Allan ASHER
*Commissioner Australian Trade Practices ommission
UN Consumer Protection Guideline and Consumer Protection Legislation in Developed Countries
Allan ASHER*
Twenty years ago 150 consumer activists from around the world met in Sydney, Australia to discuss the need for a global standard for consumer protection.
Eleven years later - in 1985 - the United Nations General Assemble adopted the “Guidelines for Consumer Protection" which partially fulfil the aims of the consumer activists who met in Sydney.
The UN Guidelines were developed over a long period and provide a framework for governments in elaborating and strengthening consumer protection policies and legislation. They are also intended to encourage international cooperation in the field of consumer protection.
Developed by the Economic and Social Council the guidelines also contain many ideas contributed by the Consumer Policy Committee of the Organisation for Economic Cooperation and Development (OECD).
It is entirely appropriate that elements of all of the key participants are present at this Japan seminar on Consumer Affairs. The consumer activists continue to be well represented by the International Organisation of Consumers' Unions, the OECD is well represented by some respected international consumer policy officials and the UN through the product of its deliberations the “Guidelines for Consumer Protection".
This paper sets out the objectives of the UN Guidelines, links those to the IOCU formulation of consumer rights and contrasts these principles with the consumer protection regime from Australia. In so doing Australia stands as a point of comparison for consumer protection in developed countries. There are differences many of which will be highlighted over the coming two days, however, for the purposes of a practical understanding of international norms in consumer protection Australian law serves as a case study.
I would like to speak to you today about what I see as ‘best practice' in consumer protection, including some observations about the need for integrated and comprehensive fair trading laws. From this general adiscussion I will move to the question of whether Australia's Federal Trade Practices Act (TPA) contains any lessons for Japan should it seek to reform its consumer protection regime.
Evaluating consumer protection systems is a business fraught with difficulty, and what is needed first of all is a set of reference points. President John F. Kennedy, in his celebrated 1962 ‘We are all consumers' speech to the US Congress, listed four basic consumer rights, and
these have formed a platform for making and assessing consumer policy in developed countries.
In the 1970's the UN Economic and Social Council took the matter further by surveying international consumer protection institutions and legislation, and followed that in 1981 by initiating a process to develop a set of guidelines for consumer protection. The guidelines were adopted in 1985.1
The guidelines list ‘legitimate needs' of consumers, namely:
・protection from hazards to health and safety;
・promotion and protection of economic interests;
・access to adequate information to enable informed choices;
・consumer education;
・availability of effective redress; and
・freedom to form groups, and the opportunity for those groups to present their views to decision-making processes.
While on the subject of the United Nations, I would like briefly to mention the campaign for the development and use of Guidelines for Global Business, which began in 1976 and is on the 1994 agenda of the UN Commission on Transnational Corporations.
1) United Nations, Guidelines for Consumer Protection, New York, 1986
2) Rosenbaum, H. and Tabor, A., Guidelines for Global Business: A
Discussion Paper, Australian Conservation Foundation, January 1994, Foreword.
If successful, the campaign will deliver a code of conduct for these corporations which, it is acknowledged
influence global, regional and national economies, beyond the control of existing international institutions.
The potential for the enhancement of consumer welfare which these Guidelines represent is immense.
Meanwhile the international consumer movement was active in the development of a framework of its own. It produced in 1982 a statement of rights which I regard as the most comprehensive, contemporary statement of a sound consumer policy framework. It lists eight rights, developed from Kennedy's original four, as follows:
1. The right to satisfaction of basic needs
To have access to basic, essential goods and services: adequate food, clothing, shelter, health care, education and sanitation.
2. The right to a healthy environment
To live and work in an environment which is non-threatening to the well-being of present and future generations.
3. The right to safety
To be protected against products, production processes and servicces which are hazardous to health or life.
4. The right to redress
To receive a fair settlement of just claims, including compensation for misrepresentation, shoddy goods or unsatisfactory services.
5. The right to be heard
To have consumer interests represented in the making and execution of government policy, and in the development of products and services.
6. The right to be informed
To be given the facts needed to make an informed choice, and to be protected against dishonest or misleading advertising and labelling.
7. The right to consumer education
To acquire knowledge and skills needed to make informed, confident choices about goods and services, while being aware of basic consumer rights and responsibilities and how to act on them.
8. The right to choose
To be able to select from a range of products and services, offered at competitive prices with an assurance of satisfactory quality.
3) Bawayan, F., An Overview of the Consumer Situation in the Philippines by the Church-Based Consumers' Movement. Paper presented at the Asian Seminar on Consumer Law, Kuala Lumpur, 9-12 August 1993.
