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Article

COMPETITION LAW AND CONSUMER LAW: REMEDIES FOR CONSUMER

WELFARE AND DIFFERENCES IN THE ACTS

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Keywords: Consumer welfare; Unfair Trade Practices; Consumer; Product liability;

Competition Commission of India (CCI); Dominant position; Irregularities; E-commerce
market; Defective services; Consumer Disputes Redressal; Market power; Promotion of the
interests of the consumers; Direct reliefs.

Legislation: Consumer Protection Act 2019- Sections 2(34), 34(1), 47(vii), 47(viii), 83, 94.

Competition Act 2002- Sections 2(r), 2(s), 2(t), 4, 19.

Cases: (1) Shri Pravahan Mohanty vs Hdfc Bank Limited, Chennai & Ors. on 23 May 2011

(2) Belaire Owners' Association vs Dlf Limited, Huda & Ors. on 3 January 2013

(3) Mrs. Veena Khanna vs M/S. Ansal Properties on 9 July 2007

(4) Sapient Corporation Employees vs Hdfc Bank Ltd. & Ors. on 1 November 2012

____ year student of the university’s name.

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Methods in which the Consumer Protection Act 2019, and the Competition Act 2002
provide remedies to the plaintiff and increase consumer welfare.

The Consumer Protection Act 2019 (or Consumer Act) provides enhanced remedies for a
consumer to seek relief under the Act. With the new Act, consumers can claim damages in e-
commerce transactions2 (Section 94 of the Act protects the rights of consumers in unfair
trade practices in e-commerce). This is a major development since e-commerce has
expanded rapidly making online transactions much more common.

The District Commission possesses the first jurisdiction to bring a consumer complaint in a
court of law. At present, there are 678 District Commissions and 35 State Commissions3
making District Commissions almost twenty times more accessible. With the new Act and
under Section 34(1), the remedy has been provided to the consumers by increasing the
claim amount of District Commissions to take complaints from 20 Lakh rupees to 1 crore
rupees. Consumers have a better scope to seek redressal.

Furthermore, under Section 2(34) product liability has been defined as the responsibility of
a product manufacturer or product seller to compensate the consumer for defective
products. Under Section 83, product liability action allows consumers the recourse to file
consumer complaints against manufacturers as well. Under Section 47(vii), failure to issue
an invoice or a bill to the consumer is an unfair trade practice for the goods/services
purchased by such consumer and is an offence under the Act. Section 47(viii) further
protects consumers by allowing returns and/or refunds of defective goods within thirty
days of time.

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Waheb Hussaini and Snigdha Singh, ‘India: Consumer Protection Act 2019: Promising
Transparency And Choices To Consumers’ (Mondaq, 12 October 2020)
<https://www.mondaq.com/india/dodd-frank-consumer-protection-act/993392/consumer-
protection-act-2019-promising-transparency-and-choices-to-consumers> accessed 7 November
2022

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National Consumer Disputes Redressal Commission, ‘HISTORY’ (NCDRC)
<http://ncdrc.nic.in/history.html> accessed 8 November 2022
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The Competition Act 2002 (or Competition Act) provides numerous remedies to consumers
as well. Section 4 of the said Act checks the unfair or discriminatory condition of products
or services and ensures that the price in the purchase or sale of goods or services cannot be
to the prejudice of the consumers. The consumer has the right to request the Competition
Commission of India (CCI) to inquire and take necessary steps for any adverse/alleged
agreements between enterprises and corporations. However, Section 4 is only applicable to
companies or corporations having a dominant position in the market, as held by the
Competition Commission of India in Shri Pravahan Mohanty vs Hdfc Bank Limited, Chennai
& Ors. on 23 May 2011 4. Section 4 is applicable when there exists an abuse of the dominant
position in the market, as was held in Belaire Owners' Association vs Dlf Limited, Huda & Ors.
on 3 January 20135.

Section 19 provides that the Commission must take into account the benefits of consumers
while determining the adverse effect of the agreement.

