CAIRO: The Federation of Egyptian Industries (FEI) called on the government Sunday to rescind the recently ratified Consumer Protection Law, until significant amendments are made, to protect local producers from going out of business.
FEI s lobbying comes a week after its Food Industries Division said that, if fully implemented, certain clauses in the law could put many producers out of business. Ratified in May, the law requires businesses to accept returns and exchanges within 14 days as long as a receipt is presented, and stipulates fines from LE 5,000 to LE 100,000 for violations ranging from refusal to return goods to the intentional sale of defective goods.
The law, which complements the 2005-ratified anti-monopoly law, allows consumers and NGOs to file complaints against non-compliant businesses to the Ministry of Foreign Trade and Industry s Competition Commission, which has the authority to settle disputes and issue binding rulings and fines.
It has to do with public awareness of the procedures required to file complaints, Economist Magdi Sobhy of Al Ahram Center for Political and Strategic Studies told The Daily Star Egypt. I think waiting for the public to present formal complaints is unrealistic. The government must take the initiative, at least in the early stages of implementation of the law, to conduct its own investigations based on its sense of the market.
Sami Abdel Latif, board member of the Central Egyptian Society for Consumer Protection, says he is satisfied with the law as a first step. It stands out, he says, as the first of its kind since the 1952 revolution.
Historically, there has never been a need for consumer protection because the state controlled production and distribution of most goods, he says. Consumers could only resort to the ministries of supply and trade and a few NGOs if they wanted to complain. Now there s a law and consumers are empowered to take their cases to court if need be.
Although he says the Consumer Protection Law, as it stands, does not go far enough, Sobhy says it s natural for FEI to claim the law goes too far. Any gains that FEI can attain now will only give producers more control over the market and put more consumers at risk of unreasonable price hikes, he says.
We don t have a tradition of protecting consumer rights, says Sobhy. I m still not convinced it will make a difference . At the same time that we see the government controlling everything on the political front, it s hard to see that it will not have a large influence on the economic front. So it really depends on the government s will, which does not stand to benefit from the law.
Abdel Latif agrees the law has been politicized. But unlike Sobhy, he says the fact should work in favor of the consumer because the government has a vested interest in keeping the consumer happy.
I m optimistic but it will take time, says Abdel Latif. People are demanding protection more than ever before, which is introducing a very important political element into the issue.
Still, Sobhy says it is unlikely consumer protection will be effective without ending market monopolies that characterize the Egyptian market today. Monopoly structures, he says, have grown beyond one or two companies forcing others out of the market through practices such as price-dumping.
Today, especially in the cement and steel-production sectors, large companies are able to conspire with smaller companies to pre-determine market share, and therefore price, so everyone wins. The practice minimizes harm inflicted on smaller companies, keeping them from taking advantage of the new anti-monopoly legislation, he adds.
Commission Chairman Mona Yassine says just seven complaints of alleged monopolistic practices have been filed since May, despite the seemingly increasing public dissatisfaction with prices and quality of service.
At the American Chamber of Commerce-sponsored competition seminar Monday, Competition Commission Executive Manager Khaled Atya said the seeming failure of the law so far is related to the relatively large gray economy that has grown over decades in Egypt. Economists estimate gray, or unofficial, economic activity accounts for as much as 50 percent of business activity in Egypt.
Unofficial business is not under control of the law or the commission, Atya said. We need to find ways to integrate this activity into the official system.
