Many people view the Consumer Protection Act 68 of 2008 (CPA or “the Act”) as the Bill of Rights for consumers – probably rightly so, as consumers will have ample rights in terms of the Act, once in operation. One of these rights is the Right to Choose as contemplated in Chapter 2, Part C of the Act.
What does the right to choose really entail?
The Right to Choose actually deals with all of the following issues:
- The Consumer’s right to select suppliers;
- Expiry and renewal of fixed-term agreements;
- Pre-authorisation of repair or maintenance services;
- The Consumer’s right to a cooling-off period after direct marketing;
- The Consumer’s right to cancel advance reservation, booking or order;
- The Consumer’s right to choose or examine goods;
- The Consumer’s rights with respect to delivery of goods or supply of service;
- The Consumer’s right to return goods;
- Unsolicited goods or services.
The right to select suppliers by implication excludes bundling of products or services.
The Consumer’s right to select suppliers
Section 13 of the CPA prohibits a supplier of goods or services to require (as a condition of offering to supply goods or services or to conclude an agreement with a consumer) that the consumer purchases other goods or services from that supplier or a specific third party supplier. In practice, this means that it is against the law to bundle [private]products or services, because it infringes a consumer’s right to choose its supplier. For example, where supplier A provides a software solution on condition that the consumer buys the hardware required for the software to run on from supplier B (or A for that matter).
The CPA wants to avoid the situation where a consumer is forced to buy more than one product (or obtain a service) from the same or nominated third party supplier where it does not actually want to buy the second product (or obtain the service) from the supplier. The consumer might not need the second product or service. For example, you want to buy a surf board, but the surf shop says that if you want a surf board you have to buy a wet suit. Fine if you live in Cape Town, but not if you live in Durban.
There are certain exceptions to the general prohibition on bundling. The CPA prohibits bundling, unless the supplier can show that:
- the convenience to the consumer to bundle the goods or services outweighs the limitation or restriction of the consumer’s right to choose
- bundling of the goods or services results in economic benefit to the consumer – surf board R100, wet suit R100 – surf board and wet suit R180
- the supplier offers bundled goods or services separately and at individual prices as well
The bundling must be to the consumer’s advantage or the different goods or services must be offered individually as well
So, the bottom line is that the bundling must be to the consumer’s advantage or that the different goods or services must be offered individually as well. In practice, exception 3 won’t be problematic – it is easy to ascertain whether a supplier provides goods and services at individual prices or not. Applying exceptions 1 and 2 may be a bit more difficult. Convenience v limitation is a matter of interpretation and each case will have to be judged on its own merits. The same goes for economic benefit. On the face of it, a “saving” to a consumer seems to be an economic benefit. But is it really an economic benefit if the consumer did not want or need the second product or service in the first place? We’ll have to wait and see how the Commissioner and Tribunal (National Consumer Tribunal established by section 26 of the National Credit Act) and Courts interpret these exceptions.
Real life cases
Recently Telkom has come under fire for the bundling of it voice services with that of its ADSL data service, or more specifically that it is impossible to subscribe to ADSL service without first getting a voice subscription. This is a clear example of bundling, as defined in the Act, and is unlawful unless Telkom can rely on one of the exceptions.
Telkom cannot rely on exception 3 as currently they do not offer ADSL services separately to voice services. The fact that ADSL services are priced separately from voice services on ones bill does not mean Telkom has met the requirements exception, as these services are not offered separately.
As mentioned above, it is difficult to determine how the National Consumer Commissioner will interpret exceptions 1 and 2, so how it they will rule in in telkoms matter is difficult. Given the Commissioners strong “pro-consumer” statements thus far, it is likely Telkom will not meet the requirements for exception 2. I say this on the basis, that even if ADSL prices are subsidised by the voice services, I don’t think the subsidisation is so great that it would benefit the Consumer to take voice services, that they don’t intend to use.
I think Telkom’s greatest chance lies in exception 1. Because this section is so loosely defined, Telkom could possibly make an argument that, for technical reasons, ADSL services can only be provided on lines that have voice services already enabled on them. To my mind, I don’t think that this argument will work, and if the matter goes before the Commissioner I think we will see them rule in favour of the Consumers.