The boom in e-commerce in India over the past few years has paved the way for a spate of consumer complaints across India, with customers not having adequate information about pre-packaged commodities sold through such e-commerce platforms. Customers had limited information about various products offered on these websites and it was not uncommon to have bought a product that was almost close to its expiry date or having inadequate information about its weight and related aspects. A recent amendment to the legal metrology regulations seeks to bring in a much-required stronger consumer protection framework in this regard.
The Legal Metrology Act, 2009 and the Legal Metrology (Packaged Commodities) Rules, 2011 (Rules) prescribe the mandatory technical and legal requirements relating to standards of weights and measures for goods which are sold or distributed in India. The Rules were framed to regulate pre-packaged commodities such that they comply with certain mandatory labeling requirements and overcharging of prices of such commodities is prevented. However, it was silent about products sold through e-commerce platforms. The Rules have been amended with the notification of the Legal Metrology (Packaged Commodities) Amendment Rules, 2017 (Amendment) slated to come into effect from January 01, 2018. The Amendment specifically brings the products sold on e-commerce platforms within the ambit of the Rules to protect customers and bring in regulatory overview over e-commerce platforms.
The key aspects of the Amendment are as outlined below:
Applicability to e-commerce platforms
The Amendment defines an e-commerce entity and extends to e-commerce entities following the marketplace model. Pre-packaged commodities sold on e-commerce platforms will be mandatorily required to contain declarations prescribed under the Rules such as the name and address of the manufacturer, packer and importer, name of the commodity, net content, retail sale price, etc. Pre-packaged commodities refer to products placed in sealed packages such that the packages are not opened prior to sale of such products and the contents of the packages are not tampered with. The Amendment will apply to all commodities except packages containing food products that will fall under the Food Safety and Standards regulations and that of drugs and cosmetics that will be subject to the provisions of the Drugs and Cosmetics Act, 1940.
Responsibility of e-commerce platforms
For market place model of e-commerce platforms, responsibility of the correctness of declarations shall lie with the manufacturer/seller/dealer/importer and not with the e-commerce entity. This is subject to the e-commerce entity:
- providing only access to a communication system over which information is made available by the manufacturer/seller/dealer or importer;
- not initiating the transmission or selecting the receiver of the transmission or selecting/ modifying the information contained in the transmission; and
- observing due diligence while discharging its duty as an intermediary as provided under the Information Technology Act, 2000 (IT Act).
No dual Maximum Retail Prices (MRP)
Dual pricing is a fairly common practice undertaken by manufacturers of pre-packaged commodities, where they affix a higher retail sale price on a batch of pre-packaged commodities, which are then sent to malls, cinema halls, etc. The Amendment provides that no person shall declare different MRPs on an identical pre-packaged commodity, unless allowed under any law. This will benefit consumers at large as there are various instances where consumers suffer on account of the practice of dual MRP, when say, a one litre bottle of packaged bottled water is sold at a price higher than the MRP in different places depending on the nature of the commercial establishment.
Enhancing visibility
The size of letters and numerals for making declarations on the pre-packaged commodities has been increased with a view to enable the consumers to read the same easily.
Applicability of intermediary regulations under the IT Act
The Amendment also draws reference to the intermediary regulations under the IT Act applicable to a market place model of e-commerce. Such entities merely act as a facilitator/market place and do not play any part in creation or modification of the content or information. The e-commerce entity does not directly control the third party data but only provides access to a communication system over which information made available by third parties is transmitted.
The e-commerce entity has to observe due diligence while discharging its duty as an intermediary under the IT Act. This means that the e-commerce entity has to publish the rules and regulations, privacy policy and user agreement for access or usage of the intermediary's computer resource by any person. Such rules and regulations have to list the categories of information which if posted online could be considered as illegal such as information that infringes any patent, trademark, copyright or other proprietary rights, is blasphemous, obscene, pornographic, paedophilic, libellous, invasive of another's privacy, hateful, or racial, etc.
These provisions are in line with the provisions of the IT Act which prescribe the cases in which the intermediary is not held liable for any third party information, data, or communication link made available or hosted by them.
Voluntary declarations
The Amendment leaves it to the discretion of the manufacturer/packer/importer to put up logos of schemes such as Swachh Bharat Mission and barcode or QR codes on the commodities. Such discretion appears to be an attempt of the Government to not impose too many mandatory compliance requirements on businesses.
Our views
The Amendment comes in at a time when e-commerce has taken off in a big way in India and strengthens consumer protection for online transactions. While there will be an additional burden on the manufacturer, retailer, dealer and importer to ensure compliance with the Amendment while selling their goods through e-commerce platforms, the Amendment will increase transparency and turn out to be beneficial to the consumers in the long run.
Originally published July 26, 2017
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