Consumer Affairs Authority


Vision
A well protected consumer within a disciplined business culture

Mission
To safeguard consumer rights and interests through consumer empowerment, regulation of trade & promotion of healthy competition
 


CORPORATE GOALS of the Authority

  • Protect Consumers against hazardous and substandard Goods and Services
  • Protect Consumers against deceptive conduct and unfair and restrictive trade practices
  • Provide Redress to Consumers affected by unfair Trade Practices
  • Provide Consumer education and empowerment of consumers
  • Protection of Traders and Manufacturers against anti-competitive trade practices and promotion of healthy competition
  • Ensure reasonable pricing
  • Augmenting Authority’s own strengths – Legal & Financial
  • To develop a competent, committed and motivated workforce through the application of modern Human Resource Management practices
  • Implementation of Government Policy relating to Consumer protection and furtherance of fair trading
  • Assist in improving productivity levels of the Public and Private Sectors
CORPORATE VALUES
  • Trust
  • Honesty & Integrity
  • Accountability
  • Team Spirit
  • Recognition
  • Commitment
  • Responsiveness
  • Creativity & Innovativeness
INTRODUCTION
 
The Consumer Affairs Authority was established by the Consumer Affairs Authority Act No. 09 of 2003, and commenced operations on 1st July 2003. The purpose of the Act is to give effect to Government policy to promote competitive pricing, to ensure healthy competition among traders and manufacturers of goods and services, to offer better protection to the consumer through the regulation of trade and prices of goods and services, consumer education and empowerment, and to protect traders and manufacturers against unfair and restrictive trade practices. The Consumer Affairs Authority replaced the former Fair Trading Commission and the Department of Internal Trade, which were wound up to pave the way for the operation of the new Consumer Law of 2003.
 
OPERATIONAL STRUCTURE UNDER THE ACT
 
The Consumer Affairs Authority was established by the Consumer Affairs Authority Act No. 09 of 2003, and commenced operations on 1st July 2003. The purpose of the Act is to give effect to Government policy to promote competitive pricing, to ensure healthy competition among traders and manufacturers of goods and services, to offer better protection to the consumer through the regulation of trade and prices of goods and services, consumer education and empowerment, and to protect traders and manufacturers against unfair and restrictive trade practices. The Consumer Affairs Authority replaced the former Fair Trading Commission and the Department of Internal Trade, which were wound up to pave the way for the operation of the new Consumer Law of 2003.
 
ORGANIZATION STRUCTURE AND FUNDING
 
The Authority has an approved cadre of 312 and the number currently employed is 189. An Internal Auditor was appointed to the Authority from 16th October 2007. At present the Post of Director General of the Authority is vacant since the termination of services of the incumbent on 12.10.2006. A permanent appointment cannot be made to the position due to the stay order issued by the Court of Appeal in the case filed by the former Director General against the Authority. The post of Director (Pricing & Management) is also vacant and action is being taken to fill the said vacancy.

The Authority is expected to conduct its activities during the current year within the monetary allocation of Rs. 113.9 Million for recurrent expenditure and Rs. 2.8 Million for capital expenditure. The monies so far released by the Treasury up to end August 2008 have been Rs. 55.7 Million in respect of recurrent expenditure and Rs. 2.2 Million in respect of capital items. The total of the vote on capital account is expected to be incurred during the 2nd half of the year. The major item of expenditure under the recurrent vote is personnel emoluments which comprises approximately 68% of the total recurrent vote.

The total amount of money received from the Treasury upto August 2008 is Rs. 55.8 Million and the total payments made during this period is Rs. 54.2 Million. Payments on account of staff emoluments was Rs. 30.5 Million. The Authority has spent a sum of Rs. 471,217/- for Staff Development during the period in question.

The Budget for the year 2009 has been submitted to the Treasury with the approval of the Board of the Authority. The Final Accounts for the year 2007 h`ave been submitted to the Auditor General within the specified period.

