Business Practices Committee Report 79

The Consumer Affairs Committee (the Committee) administers the Consumer Affairs (Harmful Business Practices) Act, 71 of 1988 (the Act). It is a statutory committee, resorts under the Department of Trade and Industry and reports to the Minister of Trade and Industry (the Minister). The purpose of the Act is to provide for the prohibition or control of unfair business practices.

An "unfair business practice" is defined in the Act as any business practice which, directly or indirectly, has or is likely to have the effect of harming the relations between businesses and consumers, unreasonably prejudicing any consumer, deceiving any consumer or unfairly affecting any consumer. The definition makes no distinction between unfair business practices that come about by design and those that come about intentionally.

The Committee has wide investigative powers in terms of the Act. The Committee is empowered to undertake two types of investigations, namely formal and informal investigations. Informal investigations are undertaken in terms of section 4(1)(c) of the Act and formal investigations are undertaken in terms of sections 8(1)(a) and 8(1)(b). The Committee is not obliged to undertake a section 4(1)(c) investigation into the business practices of a particular entity or individuals before it embarks on a section 8(1)(a) investigation. This route is followed when the Committee has reason to believe that it has sufficient information at its disposal to forego the section 4(1)(c) investigation.

Notice of formal investigations in terms of the Act [section 8(1)(a) and section 8(1)(b)] are published in the Government Gazette. Should the Committee, after an investigation, find that an unfair business practice exists, it recommends corrective action by the Minister to ensure the discontinuance of the unfair business practice. The powers of the Minister are set out in section 12 of the Act. Orders of the Minister are published in the Government Gazette. A contravention of an order by the Minister is a criminal offence, punishable by a fine of R200 000 or five years imprisonment or both the fine and the imprisonment.

The focal point of a section 8(1)(a) investigation is any unfair business practice that exists or may come into existence and which involves a particular individual or individuals or business entity. The subsequent order of the Minister will be applicable to the particular individual or individuals or business entity. The focus of a section 8(1)(b) investigation is any business practice in general which is commonly applied for the purposes of or in connection with the creation or maintenance of unfair business practices. The subsequent order of the Minister will be applicable to all individuals and entities.