Competition law enforcement promotes vigorous competition and prevents anticompetitive

business practices ensuring that businesses compete on the merits of their work. 6 The Act
ensures corrective measures towards illegal cartels, monopolies, dominant players of the
market, et cetera. This further enhances consumer welfare when prices are monitored, the

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Shri Pravahan Mohanty v Hdfc Bank Limited, Chennai & Ors. [23 May, 2011]-
Para 9.5- “Levying impugned charges and imposing alleged terms and conditions may be termed as
'unfair trade practices' but elements of abuse of dominant position definitely stand on a higher
platform and in absence of establishment of dominant position such conduct of Opposite
Party will not be covered under the provisions of section 4 of the Act.”

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Belaire Owners' Association v Dlf Limited, Huda & Ors. [3 January, 2013]-
Para 13.1- “Finally, the Commission has concluded that DLF Ltd. is in contravention of section
4 (2) (a) (i) by imposing unfair conditions on the sale of its services to consumers.”
Para 13.4- “The abuse of dominant position in this case is in respect of the basic necessity of
housing. The earlier deliberation on the elements and extent of abuse make it clear that DLF
has been grossly abusing its dominant position, and that too against a vulnerable section of
consumers, who have little ability to act or organize against such abuse. The penalty, therefore, has
to be commensurate with the severity of the violation through such blatant abuse of dominance.”

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COFECE, ‘EXPLAINING THE BENEFITS OF COMPETITION TO THE GENERAL PUBLIC’ Comisión
Federal de Competencia Económica
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quality of products/services are reviewed, and businesses are penalized for taking undue
advantage of consumers.

Irregularities in both the Acts

The Consumer Protection Act 2019 fails to provide the methodologies and guidelines for
seeking specific relief for a defective product/service in the sector of the e-commerce
market.7 Although Section 94 prevents unfair trade practices in e-commerce, the Act has yet
to establish the base for what kind of e-commerce transactions are included/excluded while
lodging a consumer complaint as well as the physical jurisdiction for such complaint.
Furthermore, online purchasing of real ornaments, heavy machinery, furniture, et cetera
provides a vast scope of what kind of defectives can be covered under the Act or the types
of remedies that are available to consumers. This vast scope has not been completely
answered in the Act.

Defective services cannot be defined easily. The burden of proof rests on the consumer to
prove a defective service, however, the Act provides no supporting format or guideline as to
what would a defective service constitute or how would defectiveness in a service be
measured. In Mrs. Veena Khanna vs M/S. Ansal Properties on 9 July 2007 8, the National
Consumer Disputes Redressal held that in case of no replacement of a service, the consumer
has the right to be adequately compensated by the service provider for the delay in the
service and/or for the new service to be purchased from another service provider.
However, a consumer’s fault in availing of service does not amount to deficiency of service

Press Information Bureau Government of India, Suggestions on Rules under the Consumer Protection
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Act, 2019 (Delhi, 6 December 2019)

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Mrs. Veena Khanna v M/S. Ansal Properties [9 July, 2007]-
“Therefore, there are two alternatives (a) one is to give adequate compensation for delay and
to direct the Opposite Parties to hand-over possession of an alternative flat in the vicinity of
the area where the flat was allotted to the Complainant; (b) or secondly, to pay adequate
compensation to enable the Complainant to purchase a new flat of the same area in the same
or similar locality.”
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from the service provider as was held in Sapient Corporation Employees vs Hdfc Bank Ltd. &
Ors. on 1 November 20129.

The Competition Act 2002 has achieved remarkable growth in the market industry but
certain loopholes remain. Almost all companies are focusing on gathering consumer data as
much as possible. This is legal to the extent that such data is used for feedback on the
company’s products/services. However, recent upbringings in the news state that the
majority of consumer data is utilized more negatively. For example- Amazon collects voice
data, browser data10, addresses, searches, and recordings. The Act does not provide specific
relief against big companies using consumer data without the permission of the consumer.
Another recent example is the merger of WhatsApp and Facebook gaining control over ‘big
data’ and treating it as an asset in determining market power 11. The competition law has
not arrived at a solution to periodic analysis in the context of technological advances.

