by Priyanka & Veena Mahor
With the advent of the digital era an expansion of trade and commerce activities happened around the globe transcending borders and cultures. Digitization has provided quick access, an outsized sort of choice, convenient payment mechanisms, improved services and shopping as per convenience. However, the digital era has also made them vulnerable to unfair business practices through social media. Along the expansion path, it also brought in challenges associated with consumer protection. Hence, to deal with the new set of challenges faced by consumers within the digital age, the Indian Parliament passed the landmark Consumer Protection Act, 2019.
The act aims to supply with timely and effective administration and settlement of consumer disputes.[1] The Consumer Protection Act, 2019 replaced the three decades old legislation lays down provisions for the establishment of consumer councils [2]. Even though it is too early to examine the practical implications of the Act, some ramifications of the Act are evident considering the trend in the Consumer law jurisprudence in our country.
Consumer Protection Act, 2019
The Consumer Protection Act 2019 was introduced as a new initiative signaling to several new definitions and the establishment of new administrative or regulatory bodies. However, if we do a comparative study of the Act of Consumer Protection Act 1986 and 2019, then we find that the new Act is to a large extent a reiteration of the earlier Act, though there are new provisions such as the establishment of new bodies like the Central Consumer Protection Authority and Mediation cell etc.
In this context, a policy question arises as to why the Central Government needed to establish the above mentioned administrative rules through the new Act. Did the Government not believe in the three-tier Dispute Settlement Mechanism established by it or has any efforts been made to increase the ability or decisive capacity of these bodies related to consumer protection? It seems that, through this new act of 2019, by introducing a new dispute settlement system for the consumers, the central government tried to fulfil its responsibilities in a hurried manner.
Further, the increase in pecuniary jurisdiction could affect consumers since they would have to be part of a three-tier hierarchy of judicial forums as envisaged under the Act if the amount is less than 10 crores. This would have adverse effects and could go in contravention to the objective of speedy disposal of cases. This would mostly affect the consumers in the real estate sector and could lead to a position where the consumer may opt for mediation and may be forced to accept certain terms as dictated by the manufacturer/service provider.
The government also notified the Consumer Protection (E-commerce) Rules, 2020 under the Consumer Protection Act, 2019. E-commerce entities have the mandate to provide information to consumers relating to their return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, and security of payment methods, charge-back options and country of origin.
These platforms will need to acknowledge the receipt of any consumer complaint within 48 hours and redress the complaint within one month from the date of receipt. The Consumer Protection (E-commerce) Rules, 2020 are mandatory and have no advisories. The rules also prohibit e-commerce companies from manipulating the price of goods or services to gain unreasonable profit through unjustified prices.
Consumer Protection and Competition Policy
We cannot deny that there is a robust commonality between competition policy and law on the one hand and consumer protection policy and law on the other. At the root of both consumer protection and competition policies, lies the recognition of an unequal relationship between consumers and the supply side stakeholders of market. When consumer protection policies and legislations protect the consumers by setting minimum specifications and safety standards for products and services, to rectify the informational asymmetries over the quality. They also establish mechanisms to redress their grievances over the defects, post purchase.
An effective competition policy lowers entry and exit barriers and makes the environment conducive to promoting entrepreneurship, which also provides space for the expansion of small and medium enterprises and consequent employment expansion. It is also known that Competition law concentrates on maintaining the method of competition between enterprises and tries to remedy behavioural or structural problems to re-establish effective competition within the market. This would lead to higher economic efficiency, greater innovation and enhancement of consumer welfare. Thereby, the buyer experiences wider choices and greater availability of products at affordable prices. On the other hand, the buyer protection policy and law are primarily concerned with the character of consumer transactions, trying to enhance market conditions for effective exercises of consumer choice.
Thus, it is important for the two which are mutually reinforcing should be built as an integrative system rather than making it exclusive policies. This is even more pertinent in a fast-moving digital age where the systems of trade get even more complex and concentration of supply side is in vogue.