Consumer watchdog gets savage mauling
Established as a champion of consumer rights just over a year ago, the National Consumer Commission appears to have been more successful at making enemies than solving consumer issues.
Not only has the commission and its head, Mamodupi Mohlala-Mulaudzi, lost favour with some government departments and big players in the private sector, it is also at loggerheads with the Department of Trade and Industry, to which it reports.
A confidential report compiled by the Consumer Tribunal at the request of the department paints a damning picture of the commission and raises several "matters of serious concern".
At the heart of the discontent seems to be Mohlala-Mulaudzi's alleged over-eagerness to issue compliance notices, and the commission's way of dealing with the parties to a dispute.
Scores of the compliance notices have been overturned by the tribunal.
This hurts businesses. Even when they are successful, they have no way of recovering the legal costs of the review.
The report raises a number of concerns, including:
- The commission's failure to follow the correct procedures before issuing a compliance notice;
- Defective compliance notices;
- Issuing notices not authorised by the Consumer Protection Act;
- Failure of the commission to understand the act;
- Poorly drafted documents, riddled with errors;
- Contemptuous and unprofessional conduct by the commission when dealing with opposing lawyers and the tribunal; and
- Undermining the work of the tribunal.
The report states that Mohlala-Mulaudzi appears to "usurp" the role of Trade and Industry Minister Rob Davies by publishing notices in the Government Gazette.
"The commission has little or no understanding of [or makes little or no attempt to understand] the many and varied different types of business and/or business models against which complaints are laid."
A compliance notice is a serious remedy and carries a R1-million fine or 10% of a company's annual turnover if not adhered to.
The commission has had a poor success rate when compliance notices are reviewed, mostly because it fails to follow the correct review procedures, according to the report.
To date, 33 matters have been filed with the tribunal, all dealing with compliance notices issued by the commission, the report reveals.
In one matter, 45 compliance notices issued to the City of Johannesburg were set aside.
It says the commission bases its decisions "on its own subjective views", adding that it ''impugns the dignity of other state institutions'' and ''undermines'' the work of the tribunal.
Though confidential, the report was used by the commission in its urgent application to the Pretoria High Court for the setting aside of a recent decision of the tribunal in respect of Auction Alliance.
The court rejected the application.
Robby Coelho, a partner in law firm Webber Wentzel, which represented MTN at the tribunal, said: ''Only a handful of big companies have the capacity and resources with which to defend themself."
Compliance notices have been served on Telkom, Multichoice, Top-TV, Cell C and Vodacom.
''In some cases, smaller businesses that can't afford to challenge a compliance notice are forced to do what is demanded by the commission, even if the complaint against themselves is unjustified,'' Coelho said.
Mohlala-Mulaudzi herself is embroiled in a court battle about her employment contract, and about which department she should report to.
Judgment will be handed down on Monday, possibly putting an end to 10 months of friction between Mohlala-Mulaudzi and the Department of Trade and Industry.
Earlier, her application that she be authorised to report to a parliamentary committee and not the department was rejected.
In May she lost an application to the Labour Court that her contract be extended beyond September.
Mohlala-Mulaudzi could not be reached for comment.
She has made national headlines over the past two years.
In 2010, she was in the news when she was dismissed as director-general of the Department of Communications by then minister Siphiwe Nyanda.
Their working relationship was said to have broken down irreparably after they bumped heads over tender procedures.
She went to court to challenge her dismissal but an out-of-court settlement was reached after President Jacob Zuma intervened.
She was assigned to the commission in October 2010.
THE NCC'S STRIKE RATE:
- Matters referred to the tribunal for review: 33
These include names like Eskom, the City of Johannesburg, all the big telecoms companies, BMW, Volkswagen, Audi SA, Peugeot Citroen SA, and Kia, among others.
These are only the companies that applied for a review of the compliance notices issued against them; smaller ones just accepted the NCC's rulings
- Judgment was issued in six of the matters, including the cases involving MTN, Vodacom and the City of Johannesburg. Notably, the tribunal judged that the correct procedure was not followed by the NCC in issuing the compliance notices.
- The NCC failed to file responding affidavits to 13 of the notices under review; the rest are in various stages of completion.