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DIFFERENT MEANS, IDENTICAL ENDS: CONSUMER PROTECTION ACT, 2019 AND COMPETITION ACT, 2002

INTRODUCTION

The Consumer Protection Act, 2019 and Competition Act, 2002, both seek to achieve consumer welfare, whether directly or indirectly. This is evident from their preambles, both of which mention the phrase “protection of the interests of consumers.” However, this is where the similarities end; although the welfare of consumers may be the ultimate purpose of both of these laws, there is a significant gap between them regarding the areas they cover and the functions they perform. They complement each other and work to promote consumer welfare and protect consumers in the marketplace.

Consumer protection laws operate under the inherent assumption that the consumer is the weaker party and should be protected directly through the use of a variety of rights and remedies. On the other hand, competition law serves to protect consumer rights indirectly by preserving and maintaining competition in the market. This is also one of the reasons why consumer forums in India are some of the quickest and most approachable courts in the entire country.

The archaic Monopolies and Restrictive Trade Practices Act, 1969 was replaced with the Competition Act, 2002, which was approved by the parliament of India while the Vajpayee government was in power. It is a piece of anti-trust legislation that primarily addresses issues concerning anti-competitive agreements, abuse of dominant position, mergers and acquisitions, and other similar topics. It is vital to remember that all of these disagreements or difficulties that fall under the scope of the Competition Act are between businesses, not between businesses and individuals, as is the case with The Consumer Protection Act, 2019.

WHO IS A CONSUMER?

The definition of the term “consumer” that is provided in each of the acts has been altered slightly, which explains how the acts are aimed at two different groups of people. While the consumer protection act makes it abundantly clear that the consumer cannot be someone who obtains any goods or services for commercial activity[1], the competition law places no such restrictions and states, “whether such hiring or availing of services/goods is for any commercial purpose or personal use.”[2]

It is a common phenomenon to see consumer cases being confused with competition cases. In Rajendra Agarwal v. Shoppers Stop Limited, argued in the Competition Commission of India, the Informant had shopped at Shoppers Stop for a total value of Rs 6,495 and in return obtained two discount coupons, each worth Rs 500.[3] The Informant wished to redeem his coupons on his next purchase but was informed that he must spend a minimum of Rs. 4000 to be eligible for redemption. Regarding the aforementioned fact, the Informant indicated that he was unaware of this condition and was unable to read it on the back of the coupon due to his advanced age. After carefully considering the Informant’s arguments, the commission clarified by citing Sanjeev Pandey v. Mahendra & Mahendra that ‘the CCI’s primary aim is to prevent anti-competitive practices, and that the Consumer Protection Act of 1986 serves to safeguard the rights of individual consumers.’[4] The commission ruled that the dispute is a consumer dispute and ordered the case to be closed.

In Sanjeev Pandey V. Mahendra & Mahendra & Ors. the Informant Saneev Pandey alleged that the opposite party (OP) Mahendra & Mahendra was only selling a car called the XUV 500 in a few of India’s metropolitan areas. It was not making it available to its dealers in the state of Rajasthan, even though there was a greater need for it there than in the other metropolitan cities. In addition to this, he asserted that customers based in Rajasthan were coerced into purchasing the aforementioned vehicle from either Delhi, Haryana, or Punjab and coerced into paying additional local taxes in Rajasthan, which he characterised as an exploitative practice directed toward general customers. As a result, he requested that the commission order an investigation per the provisions of section 26(1) of the Competition Act, 2002. In addition, he requested that a suitable penalty be imposed on the opposing parties by the provisions of section 27 of the Competition Act, 2002. The court, in its judgment, said that,

“The Informant has misunderstood the Act and probably confused it with the Consumer Protection Act, 1986. The scope of the Act is primarily aimed to curb the anti-competitive practices having adverse effects on competition and to promote and sustain competition in the relevant markets in India. Whereas the Consumer Protection Act, 1986 is aimed to protect the interest of individual consumers against the unfair practices being widely prevalent; in the market.”[5]

COMPLEMENTING EACH OTHER

Despite the several differences between the two laws, some theorists argue in favour of a relationship between the concepts of consumer protection law and competition law. Spencer Weber Waller being one of them, argues that “Competition and consumer protection laws are intimately related, two sides of the same coin of consumer sovereignty and hence economic justice.”[6] Lande and Averitt note in their path-breaking article Consumer Sovereignty: A Unified Theory of Anti-trust and Consumer Protection Law, argue that competition law provides consumers with a choice of competing products and services and consumer protection law allows consumers to exercise that choice free from fraud, coercion, deception, or demonstrably false information.[7]

Together, these two Acts work to complement each other in protecting consumers. While the Consumer Protection Act, 2019 provides a mechanism for individual consumers to seek redress for harm suffered due to unfair trade practices or defective goods and services, the Competition Act, 2002 ensures that businesses do not engage in practices that can harm competition and lead to higher prices and reduced consumer choice.

Moreover, the Consumer Protection Act, 2019 can address issues that fall outside the scope of the Competition Act, 2002, such as disputes over defective goods and services or unfair trade practices that do not rise to the level of anti-competitive behaviour. Similarly, the Competition Act, 2002 can address issues that fall outside the scope of the Consumer Protection Act, 2019, such as anti-competitive practices that harm competition in the market but do not directly harm individual consumers.

CONCLUSION

Both the Consumer Protection Act, 2019 and the Competition Act, 2002 have the same overarching goal, which is to keep the market competitive and ultimately improve consumer welfare. Both approaches are highly distinct from one another in terms of their application, but at the same time, Lande and Averit show how they can be complementary to one another. They fill gaps left by each other and work to create a comprehensive framework for consumer protection in India. Therefore, when taken together, these two Acts constitute the consumer welfare architecture of the legal system in India.

Author(s) Name: Chirag Agarwal (Jindal Global University)

References:

[1] The Consumer Protection Act, 2019

[2] The Competition Act, 2002

[3] Rajendra Agarwal v. Shoppers Stop Limited, [2018] CCI 62

[4] Sanjeev Pandey v. Mahendra & Mahendra & Ors., [2012] CCI 30

[5] ibid

[6] Spencer Weber Waller, ‘In Search of Economic Justice: Considering Competition and Consumer Protection Law’ (2005) 36 Loy U Chi LJ 631

[7] Neil W. Averitt & Robert H. Lande, Consumer Sovereignty: A Unified Theory of Antitrust and Consumer Protection Law, 65 ANTITRUST L.J. 713 (1997), at 718-22.