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BUSINESS LAW
UNIT III
CONSUMER PROTECTION

Fair Competition Act


The Fair Competition Act of Jamaica 1993 (FCA) is one of the key legislation that
focuses on protecting the consumer against unfair practices of vendors. The objective of
this Act is to promote competition in markets within Jamaica. The major advantage of
this legislation is that it provides an avenue by which vendors can be prosecuted for
clearly defined offences under the Law in addition to legal action that may be pursued by
purchasers for breach of terms of contract.
The Fair Competition Act established the Fair Trading Commission (FTC) which is an
administrative body appointed by the Government and which is responsible for
implementing the FCA. The FTC has power to summon and examine witnesses, Call and
examine documents, administer oaths and to take legal action in the Supreme Court
against any business or individual found guilty of uncompetitive practice.
The functions of the commission include:
1. Investigating conduct of business in Jamaica in order to determine whether
an enterprise is engaged in business practices in contravention of the Act.
2. Taking necessary action in relation to its findings.
3. Informing and advising on matters relating to competition.
4. Assisting in the development of standards consistent with the FCA.
5. Granting authorizations for business practices, which are normally
prohibited by the FCA.
The following issues are addressed by the Fair Competition Act:
Uncompetitive Practices
Abuse of dominant position
Collective and Individual Resale Price Maintenance
Prohibited Practices
Offences against Competition

Uncompetitive Practices
The Act renders unenforceable any provision in an agreement which has the purpose of
substantially lessening competition in a market or which is exclusionary. Agreements
which contain provisions that directly or indirectly fix purchasing or selling prices; or
provisions that limit or control production are likely to be considered unenforceable
under the law for being uncompetitive. Provisions in agreements which are meant to
prevent, restrict or limit supply or acquisition of goods and services from any particular
person or class of persons are void for being exclusionary if the agreement is between
persons or businesses that are in competition with each other.

O.H Akinladejo, Lecturer School of Business Administration,


UTech.
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Abuse of Dominant Position


A business holds dominant position if it controls the market in that it has enough
economic strength to enable it to operate in the market without effective constraints from
competitors. The FCA does not view dominant position as harmful if it improves the
production or distribution of goods and services, promotes technical or economic
progress, results in cheaper prices for consumers, or if the dominant position is achieved
by superior performance. However, where dominant position is achieved by
uncompetitive practice or through the restriction of competition, the FTC ought to take
appropriate action. An enterprise abuses its dominant position if it impedes the
maintenance or development of effective competition in the market. Practices which
represent abuse of dominant position in a market include:
Restricting entry into a market
Preventing competition in a market
Removing a business or person from the market
Imposing unfair buying or selling prices
Limiting production to the detriment of consumers
Preferential treatment of some clients over others
Imposing restrictive obligations in business dealings
The Act makes it unlawful for two or more suppliers to enter into an agreement to:
Withhold goods from dealers who resell at price other than agreed price.
Refuse to supply goods to dealers who sell at price other than agreed price except on
terms and conditions less favourable.
Sell goods only to dealers that agree to resell at a particular price.
Recover penalties from dealers who sell at price other than agreed price
The commission has power to notify and direct an enterprise abusing its dominant
position which as lessened competition substantially in a market to take such steps as are
necessary and reasonable to overcome the effects of abuse in the market concerned.
Collective and Individual Resale Price Maintenance
The Act also makes it unlawful for two or more suppliers or dealers to enter into or carry
out any agreement in which they undertake; to withhold goods from dealers or suppliers
who sell at a price other than a stipulated price, to refuse to supply goods to dealers
except on terms and conditions less favourable than those applicable to others, to
withhold supplies from suppliers who supply goods without imposing conditions, to
discriminate in handling goods supplied by those suppliers etc.
A term in an agreement establishing minimum resale price in Jamaica is void and it is
unlawful for a supplier to withhold goods from a dealer because he sold goods at a price
below stipulated resale price or supplied goods to a third party who has done so.

