Abstract
Unfair trade practices pose significant challenges to consumer welfare and market competition in India. This paper examines the evolution of unfair trade practices in the country, the regulatory framework provided by the Consumer Protection Act (CPA), the roles of regulatory bodies such as the Competition Commission of India (CCI) and the Central Consumer Protection Authority (CCPA), existing redressal mechanisms, challenges in addressing unfair trade practices, landmark judgments, and recommendations for prevention. By exploring these aspects, the paper aims to provide insights into the complexities of unfair trade practices and suggest strategies for effective consumer protection.
Introduction:-
Unfair trade practices encompass a wide array of deceptive, fraudulent, or anti-competitive practices that harm consumers and distort market competition. Before the enactment of the Consumer Protection Act (CPA) in 1986, unfair trade practices were prevalent in India, but there was no comprehensive legal framework to address them.
Until 2002, Metropolitan and Restrictive Trade Practices Act,1969 was followed in cases of unfair trade practices. This Act was repealed in the year 2002, by the Competition Act, 2002 and therefore all the cases of unfair trade Practices which MRTPC Act was dealing with was transferred to Competition commission (CCI) for adjudication. But there was no provision in Competition Act, regarding unfair trade practices, hence all the cases came under the jurisdiction of Consumer Protection Act, 1986, which is currently replaced by Consumer Protection Act, 2019. The introduction of the CPA marked a significant milestone in consumer protection, as it specifically addressed unfair trade practices and provided mechanisms for redressal. This paper explores the evolution of unfair trade practices in India, their regulation under the CPA, the roles of regulatory bodies such as the Competition Commission of India (CCI) and the CCPA, existing redressal mechanisms, challenges in addressing UTP, landmark judgments, and recommendations for preventing them.
Unfair Trade Practices in the Consumer Protection Act 2019:-
Section 2(47) of the Consumer Protection Act, 2019 is crucial as it defines "unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:—
(i) making any statement, whether orally or in writing or by visible representation including by means of electronic record, which:—
(a) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;
(b) falsely represents that the services are of a particular standard, quality or grade;
(c) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
(d) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;
(e) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
(f) makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;
(g) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof: Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;
(h) makes to the public a representation in a form that purports to be:—
(A) a warranty or guarantee of a product or of any goods or services; or
(B) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result, SEC. 1] THE GAZETTE OF INDIA EXTRAORDINARY 9 if such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out;
(i) materially misleads the public concerning the price at which a product or like products or goods or services, have been or are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by sellers or provided by suppliers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made;
(j) gives false or misleading facts disparaging the goods, services or trade of another person. Explanation.—For the purposes of this sub-clause, a statement that is,—
(A) expressed on an article offered or displayed for sale, or on its wrapper or container; or
(B) expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or
(C) contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public, shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained;
(ii) permitting the publication of any advertisement, whether in any newspaper or otherwise, including by way of electronic record, for the sale or supply at a bargain price of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement. Explanation.—For the purpose of this sub-clause, "bargain price" means,—
(A) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise; or
(B) a price that a person who reads, hears or sees the advertisement, would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold;
(iii) permitting:—
(a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged, in the transaction as a whole;
(b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest, except such contest, lottery, game of chance or skill as may be prescribed;
(c) withholding from the participants of any scheme offering gifts, prizes or other items free of charge on its closure, the information about final results of the scheme.10 THE GAZETTE OF INDIA EXTRAORDINARY [PART II— Explanation.—For the purpose of this sub-clause, the participants of a scheme shall be deemed to have been informed of the final results of the scheme where such results are within a reasonable time published, prominently in the same newspaper in which the scheme was originally advertised;
(iv) permitting the sale or supply of goods intended to be used, or are of a kind likely to be used by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by the competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods;
(v) permitting the hoarding or destruction of goods, or refusal to sell the goods or to make them available for sale or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services;
(vi) manufacturing of spurious goods or offering such goods for sale or adopting deceptive practices in the provision of services;
(vii) not issuing bill or cash memo or receipt for the goods sold or services rendered in such manner as may be prescribed;
(viii) refusing, after selling goods or rendering services, to take back or withdraw defective goods or to withdraw or discontinue deficient services and to refund the consideration thereof, if paid, within the period stipulated in the bill or cash memo or receipt or in the absence of such stipulation, within a period of thirty days;
(ix) disclosing to other person any personal information given in confidence by the consumer unless such disclosure is made in accordance with the provisions of any law for the time being in force.
These practices undermine consumer trust, distort market competition, and violate consumer rights. By explicitly identifying such activities, the provision enables effective enforcement of consumer protection laws, ensuring transparency, fairness, and accountability in commercial transactions. This definition encompasses a wide range of activities, such as false representations, misleading advertisements, deceptive pricing, and unfair contract terms. By explicitly defining unfair trade practices and providing legal recourse for consumers affected by them, the CPA aims to protect consumers from exploitation and ensure fair competition in the marketplace.
Roles of Regulatory Bodies Against Unfair Trade Practice:-
The Competition Commission of India (CCI) plays a crucial role in regulating unfair trade practices that have an adverse effect on competition in the market. Under the Competition Act, 2002, the CCI has the power to investigate and penalize anti-competitive agreements, abuse of dominant position, and unfair trade practices. Additionally, the Consumer Protection Act (CCPA) established consumer commission at the district, state, and national levels to adjudicate consumer disputes arising from unfair trade practices.