 
ACHIEVEMENTS - 01ST JANUARY TO 15TH AUGUST 2008
 
The Authority as per the mandate given to it has taken steps for the protection of consumers against deceptive conduct and unfair and restrictive trade practices. In this context the Authority has conducted 2160 market investigations and raids and has filed cases against errant traders in the respective Magistrate's Courts. The amount of fines collected during this period was Rs. 10,501,850/-.
 
Table 01 - Raids conducted by the Authority
 
 
Table 02 - Fines collected by the Authority
 
 

A procedure is also being devised to publish names and addresses of traders convicted in Courts for the violation of the provisions of the Act for the information of the general public.

The Authority has identified consumer empowerment as the best method of achieving its goal of consumer protection. In this context the Authority has taken steps to establish 22 new Consumer Organizations in the Districts of Matara, Matale, Kandy, Trincomalee , Batticaloa and Ampara.

Awareness among school children for different age groups and categories were also conducted by the Authority and the total number of children benefited by these programmes amounts to 9500 children in 30 schools in the Districts of Matale, Kalutara, Badulla, Anuradhapura, Kurunegala, Ampara, Colombo and Kandy. These students included Ordinary Level students and Advanced Level Commerce stream students. Programmes were also conducted for University students specially for students from the Faculty of Law and the Sri Lanka Law College. The Authority actively participated in the "Deyata Kirula" National Exhibition in the 1st Quarter of the year. Awareness programmes were also conducted for the Government Officials and the general public as well in the Districts of Anuradhapura, Matara, Kandy, Nuwara Eliya and Matale Districts with the participation of approximately 2500 people.

The World Consumer Rights day was celebrated in the year 2008 under the world theme "Junk Food Generation - Need for Action". This year, the main celebrations were held outside Colombo with an idea of taking the concepts to the people living outside the capital and also with the objective of taking the activities of the Authority to the regions. Prior to the main programme in Kandy, schools, public institutions, Universities in the Central Province was covered and school children, University students, public officials and the general public actively participated in the programmes conducted in the Central Province. The activities also included an interschool painting competition among school children of the province, awareness programmes for Government Officials, teachers and school children of the Central Province. A Drama on the world theme was also staged during the main function.

Awareness campaigns were also conducted through both print and electronic media. The print media focussed mainly on the affairs of the Authority and on consumer rights and interest and these publications have provided valuable opportunity for the consumers to be kept abreast of the latest developments in the trading and consumer world. Officials of the Authority also participated at several awareness programmes in the electronic media (Television and Radio programmes) on Consumer Rights and the provisions of the Act.

Apart from conducting Awareness Programmes for the general public the Authority has conducted several Trader Awareness Programmes for the employees in the Corporate Sector and also Trader Associations in Kandy and Matale Districts to educate them on the compliance of the Provisions of the Act, good business practices and also on the provisions in respect of anti competitive practices.

The Authority established a Consumer Complaints Bureau specially for complaint handling during this year in the Ground Floor of the premises which has easy access to the general public, in order to provide a better and a speedier service to the consumers.

During the period the Authority has received 802 consumer complaints and the Authority has been able to grant redress in respect of 479 complaints through discussions /mediation. During this period the Authority has conducted 48 inquiries in terms of Sections 13 and 32 of the Consumer Affairs Authority Act No. 09 of 2003. The Authority also referred 42 complaints to other regulatory bodies for redress.

 
 
Table 03 - Complaints received by the Authority
 
 

A Consumer Court was also established during this period with exclusive powers to deal with consumer complaints. The Authority made several proposals for amending the current Act, and the Authority received the final draft from the Legal Draftsman's Department recently. It is expected that with these amendments in place, the Authority would overcome many issues in implementation and also the new provisions would provide better protection for the consumers. Provisions on Mergers and Monopolies have also been proposed to be incorporated to the Amendments.

The Authority appointed a Special Committee comprising Full Time Members and several other Members to look into the possibility of implementing the provisions in respect of Registration of Traders as provided for in Section 27 of the Act. It is hoped to submit the proposals towards the latter of the year for the consideration of the Hon. Minister in charge of the subject and also for the determination of the Registration fee.

