Amendments proposed to enforce and enhance consumer protection in Singapore

The amendments to the Consumer Protection (Fair Trading) Act allow more aggressive and invasive action to be taken against errant businesses engaging in unfair practices.

The Ministry of Trade and Industry, Singapore, recently proposed certain amendments to the Consumer Protection (Fair Trading) Act (CPFTA) to enhance the enforcement and investigative powers contained therein. The key amendments include the following:

  1. The designation of the Standards, Productivity and Innovation Board (SPRING) as the primary investigative and enforcement body.
  2. The conferment of certain investigative powers on SPRING, such as the power to
    1. conduct investigations if there are reasonable suspicions of a supplier engaging in or a person knowingly abetting an employer of an unfair practice;
    2. demand and require production of documents, articles, or information;
    3. enter business premises with or without a warrant;
    4. take copies or extracts of documents as evidence; and
    5. seize and detain goods and conduct tests on them.
  3. The expansion of the courts power under s9(4) of the CPFTA to grant orders additional to an injunction or declaration, including an order to require publicity of the injunction against the business at its own expense. This appears to be in response to instances in which Singaporean businesses avoid injunctions by operating under a distinct corporate identity.
  4. The removal of the Injunction Proposals Review Panel (IPRP), which gives SPRING full discretion to apply to the court for injunctions (the IPRP presently reviews injunction applications by the Consumers Association of Singapore [CASE] and the Singapore Tourism Board [STB] to ensure that only serious cases are filed in court).

These amendments are expected to align Singapores consumer protection framework with other jurisdictions in terms of enforcement and investigative rigour. The current consumer protection framework under the CPFTA relies heavily on mediation and applications for injunctions or declarations made through CASE and STB. Yet these bodies do not possess investigative powers and face difficulties procuring evidence in support of their applications. In comparison, major economies such as Australia, the United States, and the United Kingdom have all conferred on their consumer protection agencies significant investigative and enforcement powers.

For example, the Australian Competition and Consumer Commission already has the power to enter business premises under warrant or by consent to seize goods, documents, and information as evidence. Domestic and European Union enforcers also possess the power to enter premises in the United Kingdom without warrant to seize evidence on grounds of a reasonable suspicion of a breach or infringement. In the United States and Australia, individuals may be compelled to produce documents to their respective commissions, similar to a subpoena, with such evidence possibly being taken under oath or declaration.

Retail businesses and other businesses that deal with consumers should take note of these enhanced enforcement measures. If passed, businesses should expect more aggressive and active enforcement by SPRING. A corollary of the additional investigative powers is necessary for businesses to maintain clear documentation of and transparency in dealings with consumers. Businesses that have not addressed prohibited unfair practices should refer to the CPFTA and take preemptive action to ensure that all employees are compliant. Such actions will aid in avoiding liability to injunctions and the reputational harm if publicity orders are made.

The draft bill was put to a public consultation from 16 May to 15 June 2016.

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The Office of Competition and Consumer Protection will combat unfair practices in the food industry

The President of the Office of Competition and Consumer Protection (UOKiK) will have greater authority and a wide range of opportunities to impose fines for unfair practices that involve using contractual advantage on the food market. Such changes are provided for in the draft Act on Counteracting the Unfair Use of Contractual Advantage in the Trade in Agricultural and Food Products, which has recently been published by the Ministry of Agriculture.

The new regulations will apply to business entities (both purchasers and suppliers) that use prohibited trade practices whose annual turnover (or the turnover of the capital group they belong to) exceeds PLN 100 million (c. EUR 23 million). At the same time the President of UOKiK will examine only cases where the annual turnover between business partners exceeds PLN 50,000 (c. EUR 11,000) in the year in which the proceedings commenced (or any of the 2 preceding years).

Under the draft act examples of prohibited practices include:

  • unfounded termination of an agreement (or a threat of terminating an agreement);
  • granting the right to terminate an agreement only to one party;
  • making the conclusion or continuation of an agreement contingent on accepting or satisfying another performance which is not connected with the master agreement;
  • unfounded extension of the payment deadlines for the supplied goods.

If the use of a prohibited trade practice is suspected, the President of UOKiK may carry out a dawn raid at the premises of a business entity. Under the draft act such inspection may concern, among other things, the companys documentation related to the subject matter of proceedings, e-mail correspondence and devices containing IT data.

If the use of contractual advantage (i) proves to be contrary to good custom; and (ii) threatens or violates a material interest of the other party, the President of UOKiK will be able to impose a fine of up to 3% of annual turnover. The business entity on which the fine is imposed will have the right to file an appeal to the Court of Competition and Consumer Protection.

Under the draft act it will be possible to commence administrative proceedings within 2 years of the end of the year in which the use of unfair practices was discontinued.

As well as imposing fines on businesses, the draft act also stipulates fines for natural persons. If a person performing a management function or a member of a governing body hinders or prevents an inspection, they may be subject to a fine of up to 50 times the average monthly remuneration (at present this totals approximately PLN 200,000, c. EUR 45,000).

The draft act is undergoing inter-ministerial and social consultations, so the final wording of the new regulations may be changed.

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