Monday, January 12, 2015

Sultanate of Oman: The Consumer Protection Law

News headlines concerning the expiry of and re-packaging of goods, substandard production methods and incorrect product labelling now feature prominently in Oman news. The Consumer Protection Law (the “CPL”), enacted pursuant to Royal Decree 66 of 2014 which has repealed Royal Decree 81 of 2002, is a direct response to rooting out monopolistic market practices and the prevention of trading in or advertising counterfeit or unauthorized products or services, in an attempt to better regulate the activities of suppliers, advertisers and agents alike.

The CPL was also enacted to form the Authority (established pursuant to Royal Decree 26 of 2011), an independent regulatory body aimed to:

  1. ensure that the principles of the CPL are effectively implemented;
  2. initiate action against traders and suppliers in breach of the law; and
  3. detect inflated pricing or the sale of items which are banned in Oman.

Previously, the Ministry of Commerce and Industry (“MOCI”) monitored the actions of suppliers, advertisers and agents.

What are the main provisions of the CPL?

Consumer Rights: A consumer is defined as “any natural or corporate person who purchases a commodity or service” and whose rights are as follows:

  1. he right to receive correct information about the commodity he purchases or uses or the service he receives;
  2. The right to maintain his free choice when he selects any commodity or receives any service;
  3. The right to ensure the quality of the commodity or service and to purchase it at the announced price;
  4. The right that guarantees his safety and health when he receives a commodity or service and ensures non-infliction of harm while ordinarily using the commodity or service;
  5. The right to claim compensation for the injury sustained as a result of his purchase or his ordinary use of the commodity or service;
  6. Representation of his interests upon the formulation of consumers’ protection policies; and
  7. The right for respect of his religious values, customs and traditions when providing him with a commodity or service.

Duties of Suppliers and Advertisers: A supplier, which according to the CPL is “any natural or corporate person providing the service or selling the commodity to the consumer,” must (amongst other duties) provide a consumer with correct information about the commodity or service. In addition, a commodity which includes “every industrial, agricultural, animal or transformative” product must state the price, weight, date of manufacturer, date of expiry, the name of the product, its components, country of origin and number of specification in Arabic. In addition, although this list is not exhaustive, a supplier must guarantee the repair and maintenance of a commodity, and inform a consumer about a defective product, and stop trading as soon as a defect is discovered.

Further, it is imperative that both a supplier and advertiser act in a transparent and credible manner and avoid false and misleading advertisements when promoting commodities and services provided to the consumer.

What are the significant developments of the CPL?

There are three key changes to the former legislation, namely (1) the role, function and powers of the Authority; (2) increased penalties for contravention of the CPL; and (3) increased obligations of the commercial agent, all of which shall be expanded upon below.

Powers of the Authority: The Authority, in place of the MOCI, has by virtue of the CPL the power to investigate potential breaches of the Law wherein “they shall have the right to enter the shops and examine all documents related to the commodity or service provided by the supplier.” In addition, it is the Authority which “may decide to confiscate or destroy a commodity” that is the subject of a violation. By contrast, the former legislation had authorised the MOCI to seize goods only after a court order had been issued.

The increased power of the Authority is also evident by the fact that a supplier is not permitted to make any promotional offers or discounts on the services or commodities they offer without first obtaining a licence and approval from the relevant competent authority of the supplier’s activity after its coordination with the Authority.

Penalties: The CPL has imposed tougher penalties for violation of the CPL including imprisonment in addition to fines and possible confiscation and destruction of the commodity. Depending on the type of violation, an individual could face between 10 days and three years of imprisonment and/or RO 100 to RO 50,000 fine. This is in stark contrast to the RO 5,000 maximum fine (to be doubled in case of recurrence) as provided for in the former CPL. Further, the CPL now provides that the Court may, in case of conviction, order for the publication of the judgment’s summary in two widely circulated daily newspapers of which one would be in Arabic.

As well as sanctions being imposed by the Court, the Authority “may impose administrative fines” provided that the fine does not exceed RO 1,000 for the first offence, RO 2,000 for the second offence with a RO 100 fine per day for each day the violation is not removed, not exceeding RO 2,000 in total.

Commercial Agent Obligations: A commercial agent (“Agent”) is now obligated to adhere to all obligations of the manufacturer during the guarantee period. Further, the Agent must commit to providing spare parts and offer access to repair shops as required for the commodity. If an Agent is unable to fulfil these guarantees within fifteen days, the consumer is entitled to a similar commodity until such time when the guarantee is fulfilled.

What is the impact of the CPL?

The CPL has provided detail particularly with regards to the duties and obligations of the supplier, advertiser and agent. The new law is clear evidence of the fact that the Sultanate is cracking down on those in breach of the law and protecting consumer rights by encouraging fair competition, combatting the sale and distribution of counterfeit goods and curbing monopolistic market practices. However, as the CPL is only in its infancy, its true impact is yet to be realized. Currently it is unclear how the Authority and the Court alike will implement their power as provided for by the CPL. In addition, the indicative timeframe for implementation of the Executive Regulations to the CPL is six months from the implementation of the CPL. Again, we are uncertain of the nature and scope of the new regulations.