduced in the FCCPA despite the woeful experimentation with price control measures in the 1970s and 1980s.
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