O.H Akinladejo, Lecturer School of Business Administration,


UTech.
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Prohibited Practices
Exclusive Dealing: Exclusive dealing may be prohibited upon investigation by the
Commission. Exclusive dealing is any practice whereby a supplier of goods imposes
conditions either that the customer deals or primarily deals in goods supplied or
designated goods; or that the customer refrains from dealing in a specified class or kinds
of goods except as supplied by the supplier; and the supplier agrees to supply goods to
the customer on more favourable terms if the customer agrees to comply with the
conditions.
Tied Selling: Tied selling is prohibited. Tied Selling is any practice whereby a supplier
of goods as a condition to supplying the goods require the customer to purchase another
item from the supplier or to refrain from using or distributing along with the item
supplied another item that is not the brand designated by the supplier; and the supplier
agrees to supply goods to the customer on more favourable terms if the customer agrees
to comply with the conditions.
Market restriction: Market restriction may be prohibited upon investigation by the
Commission. Market restriction is any practice whereby a supplier of goods as a
condition to supplying the goods requires either that the customer supplies the goods only
in a defined market, or imposes penalty on a customer who supplies the goods outside of
a defined market.
The Commission will not take any action if in its opinion the exclusive dealing or market
restriction will be engaged in only for a reasonable period to facilitate entry of a new
supplier of goods into the market; or to facilitate the entry of new goods into the market.
Note- The provisions of the Act on exclusive dealing and market restriction is not
applicable to exclusive dealing and market restriction between or among interconnected
companies.
Offences against Competition
Price Fixing: It is an offence for two or more suppliers of goods or services to agree to
control price of their product. Price fixing is an artificial means of raising or lowering
prices when two or more businesses agree to control or fix price of their goods and
services.
Horizontal price fixing occurs when business competitors agree to set a common price for
their products by agreeing on a minimum price to supply or by agreeing to charge a
higher price for their product or by a group setting prices for its members.
Vertical price fixing / Resale price maintenance occurs when suppliers attempt to
influence their distributors and retailers to charge a minimum resale price by inducing
retailers not to sell below a specified price or by threatening to stop supplying retailers to

O.H Akinladejo, Lecturer School of Business Administration,


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force them to sell at a specified price or canceling dealership or discriminating against a


dealer because a dealer sold goods at a price below that which is specified by the
supplier.
Note - It is not an offence for a supplier to recommend a retail price as long as it is
clearly stated that the retailer or dealer is not bound to follow the recommended price.
The provisions of the Act does not apply to interconnected companies or principal/agent
relationships.
Conspiracy: It is an offence to conspire, combine, agree, arrange, or undertake acts
which unduly limit transportation, production, manufacture, storage, or supply of goods
or services with or without the direct aim of influencing the price or lessen competition.
Bid-rigging: It is an offence for two or more persons to enter into an agreement to either
refrain from submitting a bid in response to an invitation to bid/tender or to submit
bids/tenders arrived at by agreement.
Double ticketing: It is an offence for a supplier to supply goods at a price that exceeds
the lowest of two or more prices clearly expressed or indicated by him in respect of the
article. The prices may be expressed or indicated on the article, its wrapper/container,
anything attached to the article, anything on which the article is mounted for display, or
advertisement at the place at which the article is purchased.
Sale above advertised price: It is an offence to sell goods at a price above the advertised
price during the period and in the market to which the advertisement relates.
Note: This provision does not apply to advertisement that appears in catalogue or other
publication in which it is prominently stated that the prices stated are subject to error if
the error is established.
Misleading advertising: It is an offence to make statements which are false or
misleading about the nature, character or performance a product. Misleading advertising
involves making representation which is false or misleading in a material respect. These
misleading statements may be inform of warranties, labels, guarantees, false price claims
and sale of defective products without adequate disclosure.
Advertising sale at bargain price with no intention of supplying (Bait and Switch): It
is an offence to advertise sale at bargain price with no intention of supplying or without
reasonable grounds for believing you can supply at the advertised price having regard to
the nature of the market, the size of business and the nature of the advertisement. This
practice is called bait and switch because the true intention of the storeowner is to take
advantage of the consumers presence in the store to persuade him to buy other items
rather than selling the product advertised at the advertised price.
The offence is not committed; where the supplier took reasonable steps to obtain the
supply in adequate time but was unable to obtain the supply for reasons beyond his
control, where the supplier was unable to meet the demand because the demand surpassed
his reasonable expectation having regard to the nature of his advert, where the supplier