Furthermore, under Sections 2(r), (s), and (t) of the Act 12, relevant market/geographic
market/product market do not specify and particularly include the internet or the e-
commerce market, which in reality is the largest market in the country.
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Sapient Corporation Employees v Hdfc Bank Ltd. & Ors. [1 November, 2012]-
“Para 6- “In para 10, the Complaint petition says that the Opposite Parties have acted with wilful
negligence in wrongly debiting an amount of Rs 1,47,52,766 (Rupees one crore forty seven lac fifty
two thousand seven hundred sixty six only), without any authority or mandate, in account of the
Complainant and are therefore guilty of deficiency in service.
Para 9- In view of the detailed consideration of the facts and circumstances of the case before us, we
hold that the action taken by OP bank was proper, legal and after reasonable notice to the
complainant. It does not amount to a deficiency of service and no cause of action would arise
from it.”

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Reason Automation, ‘Amazon data collection: what info does the company gather?’ (Reason
Automation, 13 June) <https://www.reasonautomation.com/content/amazon-data-collection-what-
info-does-the-company-gather> accessed 7 November 2022

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Vedika Mittal and others, ‘Systematizing Fairplay – Key Issues in the Indian Competition Law
Regime’ (Vidhi Legal Policy) <https://vidhilegalpolicy.in/research/report-on-systematizing-
fairplay-key-issues-in-the-indian-competition-law-regime/> accessed 7 November 2022

Dhanendra Kumar, ‘The challenges ahead for the Competition Commission of India’ Financial
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Express (19 May 2022)

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Similarities and dissimilarities between the Acts

The major similarity between the Acts is that both Acts assist in promoting consumer
welfare and protection and promotion of the interests of the consumers. The objective of
the Consumer Protection Act 2019 is to protect the rights of the consumer in claiming
compensation and redressal in case of defective products/services and to have access to
such redressal. The objective of the Competition Act 2002 is to assure the availability of
goods and services at competitive prices for consumers by prohibiting anti-competitive
agreements.13

The major dissimilarity between the Acts is that the Consumer Act focuses on consumer
benefits, remedies, solutions, and possible outcomes to defective goods/services while the
Competition Act focuses on the betterment of the entire market by promoting healthy
competition.

Moreover, the definitions of a “consumer” in both Acts are different. The Consumer Act does
not include a consumer to be a person who obtains goods/services for resale or any
commercial purpose, meaning that only the end user or buyer can be a consumer under this
Act wherein no re-sale or further commercial transactions occur. While the Competition Act
includes a consumer when a purchase of goods/purchases is for resale or any commercial
purpose or personal use, meaning that any re-seller or any retailer who intends to re-
sale for any commercial purpose is also a consumer under this Act.

Another notable difference is that the Consumer Act provides direct relief to the consumers
dealing with them directly. The Act has remedies for complaint filing in the three
Commissions for unfair trade practices, replacement of goods, and awarding compensation.
The Competition Act, however, does not directly deal with consumers. It eliminates
practices having an adverse effect on competition, promotes and sustains competition, and

Ministry of Human Resource Development, ‘Competition Law and Consumer Protection Law’
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protects the consumers’ interests 14 indirectly taking care of consumer interests as a whole
in the country.

Lastly, Competition Act controls market irregularities while the Consumer Act controls
individual market transactions between the buyer and the seller. 15 Protection of consumer
welfare is much enhanced in the Consumer Protection Act 2019 than in the Competition Act
2002.

End.

Ministry of Human Resource Development, ‘Competition Law and Consumer Protection Law’
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Jenisha Parikh and Kashmira Majumdar, ‘COMPETITION LAW AND CONSUMER LAW:
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IDENTIFYING THE CONTOURS IN LIGHT OF THE CASE OF BELAIRE OWNERS ASSOCIATION v. DLF’
(2012) NUJS LAW REVIEW 5 NUJS L. REV. 249
<http://docs.manupatra.in/newsline/articles/Upload/03E26D51-BA75-4E0A-96CF-
E4421360840E.pdf> accessed 8 November 2022