I should pause to give appropriate recognition to the absolute primacy of the first of these rights, for until this condition (satisfaction of basic needs) is met the others are of little practical relevance to the ordinary consumer. At a recent Asian Seminar on Consumer Law, Francisca Bawayan described the position of consumers in an impoverished country as follows:
...the main focus of consumers is how to develop their ability to stretch the peso and to have access to basic services like food, health, education, etc. Thus, to expect product consciousness or to expect the Filipino consumer to act as a watchdog vis-a-vis services and product quality is not yet feasible. The Filipino consumer is constantly in search of cheaper substitutes for basic commodities and the age old problem of affordable basic servisec.3
Poverty, malnutrition, disease: consumer policy alone can not overcome these human tragedies. Yet they are consumer issues. The example of the Philippines illustrates a point to which I will later return: the need for consumer policy and legislation to be integrated with related policy areas such as trade, health, agriculture and competition.
Returning to the eight fundamental rights: acknowledging these as the common goals of consumer policy, we need to identify the common barriers to their achievement, and the prerequisites to success. In my view there are - apart from poverty, shortage, etc. as mentioned previously - two significant hurdles to overcome before a consumer protection regime can be described as successful.
These hurdles are:
・the institutions of society (courts, governments, etc.); and
・the degree of independence of the consumer agency, or agencies.
4) Harland, D., Implementing the principles of the United Nations Guidelins for Consumer Protection, Journal of the Indian Law Institute, Vol 33:2, 1991, p.226
5) Ibid, p.228
6) Ibid, pp 202-237, passim
David Harland, in a paper examining how best to implement the UN principles, described these ‘hurdles', or limitations thus:
...there are clearly limits as to how far legislation and other government action can go in protecting consumers.4
...although governments obviously have an essential role in the development and implementation of consumer protection policy, consumer protection is not a matter for governments alone.5
His paper lists essential elements in the establishment of a comprehensive consumer policy, as follows6.
・an adequate legal framework
・an infrastrusture to develop, implement and monitor consumer
protection policies, including
◆ an active official enforcement agency
◆ a central agency to develop and implement consumer policy
・consumer access to justice
・informal redress and consiliation mechanisms
・effective consumer information and education programs, including education for business about consumer rights
・adequate consumer representation, including visible consumer organisations with the right to criticise
・international co-operation
I would add to Professor Harland's list some qualifications that describe the attitude adopted within the infrastructure that he postulates:
・a ‘results orientation' in governments, consumer organisations, and consumer agencies; and
・imaginative leadership.
We will first examine the meaning of ‘results orientation' in terms of how regulatory policy should work, at a theoretical level.
Regulatory policy Regulation or deregulation? That has been the question for governments of whatever ideological persuasion for over a decade. But in truth, neither full-scale regulation (such as that which characterised the command economies of what was the Soviet Union) nor total deregulation (as attempted in Margaret Thatcher's Britain) is entirely satisfactory.
‘Full on' regulation, where every form of conduct and every event likely to occur in a particular area is monitored, judged and (where appropriate) punished has a number of weaknesses, among which are:
・it is a resource-intensive exercise requiring more staff than governments can ever afford;
・regulatory staff, as a result, tend to be paid little, leading to corruptibility;
・punishment-only strategies undermine the willingness of people or businesses voluntarily to act as policy would have them act ;
・punishment-only strategies also ensure that much productive energy is wasted on strategies to circumvent oppressive regulation.
Deregulation by contrast leaves a policy void which ‘the market' is required to fill. The free interplay of market forces can and does deliver beneficial outcomes, but there are some significant risks:
・inequality of bargaining power - as between individuals, businesses or even countries - can deliver perverse outcomes;
・inadequate information flows can distort the market;
・players in more regulated markets can use deregulated markets as dumping grounds or as a means of skirting domestic regulation.
Competition, while generally speaking a desirable thing, does not always generate optimal outcomes. The vigorous struggle for market share may lead to an increase in unfair practices such as misleading or unconscionable conduct. Vigilance is required to ensure that the benefits of competition - lower prices, better quality, wider choice - are passed on to consumers and not appropriated by business through unfair practices.
