Major court victory for SA consumers

The Consumer Goods and Services Ombud (CGSO) scored a major victory for consumers on Friday when the Pretoria High Court confirmed the lawfulness of the Consumer Goods and Services Industry Code of Conduct, as well as the powers of the CGSO to levy annual participation fees.

As an independent and accredited alternative dispute resolution scheme, as defined in the Consumer Protection Act (CPA), the CGSO has signed up 979 organisations that includes most of the major retailers, manufacturers, wholesalers and distributors.

The CGSO applied for a declaratory order when electrical wholesaler, Voltex, challenged the constitutional validity of the code, the powers of the minister of trade and industry to promulgate it and whether it was compulsory for qualifying businesses to subscribe to the code and pay the annual participation fees.

When Voltex applied for a court order to force the CGSO to repay a participation fee of R285,000 and Astral Operations Limited, a company in the retail space, challenged the constitutional validity of the code, as well as the powers of the minister of trade and industry to promulgate the code, the CGSO approached the high court for the declaratory order instead.

Astral also stated that it was not compulsory for qualifying businesses to subscribe to the code and pay the annual participation fees. The declaratory order was granted and the court ruled in favour of the CGSO on:

• the lawful establishment of the CGSO Code of Conduct according to the requirements of the Constitution and the CPA
• the competence of the code to require mandatory participation for all eligible businesses
• the lawfulness and competence of the Code to require all eligible businesses to pay fees
• the competence and lawfulness of the CGSO Board to declare a fee structure for eligible businesses
• the competence of the CGSO to compel participants to disclose their annual turnover figures for determining the annual fees and/or levies
• the competence of the CGSO to initiate legal proceedings to recover any outstanding fees or levies
• the competence of the CGSO to approach a court, the National Consumer Tribunal or the National Consumer Commission when businesses fail to register with the CGSO and pay fees or levies.

Magauta Mphahlele, the ombudsman, welcomed the judgment.

“Regardless of whether a business subscribes to the code or paid its participation fees or not, the CGSO is obliged to deal with any complaints received against that business.”

She said the ruling meant that all qualifying businesses in South Africa must subscribe to the code by registering with the CGSO, declare their annual turnover and pay the annual participation fees.

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