Business Self-Regulations

How to ensure consumer protection from unfair, restrictive, deceptive and exploitative practices of manufacturers and suppliers?

The important ways for Consumer Protection are:

  1. Imposition of self-regulation and discipline by the manufacturers and suppliers of goods and services for working in the interests of consumers.
  2. The role of government which can enact laws for the protection of consumers and make arrangements for their enforcement.
  3. Voluntary organisation of consumers to form groups such as NGO, cooperative societies to safeguard the interests of consumers.

We explain below in detail the above three ways of protection of consumers.

Imposition of Self-Regulation and Discipline by Manufacturers and Dealers:

The important way for consumer protection is the voluntary imposition of self-regulation and discipline by the manufacturers and others engaged in supplying and distributing goods and services. If they are self enlightened, they would pay due attention to the consumer rights. Of course, producers’ main aim is to maximise their profits but this should be achieved by raising their efficiency in production and quality of their products rather than deceiving and exploiting consumers.

The socially responsible producers and distributors must not form cartels and adopt monopolistic practices to fleece consumers by charging high prices. Prime Minister Dr. Manmohan Singh in the annual session of Confederation of Indian Industry (CII) in May 2007 rightly urged the captains of Indian industries to exercise self-restraint in charging and raising prices by using their monopolistic power.

To quote him, “The operation of cartels by groups of companies to keep prices high must end. It is unacceptable to obstruct the forces of competition from having free play. It is even more distressing in a country where the poor are severely affected by rising commodity prices. Cartels are a crime and go against the grain of an open economy”.

He further adds. “Maximisation of profits should be within the bounds of decency and greed’. Similarly, long ago, Mr. T. Thomas, a former chairman of Hindustan Lever Limited in his speech at the 44th Annual General Body Meeting in 1977 stated, “Restraint is best exercised voluntarily than through legislation which will otherwise become inevitable. Advertising agencies and marketing management have a very important role to play in this respect. By over-playing the claims they will be cutting the very branch on which they are perched”.

However, in our opinion it is idle to expect that private business executives will impose self-discipline on them and exercise restraint on deceiving and exploiting the consumers for maximising their profits. The fact is they regard making large profits as a symbol of their success in business and it has therefore become a mission of their life.

However, a novel way to ensure compliance of business for paying due regard to the consumer rights and the promotion of social welfare is to ‘publicize’ certain important information about proper code of conduct and require businesses to report their degree of compliance to this information. For example, in the USA, the government provides and widely publicizes information about industrial pollutants and require the manufacturers to report about the extent of pollution generation by them.

The submission of reports about their emission of pollutants and Government’s publicity about them induces some compliance by them in maintaining standards of safety. A noted example is the ‘US Toxic Release Inventory’. According to this, manufacturers are required to submit reports about the toxic materials they release in the environment. This induces them to reduce pollution to maintain their reputation.




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