7) Ayres, I. and Braithwaite, J., Responsive Regulation, Oxford University Press, 1992
8) Ibid, p. 3
To achieve this I advocate the adoption of a middle ground which has been termed ‘responsive regulation' by Ian Ayres and John Braithwaite, the authors of a recently-published book with the same name.7
What is responsive regulation? Ayres and Braithwaite suggest:
...that regulation be responsive to industry structure in that different structures will be conducive to different degrees and forms of regulation.... We also conceive that regulation should respond to industry conduct, to how effectively industry is making private regulation work.... Most distinctively, responsiveness implies not only a new view of what triggers regulatory intervention, but leads us to innovative notions of what the response should be.8
The essence of responsiveness emerges as flexibility. No single solution, or outcome, ought to be mandated for every instance of particular conduct. To the greatest extent possible, regulatory policy should mobilise the resources and self-interest of the regulated to achieve a
beneficial result. In other words:
...for the responsive regulator, there are no optimal or best regulatory solutions, just solutions that respond better than others to the plural configurations of support and opposition that exist at a particular moment....9
9) Ibid, p. 5
10) Michael E. Porter, The Competitive Advantage of Nations, London, Macmillan, 1990, p649
11) National Consumer Council, International Trade: The Consumer Agenda, London, 1993, p.7
Does this mean that there is no place for legal solutions? Certainly not. While flexible regulatory responses are desirable, they must include - and be underpinned by - tough legal sanctions for unacceptable behaviour. Michael Porter of Harvard University, a highly respected authority on competition issues, shares that view. He says:
A final important distinction in evaluating regulatory standards...is between the content of standards and the process of administering them. The two are often confused. National advantege is enhanced by stringent standards that are rapidly, efficiently, and consistently applied. These play the same role as a demanding buyer.10
Is responsive regulation an appropriate approach to consumer protection policy generally, or in Japan specifically? I believe it is the only approach with any chance of success. ‘Full on' regulation is not affordable, in financial or social terms. And the risks of deregulation, outlined in general terms above, are especially applicable to consumer policy. The National Consumer Council of the U.K. has listed these risks as follows 11.
・consumers may have no choice, bacause the supplier is a monopolist;
・suppliers may engage in anti-competitive practices, raising prices and restricting consumer choice;
・if resources are scarce - clean water or oil reserves, say - individual consumers may have an incentive to use resources too freely;
・transactions between buyers and sellers may not take into account all the resources involved; in particular, the environmental cost is often not included;
・products may be unsafe or even dangerous;
・the market may not provide consumers with the information they need to make effective choices;
・some suppliers may be dishonest and defraud customers; and
・certain consumers may not have sufficient resources to meet what are accepted as their minimum needs.
Responsive regulation provides a middle ground. Before turning to whether Australia's TPA is a sound framework for responsive regulation, I want to deal with a couple of threshold issues:
・does responsive regulation require that consumer protection measures be brought together, as far as possible, in a single law and administered by a single agency?
・what level of co-operation (between government, enterprises, lawyers and other
professionals, and the consumer movement) is appropriate to the development of responsive regulation in the consumer area?
A single, comprehensive law and administration That I can think of not a single country in which legal protection for consumers is embodied in a single statute demonstrates that this is not a neccessary precondition for tha achivement of consumer welfare. In the end, nations adopt whichever system or systems have the best fit with its culture and institutions. But we can consider this as a pole, marking one extreme of a spectrum of administrative possibility.
Consider the opposite pole: separate and specific laws regulating each class of transaction, or each kind of product, or each location within the State, or some combination of these categories; for each of these laws a dedicated agency, or no agency at all but a ‘college' of specialist attorneys.
The problems wihch consumers face just to ascertain their rights must be multiplied by an environment in which those rights change according to the product purchased, or the place of purchase, or whatever. The cost of asserting those rights will be similarly multiplied. And who will bear the burden of the cost of these many streams of jurisprudence, if not the consumer?
Another issue arising from a piecemeal approach is that of regulatory capture. Regulation in such an environment may well be responsive, but responsive to whom? To the businesses, and legal representatives of those businesses, with whom the agency deals regularly, or to the problem-burdened consumer it will see (probably) only once-assuming of course that the consumer can even locate it?
Finally, I have argued here and elsewhere for the integration of consumer policy with conpetition and other policies. This is a difficult task whatever the administrative structure; but it is made just about impossible by a fragmented approach to the development and administration of consumer protection mechanisms.
My view is that a single comprehensive consumer protection law and administration is unlikely to be achieved anywhere. However, the closer a national system comes to this the more likely it will be to deliver responsive regulation of the kind I advocate. It follows that law makers should strive to bring the disparate elements of consumer protection under one legal/administrative roof as far as they possible can.
The question of co-operation A key issue in the development of genuinely responsive regulation is what parts should be played by the various stakeholders in the process. Some of the stakeholders are: the business sector, small and large; consumers and the consumer movement; the legal community; government, national and provincial.
Unless these stakeholders can co-operate, or at the very least communicate, the likelihood of producing an effective regime will become quite remote. A system that imposes unduly harsh compliance costs will be repugnant to business, causing that sector to squander its resources in avoidance behaviour while imposing heavier and heavier enforcement costs on the responsible agency and on affected consumers. These costs will eventually swallow the system, or make it obsolete.
