Consumer Protection and Competition Law: Notes and PYQs

Consumer protection law gives a buyer a cheap and quick remedy against a defective good, a deficient service or a misleading advertisement. Competition law works on the other side of the market: it keeps sellers from fixing prices among themselves, from abusing a dominant position and from merging into a monopoly. The two together make up the legal frame of the Indian market, and questions on them appear in General Awareness as well as in the banking and economy sections.

Who is a consumer and what the law gives

A consumer is a person who buys a good or hires a service for a consideration, for personal use and not for resale or for a commercial purpose, and under the present law the definition expressly covers purchases made online and through teleshopping and multi-level marketing. The six consumer rights that the statute recognises are the right to safety, the right to be informed about the quality, quantity, purity, standard and price of goods and services, the right to choose, the right to be heard, the right to seek redressal against unfair trade practices, and the right to consumer education. Consumer protection is administered by the Department of Consumer Affairs in the Ministry of Consumer Affairs, Food and Public Distribution.

The Consumer Protection Act, 2019 replaced the Consumer Protection Act, 1986, which had been the first such law in India. The older Act set up a three-tier machinery of quasi-judicial bodies, then called forums, and fixed money limits for each, the district forum hearing claims up to twenty lakh rupees. The Act of 2019 keeps the three tiers, renamed as the District Consumer Disputes Redressal Commission, the State Commission and the National Commission, and provides that their pecuniary limits shall be as prescribed by the Central Government, so the figures are changed by notification rather than by amending the Act. The National Commission is headed by a sitting or retired judge of the Supreme Court and a State Commission by a judge of a High Court, and an appeal from the National Commission lies to the Supreme Court. A complaint must ordinarily be filed within two years from the date on which the cause of action arose, and it may be filed where the complainant resides or works, which spares a buyer the journey to the seller's city.

What the Act of 2019 added

• The Central Consumer Protection Authority, a regulator with power to inquire into unfair trade practices and violations of consumer rights on its own motion, to order the recall of goods and the refund of their price, and to penalise misleading advertisements, including the endorser of such an advertisement.
• Product liability, under which a manufacturer, a product seller or a product service provider is answerable in compensation for harm caused by a defective product.
• Rules for electronic commerce, requiring an online marketplace to display the seller's details, the country of origin and the grievance officer, and to act on complaints within fixed time.
• Mediation as an alternative, with a mediation cell attached to each Commission, so that a settled dispute need not be fought to the end.
• E-filing of complaints and hearing by video conference, and a penalty for adulterated or spurious goods.

Consumer Protection Councils at the Central, State and district level advise on the promotion of these rights. National Consumer Day is observed in India on 24 December, the day the Act of 1986 received the assent of the President, and World Consumer Rights Day falls on 15 March. Quality marks support the same purpose: the ISI mark of the Bureau of Indian Standards for manufactured goods, AGMARK for graded agricultural produce, Hallmark for the purity of gold and silver articles, and the FSSAI licence for food.

Competition law: from MRTP to the Competition Act

The first Indian law of this kind was the Monopolies and Restrictive Trade Practices Act, 1969, which worked on the idea that size itself was suspect and required large firms to seek approval for expansion. After the reforms of 1991 that approach no longer fitted an economy opened to competition, and a high level committee under S. V. S. Raghavan recommended a new law. The Competition Act, 2002 was the result; the Competition Commission of India was established in 2003 and became fully functional in 2009, when the MRTP Act was repealed and its commission wound up. The present law does not punish bigness; it punishes conduct that harms competition.

The Commission acts on information filed by any person or on a reference, and investigation is carried out by its Director General. It may order a party to stop an anti-competitive practice, impose a penalty, which for a cartel may extend to three times the profit for each year of its continuance or a share of turnover, whichever is higher, and even order the division of a dominant enterprise. The leniency provision allows a member of a cartel who discloses it to the Commission to receive a lower penalty, which is how cartels are often broken. An appeal against an order of the Commission lies to the National Company Law Appellate Tribunal, which took over this work from the former Competition Appellate Tribunal, and from there to the Supreme Court. The Competition (Amendment) Act, 2023 brought in a deal value threshold so that the purchase of a start-up with few assets but a high price is also examined, shortened the time limits for merger review, and added a settlement and commitment framework that lets a party close a case by undertaking to change its conduct.