Apart from the Committee on Registration of Traders, a Special Committee for 'Maintaining Quality & Safety of Food Products' has also been appointed to look into a much needed and important area for consumers. This Task Force comprises the Full Time Members, other Members of the Authority and representatives from relevant Organizations including the representation from the line Ministry and several important decisions have been taken during this period and the Authority is in the process of implementing the same for the benefit of the consumers.

During the period, by way of a Gazette Notification, Rice was specified as an essential item by the Hon. Minister in charge of the subject in consultation with the Authority.

The Authority has during this period issued 04 Directions in terms of Sections 10 & 12 of the Consumer Affairs Authority Act and 03 Orders in terms of Section 20(5) of the Act. Orders in terms of Section 20(5) of the Act were issued for the first time in the history of the Authority where a Maximum Retail Price was fixed above which such goods cannot be sold, on Chicken meat and on a few identified varieties of Rice. Market investigations and raids have also been conducted by the Authority subsequent to the issuing of the said Orders for compliance of such Directions and Orders by the Traders.

 
 
Table 04 - Price Movement of Rice (Specified varieties) - January to July 2008
 

  

 

  
 

The Authority has taken steps to enter into written Agreements with Traders/Associations of Traders to regulate the Maximum Retail Prices of Milk Powder, Broiler Chicken meat and Cement and has regulated the price of LP Gas through the Pricing Formula.

The Authority in the recent past has taken steps to monitor the entry of substandard goods into the Country with the assistance of the Sri Lanka Standard Institution and Sri Lanka Customs. In this respect the Authority was able to monitor 229 cases where the SLSI has ordered the consignment of goods to be re-exported as they have not conformed to the Standards prescribed by the SLSI.

The Authority has examined 12 Pricing Applications on LP Gas, 54 Pricing Applications on Milk Powder, 04 Pricing Applications on Wheat Flour 03 applications on Chicken meat and 13 Pricing Applications on Cement during the period in question.

 
Table 5 - Pricing Applications on FCMP, Cement, Wheat Flour, LPG & Chicken meat
 
Item No.of
Applications
received

Determination
given 		Agreements
Entered 		Remarks
Full Cream Milk
Powder 		54 17 33 04 in Progree
Cement 13 3 10  
Wheat Flour 04 4    
LPG 12 9   03 in Progress
Chiken Meat 03 2 1  
 
Table 6 - Prices approved by the Authority for Ordinary Portland Cement
 
Year 2008 Requested
Price range

 Approved
Price 		Remarks
January Rs. 728/-,790/- Rs. 692/- Western
Province
February Rs. 728/-,790/- Rs. 720/- For 03 Months
April, May, June Rs. 780/-,815/- Rs. 760/- For 07 Months
 

Authority was able to negotiate the price of Cement at Rs. 692/- and at Rs. 720/- for 03 months and at Rs. 760/- for 07 months during the past period. Table 6 shows the prices proposed by the respective Companies during that period. Authority was able to fix the Maximum Retail Price at a lower price than the requested prices.

 
Table 7- Prices approved by the Authority for Full Cream Milk Powder
 
2008
Pack Size

 Requested Price
range 		Approved Price
April 400g Rs. 300/-, 360/- Rs. 275 /-
  1 Kg Rs. 710/-, 797/- Rs. 687 /-
June 400 g Rs. 300/-, 370/- Rs. 275 /-
  1 Kg Rs. 732/-, 810/- Rs. 687/-
 

The Authority was able to keep the MRP of FCMP at Rs. 275/- and Rs. 687/- for 400g and 1 Kg respectively from October 2007 onwards even though milk powder Importers have made applications to increase the price (Table 7).

 
Table 8- Prices approved by the Authority for LP Gas
 
Year 2008 Requested Prices Approved Prices
February 1,870.00
1,835.00		 1,749.00
1,831.00
April 1,953.00
1,822.00		 1,729.00
1,819,00
June 2,054.83
1,687.81		 1,737.00
1,668.00
 

Price supervision on LPG is governed through a Formula agreed upon by LPG operators (Shell Gas Lanka and Laugfs Gas Ltd.) and Consumer Affairs Authority. Requested price column shows 02 prices which requested by the 02 companies. The Authority was able to fix the MRP for Colombo District as above for both companies based on independent verifications obtained from third parties.