But a system that is perceived to be too business-friendly will lose the confidence of consumers so quickly that obsolescence will not be an issue: it won't reach first base. After all, too much co-operation has historically led to cartelisation and corruption; we need to consider it with caution.
The answer, it seems, is genuine consultation and co-operation on a tripartite basis. The business sector and the consumer movement must have voices in both the design of the regulatory environment and its ongoing administration. And that process must be clothed in the legitimacy of government, to keep both parties at the table and to provide an objective arbitrator when (as must occasionally happen) their positions are irreconcilable.
I should add that in my opinion irreconcilable differences are less common than one might predict. Business, in the era of the global marketplace, actually has an interst in the establishment of meaningful consumer rights because they act as a spur to genuine competition and thus (according to the Porter thesis whicch I mentioned earlier) to international competitive advantage. And consumers have a stake in the profitability of enterprises, on the obvious basis of national prosperity. Responsive regulation, by minimising the number of adversarial encounters that occur, can allow these common interests to emerge and be recognised.
Australia's Trade Practices Act I now want to turn to my own country to explore to what extent its Trade Practices Act (TPA) and surrounding administration is a sound model for consumer protection via responsive regulation. To be such a model the trade practices administration would have to possess the prerequisites I discussed earlier, namely a results orientation and imaginative leadership.
Please realise that I am not arguing that Austyralia always has had, and will continue to have, these prerequisites in place. But they must be there to a degree, as must the following features:
・flexibility - there needs to be a wide range of remedies and enforcement options applicable to instances of non-compliance, so that the regulator can apply whichever options lead to an optimal outcome;
・focus - regulatory priorities should be clearly signalled, with ‘best consumer outcome' placed clearly at the top;
・universality - consumer protection policy needs to be applied consistently across the whole spectrum of markets, industries and regions;
・completeness - the legislative framework should be largely self-contained, so that it not only confers rights and obligation but also provides mechanisms for consumers (whether individually or as a class) to pursur those rights regardless of the resources available to them;
・linkage to competition oplicy - as I said earlier, without such a linkage there is a real risk that policies may be at cross-purposes or in direct conflict; and in any case there may be greater benefit to consumers from rigorous enforcement of competition policy than they will ever obtain from classic consumer protection measures.
Taking the last of these first, I think it is fairly clear that the TPA qualifies: competition and consumer policy are contained in the same Act and administered by the same agency, the Trade Practices Commission (TPC). The others require a little more consideration.
Flexibility The TPA provides a vast array of sanctions, from pecuniary penalties through injunctions to damages orders. These are, of course, activated by court action. But the recently-enacted s. 87B of the Act contemplates an even wider range of imaginative remedies without any court appearance: it provides that written undertakings made by a person to the TPC are enforceable at law.
It follows that the TPC can design, for any given situation, a remedy that delivers the best outcome for those affected. If the party under scrutiny is prepared to give a written undertaking to abide by that solution, s/he is legally bound to do so.
This is but one practical example of the flexibility embodied in the TPA. Another is in the area of industry codes of conduct. These are an increasingly popular method in Australia of entrenching good corporate behaviour without government supervision in industries with the capacity to regulate their own affairs (eg with an effective industry association that claims a majority of the industry as members).
A problem, with codes of conduct is that an industry may develop one that includes anti-competitive measures as well as pro-consumer measures; they may even be the same. The TPA provides a mechanism for reconciling these competing policy pressures. Its authorisation provisions allow certain anti-competitive conduct to occur without attracting legal sanction, provided that benefits to the public outweigh any anti-competitive effect. The authorisation process allows every interested party to be heard as the TPC considers its decision; and an appeal lies to the Trade Practices Tribunal should a party be dissatisfied with the dicision.
In Australia,codes established as part of an authorisation process are a widespread and increasingly effective regulatory mechanism. Another important TPC contribution has been the development of a ‘code for codes', which is a guideline for the development of effective codes that has become a positive influence on the marketplace.
Unfortunately the code of conduct area also shows up one of the TPA's shortcomings. Despite the TPC's commitment to the concept where appropriate, the TPA does not provide it with any legislative recognition outside the authorisation provisions discussed above. Thus if there are no anti-competitive elements the TPC has no role. It is unable therefore to:
...delegate certain regulatory tasks to private parties... [and thereby]... more closely
harmonize regulatory goals with laissez-faire notions of market efficiency 12
12) Ayres & Braithwaite, op cit, p.158
By contrast, most Australian States have adopted more imaginative mechanisms. For example, a common problem with codes is that while members of the relevant Association - who tend to be the better corporate citizens - may abide by them, non-members do not. In New South Wales this problem is solved by the Government's power to enforce codes as if they were law. Another provision allows a code of conduct to be imposed on, rather than adopted by, an industry. Similar mechanisms apply in other States.
