The Legal Environment
The Legal Environment
The government has passed many pieces of legislation over the past 40 years which aim to ensure that consumers are protected from the negative aspects of the operations of businesses.
The main pieces of legislation aimed at protecting consumers in the UK are:
- The Trade Descriptions Act, 1968: This makes it illegal for a business to provide false or misleading descriptions of their products, services, accommodation and facilities.
- The Unsolicited Goods Act, 1971: This stated that unsolicited goods become the property of the recipient if the sender does not retrieve them from the recipient within 30 days of notice.
- The Consumer Credit Act, 1974: This states that any business which offers credit facilities must obtain a licence from the Director-General of Fair Trading and must also display the annual percentage rate (A.P.R) that will be charged.
- The Sale of Goods Act, 1979: This states that goods must be of merchantable quality, as described in their advertisements and fit for their purpose.
- The Consumer Protection Act, 1987: This states that it is an offence for a business to give a false or misleading price indication on its product(s) AND businesses are liable for any damage and injury that their defective products cause to consumers.
- The Food Safety Act, 1990: This states that it is an offence for a business to sell food if it is not registered to do so and also if those handling the food have not been appropriately trained. It also states that the food must be of the expected nature and quality that is demanded by the consumer.
The government has passed many pieces of legislation over the past 30 years which aim to ensure that businesses treat all of their employees fairly and meet a variety of health and safety regulations. The main pieces of legislation aimed at protecting the employees in business are:
- The Employment Relations Bill, 1999: Stating that employees who have been in employment with the same business for a period of one year have the right not to be unfairly dismissed.
- The Employment Rights Act, 1996: Covering unfair dismissal, redundancy and maternity.
- The Public Interest Disclosure Act, 1998: Covering employees who disclose confidential information.
- The Health & Safety at Work Act, 1974: Covering working conditions and the provision of safety equipment, hygiene, etc).
- The National Minimum Wage Act, 1999: Making it illegal for employers to pay less than £3.60 per hour to its full-time staff who are aged over 21.
- The Equal Pay Act, 1970: stating that pay and working conditions must be equal for employees of the opposite sex who are performing the same work.
- The Sex Discrimination Act, 1975: Stating that it is illegal to discriminate against an employee, or an applicant for a job, on the grounds of their sex and/or their marital status.
- The Race Relations Act, 1976: Stating that it is illegal for an employer to discriminate against an employee, or an applicant for a job, on the grounds of their ethnic background.
- The Disability Discrimination Act, 1995: Stating that it is illegal for a business with 20 or more employees to discriminate against an employee, or an applicant for a job, on the grounds of their disability.
In the UK, the government body that is responsible for ensuring that anti-competitive business practices are abolished and consumers are protected is the Office of Fair Trading (O.F.T). This ensures that businesses meet the requirements of the Fair Trading Act 1973.
The O.F.T. has the power to recommend any business to the Monopolies and Mergers Commission (M.M.C) for further investigation, if it feels that they are acting against the public interest (e.g. charging very high prices, or restricting consumer choice).
The O.F.T. will also investigate any claims of restrictive practices, that is, where businesses act together to reduce the degree of competition in an industry (e.g. price fixing).
The O.F.T. has the power to set maximum price increases to prevent monopoly exploitation, sets quality standards for businesses to achieve, and establishes 'Watchdog' bodies to protect consumers' interests and monitor business practices.
The Competition Commission is an organisation that was established by the government in 1948, and it was designed to investigate and monitor proposed mergers and take-overs of large businesses and to ensure that any businesses with monopoly power do not act against the public interest.
In general, any business with a market share of 25% or more is likely to be investigated. The Competition Commission cannot take legal action itself against any businesses that are acting against the public interest, but instead it can recommend to the O.F.T. that action is necessary.