Statement by Mukhisa Kituyi, Secretary-General of UNCTAD

60th Anniversary of Consumers International

Virtual event
20 November 2020

Today, citizen’s welfare is the top priority for every policy maker around the world in both developing and developed countries. Faced with an unprecedented pandemic we are hard pressed to make markets work for every consumer. This is clear both in the response to the pandemic and recovery efforts.

Consumer protection has played a key role in the immediate response to the pandemic, fighting price gouging in basic household products and PPEs and medical goods, fighting scams and false claims, especially miracle products to treat COVID-19, and safeguarding consumers’ right to refund for cancelled air tickets, holiday packs and leisure events. Many consumer protection agencies also shifted their consumer information and dispute resolution initiatives online to cater for locked-down consumers.

Financial stimulus measures are expected to lessen competition in the post-COVID 19 period with difficult consequences for consumers. The likely scenario is that many undercapitalized companies from fiscally stressed countries will face competition from stronger foreign rivals strengthened by massive financial support. This will impact on market competition globally, moving markets in the opposite direction from the ‘level-playing field’.

SMEs are in a dire situation. Absent policy interventions, we expect a  non-COVID  bankruptcy  rate  of  9.4  per cent  to rise  to  18.2  per cent  for SMEs under COVID-19. The most affected sectors include accommodation and food services, arts, entertainment and recreation, and education. SMEs or start-ups in financial difficulty may become attractive targets for acquisition by dominant firms, especially by multinational companies. The will lead to an eventual rise in market concentration.

One can also expect weaker import competition in the post-COVID 19 period, if countries recovery plans adopt trade restrictive measures to make imports more expensive to favour domestic production.

The COVID-19 pandemic has also accelerated the shift towards a digital world. An UNCTAD survey of about 3,700 consumers in nine emerging and developed economies shows that online purchases have increased by 6 to 10 percentage points across most product categories. We expect that these changes in online activities are likely to outlast the COVID-19 pandemic.

Dominant online platforms have benefited significantly from COVID-19. Stock prices and market capitalization of top big technology companies have been on the rise since March 2020, when lockdown measures were adopted. This has created more incentives for these companies to invest in start-ups, thereby strengthening their market power.  According to Financial Times, Google, Amazon, Apple, Facebook, and Microsoft have made 19 acquisitions so far this year. This represents the fastest pace of acquisitions and strategic investments since 2015.

We need to make sure that our legislative frameworks are fit to address increasing market power of dominant digital platforms and to better protect consumers from unfair and misleading practices of these platforms. Governments should consider regulation of these platforms in a way to maintain competitive and open digital markets and better protected consumers. Some economies – for example, the EU and Germany are making efforts in this direction and others should follow suit.

Consumers must enjoy a level of protection online that is no less than offline. This may mean enacting or reviewing national policies and upgrading enforcement capacities.

Another emerging priority is to ensure access by consumers to access fair, effective, transparent and impartial dispute resolution mechanisms, particularly online. Businesses should protect consumers’ privacy through a combination of appropriate control, security, transparency and consent mechanisms relating to the collection and use of their personal data.

The United Nations Guidelines for Consumer Protection remain a relevant tool for Governments aiming to improve consumer protection in the medium and long-term. The Guidelines are a set of principles setting out the main elements of effective consumer protection legislation, enforcement institutions and redress systems. Their latest revision of 2015 has equipped them for the digital era.

The COVID-19 pandemic has only confirmed the ongoing importance of international cooperation in the fields of competition and consumer protection: to share experiences, to exchange information on similar competition and consumer protection cases, to improve laws and policies or generate consensus and take common positions.  UNCTAD is the focal point within the UN systems on these two issues and offers the only platform for global international cooperation.

Consumer associations are key participants in this important ongoing dialogue, playing essential roles in the institutional frameworks for effective consumer protection. They represent the voice of the consumer and their overall participation in the policymaking processes that, in turn, help inform government policies. Consumers associations play vital roles in educating, advising, representing and counselling consumers so as to enforce their rights. They help reduce the imbalances between business and consumers by empowering consumers and giving them the confidence to make informed decisions. Consumer associations are even more needed now, that markets must be rebuilt to be fairer and more inclusive.

The development of independent consumer groups is a cornerstone of global consumer protection. The United Nations benefits from the relentless contribution of the consumer advocacy movement to keep government action close to consumer needs. UNCTAD strives to facilitate dialogue among policy makers and consumer groups and forge new alliances among all stakeholders in consumer protection.

We at UNCTAD remain committed towards working with consumers associations. We congratulate Consumers International for its 60th anniversary and look forward to a promising future of partnership in which the consumer advocacy movement, governments and international organizations shape the future of consumer relations to the benefit of all consumers around the world.