For the TPA to be a complete model in flexibility terms probably requires the insertion of a new Part concerning code arrangements and the TPC's capacity to delegate power to the relevant private bodies. But in any case, I would contend that there is an enormous amount of flexibility built into the present system.
Focus The TPA is a largely self-enforcing set of fair trading principles. It covers the standards of behaviour to be observed in business, to the extent that it could be described as a code of ethiccs for business. That code is, however, underwritten by State sanctions, as I argue it must be.
The TPC is responsible in the main for articulating the focus of the TPA, and has identified its mission as the fostering of competitive, efficient, fair and informed markets through the following broad goals:
・improved competition and efficiency in markets; and
・greater adherence to fair trading practices in well-informed markets.
In addition it has set out its priorities for enforcement, namely cases where there is:
・blatant disregard of the law;
・significant public detriment;
・potential for a worthwhile deterrent or educative effect;
・a significant new market issue, eg arising from economic or technological change; and/or
・involvement of disadvantaged consumers.
But a key theme that links all of these, and in many ways the primary focus of the TPA, is information: the provision of complete, accurate, understandable information to all classes of consumers for all classes of transactions; while the TPC's major task is to provide a focus for the powers, rights and sanctions contained in the TPA.
Universality A consumer protection framework should embrace every transaction in which consumers participate and every form of conduct with a bearing on those transactions (before and after the transaction occurs).
Australia's Federal structure and Constitution ensure that no Commonwealth law will answer this description. However that problem has largely been overcome in the consumer protection area by each State and Territory enacting legislation that mirrors the TPA's
consumer protection provisions.
National coordination in competition and consumer policy is advanced by a Ministerial Council process, in which all State consumer affairs agency directors meet with their Federal counterparts to harmonise both policy and operations to the greatest extent possible.
National goals have been set to facilitate and encourage:
13) Japan Fair Trade Commission, Recent Development of Competition Policy in Japan (Outline), p.6
・the coordination of policy development and implementation by all administrations to provide the best and most consistent consumer protection for all Australians;
・consistency of policy and enforcement decisions for suppliers of goods and services within a national marketplace;
・national legislative uniformity of major elements of consumer protection policy;
・equality of access to education and information for all Australian consumers; and
・cooperation and consultation on consumer policy development and implementation between Australia and New Zealand.
Universal coverage is also somewhat compromised by the fact that within the TPA itself a range of market sectors and specific market conduct is explicitly exempted from its operation. The TPC believes that these exemptions have, for the most part, outlived their usefulness and has advocated their removal in a number of forums.
I understand that there is a similar feeling in Japan, noting that:
Cartels currently exempted from the [Antimonopoly] are being reviewed by the competent ministries and agencies with an eye to reducing their number....The FTC intends to continue to actively promote the review of the exemption system 13
Of course these limitations are about competition law. Certainly in the classic consumer protection area - the rights and remedies of individual consumers in particular transactions - the TPA and mirror-image State legislation together provide an almost-universal regime.
Completeness Too often laws confer rights without contemplating how difficult it might be to exercise them. A system based entirely on litigation will almost certainly fail unless a mechamism is established to guarantee claimants acess to the courts and adequate representation once there. Almost invaribly a potential consumer litigant will have less resources at his or her disposal than the corporation against whom the action lies.
In any event, for the most part a consumer doesn't want to get retribution through the court system. What s/he wants is the best remedy for the particular problem - to get the answer and fix the problem.
The solution is twofold:
・to the greatest entent possible, develop and use non-litigious mechanisms; and
・provide within the legislation itself means by which a poorly-resourced litigant can get access to court remedies.
I have referred to the first of these already when discussing enforceable undertakings (s. 87B). It is important to realise, however, that the TPC has for many years adopted the ‘administrative settlement' approach to market problems, and s.87B merely adds legislative endorsement to that approach.
The reason for this policy is quite clear: the TPC recieves around 52,000 complaints a year; of these only 20 are taken to civil proceedings, and a further 10 to criminal proceedings; and even at this rate the TPC faces severe resource pressure. There was and is, quite frankly, no alternative to the systematic use of non-court settlement of disputes. Fortunately, inevitable here coincides with desirable in that a non-legal approach is preferred by consumers, by the majority of the businesses with which the TPC deals, and by the TPC itself.