CENTRAL CONSUMER PROTECTION AUTHORITY:-
The Central Authority shall have an Investigation Wing headed by a Director General for the purpose of conducting inquiry or investigation under this Act as may be directed by the Central Authority. The inquiries or the investigations made by the Director- General shall be submitted to the Central Authority in such form, in such manner and within such time, as may be specified by regulations.
The District Collector (by whatever name called) may, on a complaint or on a reference made to him by the Central Authority or the Commissioner of a regional office, inquire into or investigate complaints regarding violation of rights of consumers as a class, on matters relating to violations of consumer rights, unfair trade practices and false or misleading advertisements, within his jurisdiction and submit his report to the Central Authority or to the Commissioner of a regional office, as the case may be.
A complaint relating to violation of consumer rights or unfair trade practices or false or misleading advertisements which are prejudicial to the interests of consumers as a class, may be forwarded either in writing or in electronic mode, to any one of the authorities, namely, the District Collector or the Commissioner of regional office or the Central Authority.
The Central Authority shall— (a) protect, promote and enforce the rights of consumers as a class, and prevent violation of consumers rights under this Act; (b) prevent unfair trade practices and ensure that no person engages himself in unfair trade practices;
Without prejudice to the generality of the provisions contained in sub-section (1), the Central Authority may, for any of the purposes aforesaid,— (a) inquire or cause an inquiry or investigation to be made into violations of consumer rights or unfair trade practices, either suo motu or on a complaint received or on the directions from the Central Government.
Redressal Mechanisms:-
file a complaints before the District Commission, the State Commission or the National Commission, as the case may be, under this Act; The CPA provides various redressal mechanisms for consumers aggrieved by unfair trade practices. Consumers can file complaints with the appropriate consumer commission seeking compensation, refund, or other appropriate relief. This commission has the authority to summoning to the parties and conducts the hearings, and pass orders to remedy the injustice caused to consumers. However, the effectiveness of these redressal mechanisms is often hampered by procedural delays, lack of awareness among consumers, and inadequate enforcement of orders.
Consumer Disputes Redressal Commissions (CDRCs) at the district, state, and national levels play vital roles in addressing unfair trade practices (UTP) and safeguarding consumer rights and interests. Now consumer can file a complaint in online mode and attending there hearing in virtual mode and our Indian government introduced E-dakil and Confonet App, so now speedy disposal of consumer complaint and the consumer also get speedy remedy.
Our food corporation ministry launch The National Consumer Helpline 1930. This help line (NCH) is a significant initiative established by the Government of India to empower consumers and address their grievances effectively. The National Consumer Helpline 1930 operates a toll-free number, which is easily accessible to consumers across India. This toll-free number provides a convenient and cost-free means for consumers to seek assistance, guidance, and redressal for various consumer-related issues, including unfair trade practices.
Need to Improve Mechanisms:-Despite the existence of legal provisions and redressal mechanisms, there is a pressing need to improve the effectiveness of combating unfair trade practices in India. This requires streamlining redressal processes, enhancing consumer awareness, strengthening enforcement mechanisms, and imposing stricter penalties on violators. Additionally, there is a need for collaboration between regulatory bodies, consumer organizations, and other stakeholders to address the root causes of unfair trade practices and prevent their recurrence.
Landmark Judgments in UTP:-
Several landmark judgments have shaped the legal landscape concerning unfair trade practices in India. One such case is In case of Ireo Grace Real Tech Pvt Ltd v. Abhishek Khanna and others, the supreme court held that incorporation of one sided and unreasonable clauses in Apartment Buyer's Agreement constitutes an unfair trade practice. the Hindustan Lever Ltd. v. Ashok Vishnu Kate, where the Supreme Court held that a manufacturer's liability extends to the advertisements promoting its products. Another notable case is the Cadbury India Ltd. v. State of Maharashtra, where the Bombay High Court held that misleading advertisements violate consumer rights and constitute unfair trade practices. These judgments have set important precedents and underscored the need for stringent enforcement of consumer protection laws.
How to Prevent Unfair Trade:-
Preventing unfair trade practices requires a multi-pronged approach involving legislative reforms, stricter enforcement, consumer education, and industry self-regulation. Strengthening regulatory frameworks, enhancing penalties for violations, promoting ethical business practices, and fostering competition are essential steps towards preventing UTP. Additionally, empowering consumers with knowledge and awareness of their rights, encouraging responsible advertising and marketing practices, and promoting transparency in business transactions can help create a fair and equitable marketplace.
Conclusion:-
In conclusion, addressing unfair trade practices is crucial for safeguarding consumer interests and promoting fair competition in India's marketplace. The CPA, along with regulatory bodies like the CCI and the CCPA, provide a framework for combating unfair trade practices, but challenges persist in effectively enforcing consumer protection laws While the CPA and regulatory bodies provide a framework, challenges in enforcement persist. Enhancing redressal mechanisms, increasing consumer awareness, and strengthening enforcement are essential. By implementing comprehensive strategies, India can create a marketplace characterized by trust, transparency, and fairness. Collaborative efforts among regulatory bodies, government agencies, industry stakeholders, and consumer advocacy groups are vital for deterring unethical practices and upholding consumer rights. Prioritizing consumer welfare and robust measures against unfair trade practices will foster a sustainable marketplace, benefiting both consumers and businesses, and contributing to economic growth and societal well-being.