Ho Chi Minh City, Vietnam – 12 Sept 2012

Study on Unfair Trade Practices in Select ASEAN Economies

The conceptNo universal definition of unfair trade practices available

– Country-specificB2B practices:

Undue use of superior bargaining powerDefamation of competitorsMisappropriation of trade secretsUndue interference, etc

B2C practices:Misleading advertisementBait & switchHarassment and coercionOther unconscionable conducts, including unfair contracts,

etcUnfair competition practices by government agencies

through abusing administrative powers

The criteriaThe notion of ‘fairness’ Balance of

interest between partiesOther elements:

Common standards of business ethicsBargaining powerEconomic injury inflicted upon victimsInformation asymmetries

UTPs vs. other traditional antitrust issuesCommon law system vs. civil law system

The harms

Economic injury inflicted upon victims (smaller businesses, consumers)

Erosion, loss of goodwillConsumer distrust towards an entire market or

industry UTPs could also distort the normal functioning of

the competitive markets, stop enterprises from competing by ways of innovating and serving the customers better, and pre-empt any possible equitable outcomes

Is it possible to quantify the harms?

Consumer Protection or Competition?

Findings from 05 Project countries

Please refer to the Comparative Table attached.

Singapore• The Consumer Protection (Fair Trading) Act 2004,

amended in 2009• The Act gives a consumer the option to bring action

against supplier in court for relief• What constitute an UTP?– To do or say anything/fail to do or say anything, if as a result a

consumer might reasonably be deceived or misled– To make a false claim– To take advantage of a consumer; if supplier knows or ought

reasonably to know that consumer is• Not in a position to protect his or her own interests; or• Not reasonably able to understand character, nature, language or

effect of transaction or proposed transaction or any matter related to transaction

• 20 unfair practices listed in the Second Schedule of the Act

India• UTPs used to be regulated by both the now

repealed Monopolies & Restrictive Trade Practices (MRTP) Act 1969 (from 1984) & the Consumer Protection Act (COPRA) 1986 – Significant overlaps

• With the promulgation of the new Competition Act in 2002, all UTPs are transferred to being dealt with exclusively under the COPRA 1986

• COPRA, sec 2(1) (r): ‘trade practices which a trader, 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’

• Specific UTPs include misleading advertisement, bait & switch, harassment and coercion, etc

Australia• Trade Practices Act (TPA) 1974 – Part V. Consumer

Protection – Division 1. Unfair Practices; Division 1AA. Country of origin representations; Division 1AAA. Pyramid selling The Australian Competition & Consumer Commission (ACCC)

• Competition and Consumer Act 2010 The Australian Consumer Law, Chapter 2 & Chapter 3

Specific UTPs includefalse or misleading representations in relation to

goods, services or land transactions, bait advertising, harassment or coercion, pyramid selling, the supply of unsolicited goods or services, referral selling andfalsely offering prizes

United StatesFederal Trade Commission (FTC) Act 1914 – 15 USC § 45

(a) (1): “Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.”

The FTC Act created the Federal Trade Commission as an expert body to analyze and define “unfair methods of competition.”

"It is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field. Even if all known unfair practices were specifically defined and prohibited, it would be at once necessary to begin over again. If Congress were to adopt the method of definition, it would undertake an endless task." H. R. Conf. Rep. No. 1142, 63d Cong., 2d Sess., 19 (1914).

European Union• Consumer Protection from Unfair Trading Regulations 2008 No.

1277: – These Regulations implement Directive 2005/29/EC of the

European Parliament and of the Council concerning unfair business-to-consumer commercial practices (OJ No L 149, 11.6.2005, p22).

– These Regulations also implement Art 6.2 of Directive 1999/44/EC of the European Parliament and of the Council on certain aspects of the sale of consumer goods and associated guarantees

Regulations 2008, Part II, Regulation 3, Para (3) A commercial practice is unfair if— (a)it contravenes the requirements of professional diligence; and (b)it materially distorts or is likely to materially distort the

economic behaviour of the average consumer with regard to the product.

(4) A commercial practice is unfair if— (a)it is a misleading action under the provisions of regulation 5; (b)it is a misleading omission under the provisions of regulation 6; (c)it is aggressive under the provisions of regulation 7; or (d)it is listed in Schedule 1.

• Schedule 1 lists out 31 commercial practices which are in all circumstances considered unfair

ASEAN ASEAN Economic Community Blueprint: Towards a “highly

competitive economic region”. Para 41: “The main objective of the competition policy is to foster a culture of fair competition” Introduction of competition policy in all AMSs by 2015Forum for discussing and coordinating competition policiesCapacity buildingA regional guideline

Consumer protection:establishment of the ASEAN Coordinating Committee on Consumer

Protection (ACCCP)a network of consumer protection agencies to facilitate information

sharing and exchange The region is at a very initial stage of legal harmonization. Many

issues remain unclear:Competition policy vs. competition lawFree competition vs. fair competitionUnfair competition/UTP issues

ConclusionsMarket dynamics“One-size-does-not-fit-all”Where do UTPs fit in to consumer regulation?Are UTPs only relevant to consumers?Competition law as consumer protection

regulationShould prohibitions on UTPs be included in

competition laws?Regional issues specific to ASEAN:

Legal harmonization vs. different economic development model sand legal systems

Coordination & information sharing

Thank you for your attention!

For more information, please visit our website at http://utp.cuts-hrc.org/ and join our E-discussion forum on UTPs.