Another non-litigious strategy is to pursue market-based solutions to known problems, sometimes by simple advocacy in the Parliament, the media, professinal associations and other fourms.
Neither of these approaches is feasible without establishing a regulatory body, giving it the credibility to act a public advocate and arming it with a sufficient variety of powers to respond to an infinite variety of circumstances. That body must then be willing to use both its powers and its credibility with courage and imagination.
Whatever the regulator's preference, it remains imperative that legal sanction - strong ones - be there to underpin the rest of the regulatory process. Ayres and Braithwaite say that:
...the greater the heights of tough enforcement to which the agency can escalate, the more effective the agency will be at securing compliance and the less likely that it will have to resort to tough enforcement.14
14) Ayres & Braithwaite, of cit, p.6
Leaving aside this notional regulatory body, the extent to which tough sanctions are accessible to the private complainant will have a notable compliance effect. The TPA provides a number of access mechanisms, and I will address these later in the context of the consumer's rights to redress and representation.
I have spoken of the need for tough sanctions, but it is also important that the sanctions be subtle and flexible. Many of the mechanisms available to the TPC are precisely that, but they could be improved. Some possible additions are:
・administrative ‘cease and desist' orders, whereby the TPC could immediately halt conduct in breach of the Act without the need for a court injunction;
・a measure of damages which better reflects the losses suffered by the complainant; and
・public enforcement of the implied conditions and warranties provisions (post-sale consumer protection measures).
I now turn, as promised, to an evaluation of the TPA against the United Nations Guidelines for Consumer Protection.
The TPA and the UN Guidelines The UN guidelines list those things to which the UN considers consumers entitled, including physical safety, protection of economic interests, standards for safety and quality, distribution facilities for goods and services, redress measures and education programs. I commend the Guidelines to you.
I propose to test the TPA against these guidelines, together with three of the IOCU principles which I listed at the beginning of this presentation (rights to satisfaction of basic needs, to a healthy environment, and to choice).
1. The protection of consumers from hazards to their health and safety Part VA of the TPA, governing product liability, came into force on 9 July 1992. It makes manufacturers, importers and (under certain circumstances) retailers strictly liable for the damage caused by defective goods which they supply.
This relatively new Part complements earlier TPA rules in relation to product safety. The product safety rules provide for:
・the prescription of product safety standards on particular goods;
・the declaration of goods as unsafe;
・the permanent banning of goods;
・compulsory product recalls; and
・compulsory notice of voluntary recalls.
I would contend that since the enactment of Part VA, which closed a widely-recognised gap in the law, the TPA contains a product safety/liability regime as effective in securing the consumer's right to safety as any of which I am aware.
2. The promotion and protection of the economic interests of consumers The UN guidelines list under this heading fair distribution methods, fair business pratices, informative marketing, mandatory standards for certain goods, and issues of this kind, together with the ‘greatest range of choice among products and services at the lowest cost'. Elsewhere in this presentation I have described the kings of protection which the Trade Practices Act affords in relation to most of these issues; I shall return to the issue of choice shortly.
3. Access of consumers to adequate information to enable them to make informed choices acording to individual wishes and needs The TPC is a strong advocate of greater disclosure of information in a number of areas; recently the financial services sector has been our main focus in this regard. The TPA contains a number of provisions aimed at ensuring that consumers are made aware of all material facts.
Some set explicit information requirements, for example s. 53C, which requires all advertisements specifying deposits, terms, etc to specify also the full cash price. But a broader, implicit information requirement can be found in s. 52, in relation to which there is extensive authority for the proposition that silence can be misleading conduct if in the circumstances there was a duty to disclose. Failure to disclose has also been a factor in cases of unconscionable conduct.
The TPC is constantly advocating the provision of further and better information to consumers, because so many of the market failures of which it is aware flow directly from inadequate information. Insurance is a pertinent example: while there is heated competition among suppliers of insurance, the benefits of that can not be realised by consumers since they lack sufficient information to make an informed judgment. The TPC urged the industry to reform while pressing the Government for reforming legislation; the Government's intention to enact the latter has recently been announced.
15) Social Policy Bureau, Economic Planning Agency, Consumer Policy in Japan, p.4
4. Consumer Education S. 28 TPA charges the TPC with specific responsibility for the provision of general information in relation to matters affecting the interests of consumers, and for making known the rights and obligations of persons under consumer protection laws.
It does this by issuing publications, providing speakers to seminars and articles to publications, and by linking with the education system to raise young peoples' awareness of their rights. How well it does this would be inappropriate for me to judge. In terms of a framework for consumer education, however, the TPA allocates specific responsibility and requires annual reporting on how that responsibility is discharged. Similar education activities take place in the States under the aegis of their Fair Trading Acts.
