The Consumer Goods and Services Ombud (CGSO) has welcomed the ruling by the High Court of South Africa, Gauteng Division, in the matter between the Consumer Goods and Services Ombud NPC VS Voltex (Pty)LTD and Astral Operations limited, (Case number 18096/2017).

The ruling confirmed the lawfulness of the Consumer Goods and Services Industry Code of Conduct (the Code) as well as the powers vested on the CGSO to levy annual participation fees based on the parameters set out in the Code to determine the fee.

“Section 82(8) of the CPA provides that suppliers must not contravene an applicable industry code.

“Furthermore, the CGSO is empowered by the Code to proceed with legal action against individual companies who refuse to subscribe to the Code and pay participation fees.

“Instead of pursuing legal action against those companies that refused to comply with the Code, the Board of the CGSO considered it prudent to instead seek a declarator to confirm that the provisions of the Code are lawful and enforceable,” Said Ms Magauta Mphahlele, the Ombudsman.

Voltex (PTY)(LTD) sought an order from the Court to force the CGSO to repay a participation fee of R285 000 and Astral Operations Limited had challenged the constitutional validity of the Code as well as the powers of the Minister of Trade and Industry to promulgate the Code. They had further advanced that it is not compulsory for qualifying businesses to subscribe to the Code and pay the annual participation fees.

“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.

“The refusal of some qualifying businesses to comply with the Code, created an untenable situation as those businesses that comply with the law are cross-subsidising those that do not.

“By seeking this order, we hoped to strengthen our position when it comes to fulfilling our mandate and those purposes of the CPA that speaks to alternative dispute resolution and fair access to redress for consumers,” said Ms Mphahlele.

The CGSO had asked the Court to rule on the following issues:

The Court granted a declaratory order in favour of the CGSO for all the above prayers that had been made, except for the 9th one, which was not necessary under the circumstances.

“The ruling means that all qualifying businesses in South Africa must subscribe to the Code by registering with the CGSO, declaring their annual turnover, and paying the annual participation fees.

This will allow the CGSO to spread the burden of funding the scheme while at the same time broadening access to redress for South African consumers”, said Ms Mphahlele.

Ms Queen Munyai, the CEO, also expressed her delight with the ruling, saying that “the outcome of the court case is also a victory for those businesses that continued to do the right thing by subscribing to the Code and funding the operations of the CGSO.

This outcome will now free up the CGSO to focus its time and resources on its primary mandate, namely the provision of a free, independent, accessible and fair industry dispute resolution scheme”.

Ms Munyai further said: “The Board and Management of the CGSO wish to thank the Department of Trade, Industry and Competition, who were cited as the second respondent, for the efforts and resources it put in defending the case. Ms Evelyn Masotja, the Deputy Director-General in the Corporate Regulation Division, was instrumental in driving the process to ensure a positive outcome.

This indicates that the DTIC is serious about consumer protection and we are grateful for that”.

The full judgment can be accessed on the CGSO website