Forward Planning: Regulations needed to protect consumers and promote healthy competition

This week's article is still motivated by concern about fair business practices and ethics, bringing the local business market to its highest level for the protection of consumers and promoting healthy and ethical competition by regulation of the market place.

Competition for some consists of using all kinds of methods in order to secure a deal regardless of the damages or harm being inflicted on others wheth-er competitors or clients themselves.

Healthy competition means presenting facts and ideas honestly using reason.

Unhealthy competition means using lies, emotions, deception and overall twisted ways and manners. Unfair competition which comes in all forms, sometimes means confusing consumers by the use of wrong trade practices.

Many countries have adopted an Unfair Competition Law which comprises all torts that cause an economical injury to a business through deceptive or wrongful business practices. Guaranteeing equal opportunity and protection for small businesses requires such law.

As a simple example in the line of finding remedies to unfair business and competition practices, let's look at Mongolia which has adopted its own law to prohibit wrong practices. It regulates relations connected with prohibiting and restricting state control over the competition between economic entities in the market, monopoly and other activities impeding fair competition.

Monopoly

It also fights dominance, monopoly and monopolistic activities. Dominance is identified as a situation which exist when a company or group of companies supplies more than 50 per cent of certain goods, services, products or carried out works on the market.

Monopoly is defined by a single entity accounting for the total supply of some goods or similar goods to the market.

Monopolistic activity consists of illegally preventing competition from entering the market.
The law covers both economic entities and government as well as local administrative organisations.

Economic entities are prohibited to carry out the negative activities of unfair competition such as : dissemination of false, inaccurate, or misleading information that causes losses to competitors or diminish their reputation; misleading customers by misinforming or disseminating false or inaccurate information about own or competitors' enterprises; etc.

Government and local administrative organisations are forbidden to adopt certain decisions like : prohibiting or restricting economical entities to engage in certain type of activity, production or sale of goods; giving priority or preferential treatment to any economical entity or discriminating against it ; and other similar decisions.

Complaints regarding unfair competition from economical entities, the public and other organizations can be filed either with regard to government violations or with economic entities involved in unfair competition activities.

Penalties

Penalties are imposed by court on the violators in the form of monetary penalties and/or confiscation of revenue and gained material values during a certain period.

The Consumer Protection Law of Mongolia is an added protection to the consumers' rights.
The law also covers the safe use of products which may be harmful to the health and life of humans or the environment.

Consumers' economic interests are protected with the right to claim damages for losses resulting from the wrongful actions of producers, sellers and contractors. The consumer is entitled to obtain true and complete information about a product.

Consumers have the right to choose between products according to their discretion. The Consumer or his representative has the right to seek damages either through the seller being able to remedy the damage or by filing an official complaint to the relevant state control organisation. This in Mongolia.

In the West, as in California, as another example, the "Unfair Competition" law encompasses any one of the five types of business "wrongs" which are: "unlawful" business act or practice; "unfair" business act or practice; "fraudulent" business act or practice; "unfair, deceptive, untrue or misleading advertising"; and any similar prohibited act.

A basic economical infrastructure must include proper rules and regulations to preserve the rights of consumers and business competitors alike, protecting them from dishonest and unlawful acts and providing fair and healthy competition for all.

The writer is a UAE-based insurance consultant and director of Gulf Insurance Consulting