I note that Japan has established both a Japan Consumer Information Centre and about 300 Local Information Centers.15 In Australia such activities have tended to be conducted by non-government consumer associations (in particular the Australian Consumers Association through its publication Choice and Consuming Interest). I would not especially favour one approach over the other, but suggest that if Japan were to adopt comprehensive consumer protection legislation that the roles of these Information Centres would need to be reviewed.
5. Right to Redress Generally, the TPA begins by conferring obligations on corporations to act, or not act, in certain ways. The private citizen can take private action, should s/he so desire, to cause a corporation to act in a prescribed way, to cease acting in a proscribed way, or to compensate him or her for the damage caused by the corporation's contravention of the law. Should the TPC become involved in the matter, the same remedies are available, and in addition it has the power to pursue pecuniary penalties, or obtain consent injunctions.
But the TPC can pursue an even wider range of remedies due to the effect of s.87B (see above). The sorts of solutions we would look for involve swift redress to affected consumers together with constructive, forward-looking efforts to reform the market itself. I think this demonstrates that the TPA is an excellent framework for asserting the consumer's right to redress in both the private and collective sense.
A crucial issue in the matter of redress is the extent to which the ordinary consumer has access to these remedies. Australian consumers are fortunate in the ready access which they have to the legal system. This is becaus no locus standi issues arise under the TPA: there is no need to establish a direct pecuniary interest to have standing.
For the consumer who lacks the resources to mount an action, there are two sources of consumer representation derived from the TPA itself. The first is the representative application provision (s.87 (1B)), which can be activated whenever a person (including a company) has been found to have breached one of either the restrictive trade practices or consumer protection provisions.
The TPC may in such cases make an application for appropriate orders (usually compensation) on behalf of one or more people who have suffered loss or damage by the breach - but only with the prior written consent of each person.
The second is the representative action provision of the product liability law. This is in most respects the same as s.87(1B) except that the substantive case is argued on behalf of those represented and at the same time as their claim for damages, rather than as two separate causes.
Ontside the TPA, Australian consumers - and more importantly in this context, the consumer associations which represent them - have access to ‘class actions'. These proceedings provide for a single claimant to take action on behalf of a specified class numbering seven or more people, who do not have to give their consent or even be identified. Class actions can:
・assist consumers to obtain better representation by pooling resources; and
・turn what appears to be a trivial claim by one person into a far more significant matter.
Other nations have chosen a different approach to empowering their consumer populations. In India, recognised consumer associations have the right to present petitions to a Consumer Redressal Forum on behalf of groups of named consumer, under that country's 1986 Consumer Protection Act.16 (It is interesting to note that the majority of judges in these Forums comprises lay persons).
16) Coutinho, V.B. and Ashraf, K., Report on the state of consumer law and practice in India in general and Bangalore in particular. Paper presented at the Asian Seminar on Consumer Law, Kuala Lumpur, 9-12 August 1993, p.9
17) Prokati, K., Development and Scope of Consumer Protection in Thailand. Paper presented at the Asian Seminar on Consumer Law, Kuala Lumpur, 9-12 August 1993, pp.3-4
A similar situation applies in Thailand, where consumer associations may institute proceedings on behalf of their members. Regrettably
...proceedings through the consumer associations can not come to be in practice. For the recognition of such an Association the Act requires a Ministry Regulation (Section 40, para 2). Since 1979 the required Ministry Regulation...has not been laid down.17
The Thai example graphically illustrates two things: that a nation can design whichever mechanisms are appropriate to secure consumer access rights, and no system is inherently superior; but that these mechanisms will come to nothing if governments lack the will to follow through on their consumer initiatives.
6. Freedom to form consumer and other relevant groups or organisation, and the opportunity of such organisations to present their views in decision-making processes affecting them Freedom of association is not, at present, an issue in Australia. The question here is the extent to which the voices of consumer groups are heard.
The TPC and its sister agencies consult both formally and informally with consumer groups such as the Australian Consumer Council, the Australian Federation of Consumer Organisations (both of these bodies being funded by the Commonwealth Government) and the Australian Consumers' Association. It follows that consumer groups have extensive access to policy-makers and a strong influence on the policies themselves.
In operational terms, the TPC represents consumers outside the court as well as in. Through its role as a consumer advocate, simple persuasion is perhaps the most effective strategy which the TPC adopts; and it invariably does co in close consultation with the consumer movement. Certainly a great deal has been achieved for consumers by TPC persuasion, both at the broad market level and at the level of intervention in particular disputes.
