Exactly ten years ago, the Competition Authority officially came into existence when its founding Chief Executive Officer reported for duty on 18th April 2011, as the organisation’s first employee. A lot has happened since then; a lot has been achieved and no doubt some opportunities have been missed too.
The Competition Authority has since transformed into a different organisation, the Competition and Consumer Authority (CCA). The change was not a mere stylistic transformation nor a rebranding exercise. The organisation has grown bigger in size and its mandate has widened.
The initial mandate was to go into the market-place and muck-rake any market weeds that prevented businesses to thrive and flourish through competition. These market weeds which mainly manifest themselves in the form of business conduct have the effect of choking and stunting the growth of businesses: such weeds include collusive conduct like price fixing; bigger enterprises that refuse to deal with others particularly small businesses, or even forcing them out of business through market bullying tactics (predatory conduct); or businesses such as manufacturers or distributors dictating operational terms like pricing structure to independent retail enterprises.
The other part of the cleaning and disinfecting assignment in the market-place involves scrutinising all mergers and acquisitions to ensure that they are not used to choke competition in the market-place. The glow on the market cleaning exercise is attained when all policies and regulations are inspected for their ability to support and facilitate a robust competitive market.
Quite often some well-intentioned policies could inadvertently bring competition distortions, similar to a farmer who decides to pot her plants thinking it is the best way to protect and insulate her choice plants; inevitably reality strikes, the plants need space to draw sunlight and nutrients from the natural soil.
It is common for incumbent businesses to seek to use regulatory process to protect themselves from stronger competition. This practice is rife among strong business lobby groups and it also affects professional bodies such as associations e.g association of engineers, doctors, transporters, retailers and others resorting to the use of regulatory process to protect themselves from competition so that they do not lose profits.
The competition mandate is without doubt an onerous task, it is a marathon. It is painstaking and engaging, and often the results are slow to come, but when they eventually come, the results will be all too conspicuous. Thankfully, in Botswana the fundamentals are in place for a competitive market to be realised.
On 2nd December 2019 the CCA assumed yet another critical mandate, consumer protection.
Former United States President John F. Kennedy was right when he said a consumer by definition, includes us all. “they are the largest group in the economy, affecting and affected by almost every public and private economic decision.”
Consumers have diverse needs for their everyday survival and sustenance; they consume food, they ingest medicines, they buy clothes, buy plots, buy houses, buy cars, as well as implements and accessories. Most of the time they have very little knowledge and information about these products they use and consume. Some of these products have very poor health and safety standards and could result in disastrous accidents and severe cases of poisoning. Consumers are exposed to fake commodities such as adulterated cosmetics, medicines and food. They face all manner of perils from big business and small business including invasion of privacy to health hazards from street sales. They need to be protected from over-zealous and callous profit-chasing traders.
Although consumers are a critical mass and an important group in the economy, ‘’they are not effectively organised and their views are often not heard,” President Kennedy rightly observed.
Recently on the social media streets there was an outcry on the escalating cost of consumer goods. These complaints reached their most voluble levels when the additional two percent Value Added Tax (VAT) kicked in on April 1st. On almost all social media platforms, consumers were up in arms aiming and training their firepower at among others the CCA who they accuse of failing to effectively discharge their regulatory function of reining in errant traders who fleece consumers of their hard earned Pulas. Policy makers have not escaped the wrath of consumers who they accuse of failure to protect the vulnerable consumers from the merchants of greed.
This widespread expression of displeasure by consumers is a step in the right direction and it will help incubate a healthy and robust consumer welfare culture. It will have a multiplier effect on the building blocks laid by the likes of Ruth Basele in that old Radio Botswana programme- Moji Moreki, Richard and Kate Harriman consumer rights platforms, the consumer protection office, and many other luminaries including Dallas Nash in their various consumer price guides and engagements.
The question however is whether consumer protection is a role that can be left to some public bodies alone? The body that quickly springs to mind will be the consumer protection agency, in our case, the CCA. Although it is the chief enforcer of consumer protection rights, it would be worthwhile to note that consumer protection provisions are strewn across public service organisations, some deal with specific legislations like Insurance, finance, communications, energy and the like while the CCA is a generalist.
Consumer protection agencies have been established essentially to equalise the unequal relationships that exist between the stronger and weaker parties, the type of unequal relationship that obtains between traders and consumers. Consumer protection agencies have been bequeathed with state intervention powers to correct market failures in the interest of the public or consumers. Further, consumer protection law affords consumer protection agencies to punish offending behaviours of perpetrators.
To the extent that the consumer law allows other state agencies to control supplies entering the market such as registration and licensing, public agencies have a considerable degree of control over unscrupulous traders and undesirable products and services. Public bodies further ensure that products and services offered to consumers for sale are of a minimum standard of safety and quality.
No matter how well intentioned and robust in the execution of their mandate, consumer protection agencies can never fully represent the aspirations of consumers, and these agencies do not make the pretence. Consumers are best represented by consumers or an association of consumers or a consumer group.
Government agencies are entrusted with investigating and imposing administrative fines, while associations or consumer groups will represent the core interests of consumers. Consumer groups represent the voice of the consumer and overall participation, and they do this in several ways including playing a role in educating, advising, representing and counselling consumers so that consumers could enforce their rights. The type of policy guidance that rests with consumer groups could be in strategic sectors that are critical for the socio-economic well-being of the public which includes a seat at the table where prices of utilities like power, water, gas, fuel are determined. Often these commodities in the custody of statutory monopolies or state owned enterprises.
Sometimes out of perception regulatory bodies are accused of ‘çapture’ and this perception makes it morally compelling to have consumer groups very active in the consumer protection ecosystem. Consumer groups would be seen as independent actors, that is, non-partisan, particularly where the interests of business or even the state are at stake on a consumer related dispute.
Consumer representation could become an even dire issue where there are concerns regarding the under-privileged, rural area dwellers and the illiterate, although the practice is that in reality, regulatory bodies like the CCA investigate and prosecute on the side of consumer welfare and fair business practices. Consumer representation, when available, will help eliminate all perceptions of unfairness and consumer disregard.
In Botswana, a consumer group or consumer organisation is defined as an advocacy group that seeks to protect consumers from unfair business practices. The Consumer Protection Act allows class action and consumer groups to represent consumers in the mediation or redress of a consumer related matter.
While one is waxing lyrical about the value of consumer groups in the arena of fair business practices, one is fully aware that there are attendant problems. There are funding issues that frustrate the effective development of such organisations. In the developed world consumer groups found relevance and traction by testing products for safety and suitability then selling such content to consumers in order to generate operating income. Owing to their proven functional value in an economy, consumer groups are generally supported from the public purse particularly from infancy. Although in developing countries due to competing needs, this is still a huge challenge. Thankfully in Botswana the law recognises that consumer groups are indispensable and that their activities may be supported.
Once consumer groups are active they face the real challenge of internal competing interests. It should be borne in mind that it is difficult to have a group that represents the interests of all consumers. Consumers are not monolithic; they may be divided by age, income, levels of education, locality and even social factors such as ethnicity.
Whose interests are usually met by a consumer group? Is it the agenda of rural area dwellers who want to connect to the power grid but have real issues of raising capital or it is the needs of well articulate city slickers who are already connected but would want some quality nuanced service? Whose issues dominate the consumer group agenda? These are contentious issues that could call into question the efficacy of a consumer group.
All these notwithstanding robust consumer groups are a sine qua non in the next phase of our development in consumer education and welfare.
*Gideon Gobusamang Nkala is the Director of Communications and Stakeholder Relations at the Competition and Consumer Authority.
