Consumer rights in Oman have recently received robust enhancement from the Government in the form of approved new amendments to its Consumer Protection Law. These amendments are set to completely overhaul the existing legislation.
Following year-on-year growth in consumers’ complaints, the Majlis Al Shura (Oman’s consultative assembly and the lower house of the Council of Oman) recently approved the amendments to the Consumer Protection Law during its third annual sitting on 25 March 2014. These amendments were proposed by the Council’s Economic and Financial Committee and are intended to combat the rise in complaints that have resulted from activities such as monopolistic behaviour, price-fixing, anti-competitive practices, commercial fraud and irregularities in the provision of goods and services.
The draft amendments will now be referred for further consideration to the Majlis al-Dawla which is Oman’s State Council and the upper house of the Council of Oman. Thereafter, the proposed amendments will be considered by the Council of Ministers for codification into a new law. As a result, it is unclear at this stage what the final amendments to the Consumer Protection Law will be.
The Current Framework
The Consumer Protection Law, which is currently in force and which was promulgated by Royal Decree 81/2002, was last amended in 2011. The 2011 amendments took account of changes in consumer protection practices from various different jurisdictions. 2011 was also the year in which the Public Authority for Consumer Protection (PACP) was established by Royal Decree No 26/2011. When the 2011 amendments to the Consumer Protection Law were originally brought into force, they sought to promote fair dealings, curtail monopolies and eliminate fraudulent practices so as to ensure that the suppliers of goods and services would provide quality services and/or products to its consumers.
However, over the last two years, such measures introduced have not reduced the number of complaints which PACP has received. A recent PACP report indicated that the Authority had received (and successfully dealt with) 29,246 complaints in 2013 alone. In addition, it had also confiscated more than 2.5million items that violated consumer protection laws across the Sultanate governorates. These violations were across almost all consumer sectors, including food items, car tyres and spare parts, watches, jewellery, clothes, phones, electronic devices and building materials.
It was evident from the statistics disclosed in the PACP report that the 2011 amendments did not go far enough to have the deterrent effect originally intended and did not prevent monopolistic behaviour and commercial fraud from taking place. As a result, small businesses were disadvantaged. Some commentators have attributed the shortcomings in the 2011 amendments to lenient sentencing practices such as inadequate jail terms and insufficient financial penalties.
A New Law, A Tougher Stance
In order to address the current weaknesses in the consumer protection legislation, the Government of Oman performed a wholesale review of “best-practice” in a number of other commensurate jurisdictions including Egypt, Qatar and the UAE. The new amendments attempt to strike a balance between each of the competing stakeholder interests, including the interests of business and public policy, however, the interests of the consumer have been placed at the forefront of the legislative changes. Not surprisingly given the perceived shortcomings of the existing legislation, 21 articles out of the previous 50 in the current version of the Consumer Protection Law have been approved for amendment and some have been removed altogether in order to add teeth to the new draft.
The changes approved revolve around issues of safety, information, choice, and most notably, redress. The points listed below highlight some of the more noteworthy changes introduced by the new amendments:
- enhancing judicial control and jurisdiction to tackle pricing irregularities and ensure violators are held accountable with zero tolerance crack down;
- increasing the maximum financial penalties which can be imposed on entities in Oman from OMR5,000 to OMR10,000; and
- the ability to impose fines of up to OMR100,000 and jail terms ranging from three (3) months to fifteen (15) years for dangerous commodities that have adverse effect on consumers.
At this stage, it is still too early on in the legislative process to provide a thorough assessment of the impact of the new amendments. However, the proposed new amendments have already come under criticism with local publications reporting that they will be very costly for shops and small businesses in Oman. In contrast, others have voiced concerns that the amendments do not go far enough in terms of penalizing violators.
The Commercial Agency Law Amendment
Commercial Agencies are used as one of the principal methods by which products and services are imported into the Sultanate of Oman. Given their strategic importance to the economy of Oman, the Majilis Al Shura also discussed amendments to the Commercial Agency Law (Royal Decree 26/1977, as amended by Royal Decree 82/1984, 73/1996 and 66/2005) during the same sitting which discussed the amendments to the Consumer Protection Law noted above. These additional changes follow the receipt of a report from the Legislation and Legal Committee recommending modifications to this law.
One of the proposed amendments was to limit the number of agencies operating in Oman in order to exert greater control in the local market. Other proposed amendments were rejected including a recommendation to limit the number of car agencies in the Sultanate. The Majlis Al Shura rejected this proposition because they felt that limiting the number of car agencies would not only have an adverse effect on car sales, but also before and after car sale services, the cumulative effect of which could be potentially very damaging to the Omani economy.
The amendments outlined in this article provide a clear indication of how the Government intends to shape and reform the Omani economy in years to come. Whatever the final outcome of the changes which are promulgated into force, there will inevitably be some differences which existing businesses need to be aware of and some opportunities for new businesses to capitalize on.