The Authority was able to discuss matters with all stake holders, specially with the Commissioner General of Essential Services and bring a solution to the high LP Gas pricing in the Jaffna peninsula.

The Authority actively participated for discussions with the Sri Lanka Standards Institute (SLSI Sectoral Committee) in developing standards for Cement. We also had discussions with the Officials of the Central Environment Authority (CEA) for the management of Polythene and is in the process of issuing a Direction for same.

The Authority is also actively involved in the protection of environment through discussions with the Officials of the Central Environment Authority (CEA) on the issue of e.waste.

Officials of the Authority also had discussions with the Sustainable Energy Authority (SEA) on the import control of energy consuming appliances where a mechanism was proposed to be adopted on same.

The Authority has been able to successfully handle pricing applications during the period in question since no litigation has been instituted against the Authority on the determination of pricing applications during the period.

The Authority also had discussions on the introduction of new/improved varieties of rice developed by the Department of Agriculture and CIC Agro Ltd., with the assistance of M/s Cargills (Ceylon) Ltd., and on the marketing of same in compliance with the existing laws.

The official Website of the CAA which was launched in 2006 with the assistance of the ICTA is being maintained and updated by the Authority and changes are being effected to the website which would carry more information about the powers and activities of the Authority.

Regular price surveys on consumer goods have been carried out during the period and 36 such reports have been completed and submitted. Eight representations made by traders on alleged anti competitive trading practices were examined and four of them were disposed of while three matters have been referred to the Consumer Affairs Council for determination.

A Research was conducted for the identification of the possible or likely effect of restricting the supply of shipping services in Sri Lanka due to the Europe's ruling to outlaw monopolistic practices in the shipping industry and a Report was prepared and submitted on same.

Steps have been taken to calculate the market shares of 20 consumer products with the view of examining the possibilities of market dominance.

A mechanism was devised with the Department of Customs and the Chamber of Commerce for the implementation of the compulsory customs inspection scheme in respect of five products for which the Authority issued a Direction to ensure that the Maximum Retail Price (MRP) of such items are marked on the product at the time of arrival in the country. This scheme has already earned an additional revenue for the Government as this prevents under invoicing to a greater extent.

A special Project is being carried out by the Authority focussing on the present legal and administrative procedures relating to importation, manufacturing, distribution and marketing of pharmaceuticals in order to identify the deficiencies, if any, in the existing system and in making recommendations for improvements with a view of protecting consumers (patients) from exploitation by the pharmaceutical trade.

A special Project on the 'Intervention into the use of harmful substances for ripening of fruits' is also being conducted.

The Consumer Affairs Council which administratively functions under the Consumer Affairs Authority hears and determines references made to it by the Authority, chiefly in the area of anti-competitive practices in terms of Section 37 of the Act. Cases on excessive pricing, market imperfections and market manipulations, in terms of Sections 19 and 22 of the Act have also been referred to the Council. On references made to the Council in respect of the excessive pricing/market manipulation of Rice and Chicken Meat the Council investigated and submitted recommendations on the Maximum Retail Prices to be fixed on the said items which were subsequently gazetted by the Authority.

Three cases on anti competitive practices referred by the Authority and three cases on excessive pricing referred by the Authority are being investigated by the Council.

Monthly 'Bana' sermons and Meditation Programmes are being held for the employees of the Authority for spiritual development and for relieving stress among employees.

Steps were taken to refurbish the Office and upgrade the facilities with the view of providing a conducive and pleasant working environment for the employees and also with the intention of enhancing its appearance for the general public who obtain the services of the Authority.
 
DRAW BACKS
 
A Provincial setup for the Authority was designed with a view of decentralizing the activities and for the convenience of the general public in seeking redress for their grievances. It was earlier designed to set up Offices in the Southern Province during the 1st quarter of 2008 as a pilot project and to establish another office in the Sabaragamuwa Province. Since the Authority has not received approval for same from the relevant authorities this project could not be implemented during the period.

A Scheme of Recruitment was prepared and submitted taking into consideration the provisions of the Act, the areas that the Authority should concentrate in achieving its objectives etc., but the Authority has not got the due approvals from the relevant authorities for the implementation of same.
 
