In an attempt to develop a mechanism of protecting the consumer and also ensuring the existence of acceptable trade practice norm the Ethiopian legal system has developed the following trade practice and consumer protection laws.  Below we have tried to give you a short brief about it.

Presently, commercial activities and the rights of concerned traders and buyers are regulated by The Trade Practice and Consumer’s Protection Proclamation (No. 685/2010). Obligations of the seller, rights of the buyer, illegal or harmful trade practices and their corresponding legal duties are incorporated within that aim to ensure the responsible carry of duties by parties as well as safety, health, interests and good will of the general public. This proclamation also establishes and enumerates the power and duties of the trade practice and consumer’s protection authority which among other things is responsible for the regulation and enforcement of the said provisions.

Duties of the seller

As a rule this proclamation sets obligations for the seller while only rights are provided as regards the buyer. This is probably because being the more experienced party as far as trading activities go, the seller is presumed capable of knowing and retaining the rights implied by the provisions. For example the provision restricting unfair competition conversely grants the right to other trades men to submit complaint and receive legal remedy where these acts are performed against them.  Restrictions were also put bearing in mind the vulnerable position of the buyer as the seller holds the important factors of good and value.  The proclamation therefore protects the buyer and imposes upon the seller obligations to:

1.       Give sufficient and accurate information or explanation on the quality, type of goods/ services he sells.

2.       To treat humbly and respectfully, his buyer and refrain from committing such acts like insult, threat, frustration or defamation.

3.       Displaying in public the tax inclusive prices of goods and services of their trade.

4.       Affixing on the good to be sold, labels indicating name, country of manufacture of the good, the gross and net volume of the good, quality of the good, safety measures to be considered while using the good, manufacturing date, expiry date, guarantee where one exists and  other details  necessary.

5.       Issuing receipts in respect of goods and services sold

6.       Disclosing the trade name of the business in a place where it could be clearly seen.

While these are responsibilities that the seller has to undertake in day to day trading, there exist other obligations, which, if not carried out, entail criminal sanctions. These being:

1.       Acts of abuse of dominance:  a business person is deemed to have a dominant role in a certain market where he has the actual capacity to control prices, other conditions of commercial relations or could restrain or even eliminate competition.  A business person shall not abuse the dominant position he has in the market. Specifically, he will not:

  • Limit production by withholding, diverting or hoarding goods to keep them out of the market
  • Commit harmful acts against a competitor that could harm, restrain or eliminate him
  • Impose unfair purchase or selling price
  • Refuse to work on reasonable terms with the sole purpose of harming competition.
  • Deny access to a competitor to an essential facility for no apparent reason

Any business person who abuses his dominant position in the market shall be fined up to 15% of his annual income or five hundred thousand to one million birr, as well as rigorous imprisonment between five to fifteen years.

2.       Agreements, concerted practices and decisions of  business associations that can prevent, distort or even eliminate competition: where,

  • Business  people who are also competitive traders conspire between themselves to fix the sale price or auction in concert or allocate products to be distributed by quota,
  • Business people in  supply and purchase relations with each other agree to a method of operation that has an aim of setting a minimum retail price,

 They shall be fined 20% of their annual income or 1 million to 2 million birr where that amount cannot be asserted as well as rigorous imprisonment from five to ten years.

3.       Acts of unfair competition:  where a business person, with the intent to harm or prevent competition through,

  • Performing or causing to be performed acts that create confusion about a competitor’s business, particularly his goods and services
  • Telling any false or unjustifiable allegation that is likely to discredit a competitor, his goods or services,
  • Comparing goods equivocally or falsely goods or services of a competitor in a commercial,
  • Acquiring advantage through obtaining information of a competitor’s business through bad faith like ex employees,
  • Disclosure , acquire or use of information contrary to commercial practice,

He shall be fined 10% of his annual income or where such income cannot be ascertained, from birr 300,000 to 600,000 and rigorous imprisonment from three to five years.

4.       Unfair and misleading acts: where the business person to mislead either the competitor or  customers,

  • Issues misleading information on quality or quantity or volume or acceptance or source or component or use of goods and services of a competitor,
  • Fails to disclose correctly the newness or model or the decrease in service or the re fabrication or recall because its second hand,
  • Describes goods in a misleading way,
  • Fails to sell goods as advertised,
  • Fails to meet warranty obligations entered in connection with the good and service provided
  • Misrepresents  the need for repair  the good to be sold,
  • Delivers part of a good or a service of low quality
  • Cheating or confusing in transactions like balance measurements,
  • Refuses to sell goods and services for reasons that are not protecting the rights of the consumer,
  • Unduly favors one customer over another,
  • Sells goods above the price affixed for it,
  •  Makes the consumer purchase a good or service not desired in order to sell another good or service.

These acts are punishable by fine ranging from birr 50,000 to 100,000 birr and rigorous imprisonment from three to seven years. But where such unfair or misleading act:

  • Is a pyramid scheme of sale which is a type of sale made whereby the seller promises a customer that he will get a reward in cash or in kind where through his salesmanship, he gets more customers to purchase such product and they convince others to buy and sell same
  • Is sale of goods or services that are dangerous to human health and safety, whose origin is unknown, or whose quality is below standards, poisoned, expired or adulterated,

The punishment is fine between a 100,000 to 300,000 birr and imprisonment from ten to twenty years.

5.       Hoarding or diverting of goods:  a good is said to have been hoarded or diverted where a good that is scarce in the market is found to compose 25% or more of the stock of a trade man or where the person is not a trader, such good is found in amounts that a reasonable man would expect to be too much for household use.  Not making available goods manufactured in Ethiopia using foreign raw materials or vice versa within three months from their being available for supplier is also considered hoarding.  With the exception of individuals who have received licenses to hoard goods, anybody who is found doing so will be fined 200,000 birr to 400,000 birr with rigorous imprisonment extending from three to seven years.

Rights of the buyer

These would therefore be,

  • To get sufficient and accurate information or explanation on the quality and type of goods and services he purchases.
  • Selectively buy goods or services
  • Not to be obliged to buy just because he looked into quality or options of goods and services or made a bargain regarding them
  • To be received humbly and respectfully by any business person and to be protected from such acts of the business person such as insult, threat, frustration and defamation the
  • Be compensated for damages he suffers because of transactions in goods and services
  • Submit his complaints to the trade practice and consumer protection authority for adjudication

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