TPC advocacy frequently takes the form of detailed investigation of a particular market
sector, followed by a report on practices in the sector and recommendations for
improvement. When successful, these research activities bring about significant market change, leading to the desired consumer outcomes, without litigation or further legislation. Recent studies are about:
・consumer credit insurance;
・the accountancy profession;
・life insurance and superannuation; and
・therapeutic goods.
It is also prominent in the codes of conduct area, advocating such codes where there is a need for market improvement and offering advice on how codes should be structured and administered to provide maximum consumer benefit. It advocates consumer representation in the administration of codes.
7. Right to satisfatction of basic needs [IOCU formulation] The TPA contains specific proscriptions of conduct with the potential to infringe this right, at least in relation to shelter, security, employment and fair treatment in the market:
・s.53A prohibits certain misleading representations in relation to the sale of land;
・s.53B prohibits a corporation engaging in misleading conduct in relation to employment that is or may be offered by the corporation;
・s.60 prohibits ‘physical force or undue harassment' in connection with the supply of, or payment for, goods or services (s 53A extends that prohibition to land dealings).
Breaches of any of these sections can attract a pecuniary penalty.
Accompanying the specific prohibitions is Part IVA, which prohibits unconscionable conduct in trade or commerce. Cases in this area have often involved the possible loss of homes by disadvantaged consumers.
8. Right to a healthy environment [IOCU formulation] The TPA contains no express references to environmental issues. The TPC has been charged nonetheless with the task of acting against misleading claims of environmental benefit. It does this using s.52 of the TPA, which prohibits misleading conduct generally.
This section is the basis for the TPC's empowerment to implement a broad ‘green enforcement' strategy which has included:
・the production of three publications (a guideline, a leaflet for business and a consumer leaflet) setting out the law in relation to environmental claims;
・the establishment of a toll-free telephone Greenline, through which consumers can provide or obtain information, or lodge complaints in relation to environmental marketing;
・monitoring of environmental claims by a TPC staff dedicated to that task;
・persuation of companies to alter questionable claims; and
・the institution of court proceedings where necessary.
This, I submit, demonstrates very well the dynamic flexibility of the TPA. Environmental issues are a relatively recent concern of Australian consumers and thus there is no speific reference to them; but the TPA is capable of being mobilised as an enforcement mechanism while the legislature considers the necessity for tougher, more specific measures.
While environmental marketing claims have been the TPC's main responsibility in the
environmental regulation mix, the recently-enacted product liability provisions also have
potential. Should a manufacturer's defective product cause environmental damage including direct harm to person or private property, the manufacturer would be srtictly liable for that harm.
9. Right to Choose [IOCU formulation] This is also an element of the UN Guideline relating to consumers' economic interests. The fact that a right to choice is seen as a fundamental right of consumers reflects the necessity for consumers to have a voice in competition policy; for competition policy to be inextricably linked with consumer protection policy.
Elements of competition policy which are addressed by the TPA include:
・mergers;
・price fixing;
・resale price maintenance;
・exclusive dealing;
・price discrimination;
・misuse of substantial market power; and
・anti-competitive agreements generally.
In the TPA and the TPC the two policies are linked at the legislative and administrative level. I consider this ideal, and note that there appears to be at least the beginnings of a
similar linkage in Japan: the Act Against Unjustifiable Premiums and Misleading Representations established special provisions within the Antimonopoly Act, and the Fair Trade
Commission has administrative responsibility for both competition and misrepresentation matters.18
18) Committee on Competition Law and Policy, Annual Report on Developments in Japan (January-December 1993), pp.18-19
Conclusion A responsive regulatory environment asserts and strengthens the eight fundamental consumer rights. There are no hard and fast rules for the establishment of such an environment, but some of the elements I have mentioned in this presentation are:
・tripartite co-operation (government, business and consumers) in the design and conduct of the system;
・government will to not only initiate the syste, but to follow through on its implementation;
・imaginative leadership of agencies with responsibility for consumer protection;
・results orientation in these agencies; and
・integration with other policy making and administration, with particular emphasis on competition policy.
I have offered the Australian model for consumer protecction as a useful one - no more than that. Like Japan, Australia has much to learn from the experiences of administrations elsewhere in the region and the world.
While I understand that the purpose of this forum was to consider options for reform of Japan's consumer protection law and administration, there is a regional dimension to this issue which I am compelled to mention before concluding.
We know that the global marketplace is on its way, with its enormous potential to improve the lot of consumers around the world. Part of this market evolution is the economic convergence of nations in our region. Convergence demands that Australia, Japan and their regional trading partners work closely on consumer protection policy, in order to ensure that its benefits flow on to consumers.
I leave you with that thought and my best wishes for the task that lies before you.