CONSTRAINTS
 
The Authority was not in a position to venture into new/innovative areas other than the routine work due to the lack of staff and the Government restrictions in recruitment.

A Consumer Complaints Bureau was established during the period as stated above but the approval to recruit a separate Receptionist for the said Bureau has been denied by the relevant authorities. Therefore the Authority has not been able to serve the Consumers as expected.
 
Table 02 - Fines collected by the Authority
 


 
PROGRESS TOBE ACHIEVED UPTO 15TH NOVEMBER 2008
 
The Authority plans to acheive the following during the period 15 th august- 15th November, 2008.
 
Activity Forecast
15th August to 15th November 2008
Raids 900 raids to be conducted
Fines To collect Rs. 6,000,000/- as fines
Consumer awareness programs Consumer education programmes to be conducted in the Southern Province
  • Awareness programmes to be conducted for GAs , AGAs GNs and other Government officials in the Districts of Galle, Matara & Hambantota.
  • Awareness programmes for school teachers and school children to be conducted in the Districts of Galle, Matara & Hambantota
Trader Awareness programs Conduct 8 programmes
Consumer Organizations To establish 6 organizations
Market surveillance 6 surveys to be conducted
 
WAY FORWARD - 2009
 

01. Establishment of Consumer Organizations
The Authority expects to establish Consumer Organizations with the assistance/ participation of other Government and non Government Organizations at Grama Niladhari level at least in identified areas of the Country. A strategy will also be devised for the sustainability of such Organizations. It is also hoped to conduct awareness programmes at village level by training the Office bearers of such Organizations in order to equip/familiarize them with the provisions of the Act and also on the objectives to be achieved by the Authority. Plans are also under way to recognize Consumer Organizations and award them based on their performances as a way of encouraging them.

02. Consumer Education and Empowerment
It is proposed to conduct education programmes in a more effective manner during the Year 2009. It has been planned to educate school children and also public officers during the year. Plans are underway to prepare a brochure containing information about the Education programmes of the Authority and it is hoped to circulate this brochure in Ministries and other Government Departments where such Institutions could make a request to the Authority to conduct programmes at their respective Institutions.

03. Registration of Traders
A Special Committee has already been established to develop a strategy for the implementation of Trader Registration which is overdue for a long period of time. It is hoped to submit Report to the Minister in charge of the subject for the determination of the fee and it is hoped to implement the scheme from the year 2009.

04. Strengthening the Statutory Powers
The proposed Amendments to the existing Act with the provisions of countering mergers and monopolies is hoped to be in place in the year 2009 which would strengthen the powers of the Authority and also in overcoming many implementation issues and for giving more powers to the Authority.

05. Developing a Consumer Charter
The Authority is hoping to initiate ground work in developing a Consumer Charter during the Year 2009 with the hope of protecting the consumer in a more effective manner.

06. Establishment of a fully equipped Media Unit
It is hoped to establish a fully fledged Media Unit and focus its activities mainly in the area of consumer education.

07. Decentralization of activities - Provincial Setup
A Provincial Set up was drawn and submitted for necessary approvals with a view of implementing the same during the Year 2007 but it could not be implemented since the Authority did not receive the necessary approvals as sought by it. Therefore it is expected to set up Provincial Offices during the year 2009 with a view of taking consumer protection to the regions. Initially it is proposed to set up Provincial Offices in the Southern and Sabaragamuwa Provinces as a Pilot Project.

08. Efficiency study on the Service Sector
It is planned to conduct an efficiency study focussing on one important segment of the Service Sector which has a very high effect on the consumer.

09. Study on price movement of fruits & vegetables
It is planned to conduct a study on market manipulation and its effect on price escalations/price movement of locally grown fruits and vegetables; ie; from the Producer/Farmer to the Consumer.

10. Study on market manipulation & its effect on price escalation/price movement
It is hoped to conduct a study on market manipulation and the effect on price movement on locally produced coconut oil taking into consideration the effect on coconut oil from other imported edible oil and substandard edible oils available in the market.


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