O.H Akinladejo, Lecturer School of Business Administration,


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undertakes to supply equivalent article at the bargain price within a reasonable time after
he becomes unable to supply the article advertised.
Other Offences under the Act
Obstruction of investigation: It is an offence to impede, prevent or obstruct
investigation or any authorized officer in the execution of his duties.
Destruction of records: It is an offence to refuse to produce, destroy, or alter document,
record, information or anything when required to produce same, or where warrant has
been issued to produce a document under this Act.
Giving false or misleading information to the commission: It is an offence to fail to
appear and give evidence before the commission without reasonable excuse, or to refuse
to take oath or make affirmation as a witness.
Penalties
Failure to attend and give evidence before the commission attracts a fine of $20,000 or
two years imprisonment or both. The Resident Magistrate Court has jurisdiction over
this.
The commission has the power to commence legal action against any individual or
organization that has violated the Act and penalty for individual is $1,000,000 fine and
for an organization it is $5,000,000 fine. An order of injunction may also be made by the
court.
Appeal A defendant has 15 days of finding of the commission within which to appeal
to a judge of the Supreme Court in chambers.
Consumer Affairs Commission
See the Consumer Protection Act 2005. the Act established the Consumer Affairs
Commission. The focus of the agency is on consumer education by providing a
variety of information to better equip consumers to cope with a liberalized market
driven economy.
Functions of the Consumer Affairs Commission:
1. Investigating complaints made by consumers in respect of unfair practices by
suppliers of goods and services and advising consumers.
2. Educating consumers on their rights and responsibilities.
3. Settling disputes between consumers and suppliers through moral suation.
4. Referring matters if necessary to the Fair Trading Commission and other
consumer protection agencies.
5. Providing consumer information on a variety of subjects as relates to consumers.

O.H Akinladejo, Lecturer School of Business Administration,


UTech.
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Standards Act 1969 and the Bureau of Standards


The Standards Act established the Bureau of standards.
Functions of the Bureau:
1. Set standards for items manufactured locally and imported.
2. To promote and encourage the maintenance of standardization for commodities,
processes and practices.
3. Assist industries in ensuring that labels are properly done.
4. Conduct routine checks to ensure that business places adhere to certain standard
of production and quality.
Offenses and penalties
The Act makes it an offence for anyone:
1. To make a statement (oral or in writing) that someone who is not licensed to use a
standard mark is so licensed.
2. To make a statement that a product complies with a standard specification when it
does not.
3. To make a statement without authority of the Bureau or Minister for purposes of gain
or profit to make comparison between a product and the standard provided for by any
standard specification unless he can prove that he acted without intent to defraud.
4. To use a standard mark after license has been revoked.
The penalty for the above offences is either fine or imprisonment.

Consumer Protection in Credit Transaction


The Hire-Purchase (Advertisement) Regulations provides that advertisement of goods
sold on hire-purchase, credit sale and conditional sale agreement must contain the
following information:a. amount of deposit payable or a statement that no deposit is payable
b. amount of each installment
c. total number of installment
d. length of the period in respect of which installment is payable
e. number of installments payable before delivery of goods if any
f. cash price of goods
The Hire-purchase Act also provides as follows:
a. Cash price of goods must be stated in writing.
b. Agreement must contain the following:
i.
statement of hire-purchase price or total price, and cash price of goods and
amount of each installment and the number of such installment and date
installments are due
ii.
list identifying goods to which the agreement relates
iii.
address of parties to the agreement to which communications and notices will
be addressed
O.H Akinladejo, Lecturer School of Business Administration,
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iv.

notice stating amongst other things that hirer may put an end to the agreement
by giving notice of termination in writing to the necessary party (applies to
conditional and Hire-Purchase agreements).

c. A copy of the agreement signed by purchaser must be given to him immediately as it


is signed by parties to the agreement.
d. In hire-purchase and conditional sale agreement, the following terms are implied:i.
implied condition of title
- implied warranty of quiet possession
- implied warranty of freedom from encumbrance
ii.
implied condition of merchantable quality
iii.
implied condition of fitness for purpose
iv.
implied condition that bulk will correspond with sample
v.
implied condition that goods will correspond with description.

O.H Akinladejo, Lecturer School of Business Administration,


UTech.
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