8 February 2007
The Minister of Trade and Industry, Mr Mandisi Mpahlwa signed a final
regulation stipulating the disclosures sellers of parallel or grey goods are
compelled to now make to consumers.
The regulations are the result of recommendations made by the Consumer
Affairs Committee after it had conducted an investigation, following complaints
that sellers failed to disclose upfront to consumers that the goods they were
purchasing were parallel or grey goods.
The regulation was issued under section 12 of the Consumer Affairs (Unfair
Business Practices) Act, No 71 of 1988. The final regulations have been
published in Government Gazette No. 29600 and these regulations become
effective on Friday, 9 February 2007.
Parallel or grey goods
Parallel or grey goods are intended for sale in one national market, but
exported from their original destination for sale in another market, for
example, South Africa. It should not be confused with counterfeit goods.
Parallel or grey goods are sold legitimately both locally and worldwide.
They may, however, be distinguished by lack of an agreement between the seller
and manufacturer or trademark holder to sell the goods. If the seller sells the
goods despite not having such an agreement, the goods are known as parallel or
grey goods. If the sellers of these identical goods entered into an agreement
with the manufacturer or trademark, they are deemed authorised
distributors.
Safety and warranties
Parallel goods are sold legitimately in South Africa and are suitable for
use in this country. If it were unsuitable, the South African Bureau of
Standards (SABS) would not permit their sale.
A primary consideration for consumers when purchasing goods from an
authorised or non-authorised seller or distributor is warranties. Authorised
sellers will usually offer consumers a manufacturer's warranty, while
unauthorised sellers would not. However, sellers of parallel goods may offer
their own warranties, which may be equivalent to the manufacturer's
warranty.
Nature of investigation
The committee's investigation involved issues like the disclosure of the
status of such goods as well as the nature and extent of any warranty provided
by the seller or manufacturer of the goods and after-sales services for these
goods provided by the seller.
Parallel or grey goods are not limited to electronic goods, but include any
product sold without the specific authorisation of the manufacturer or
trademark holder like motor vehicles, audiovisual equipment, agricultural
machinery and equipment, photocopiers and computers.
During the investigation, discussions were held with various interested
parties, including sellers of parallel/grey goods. Their comments supported the
investigation. All stakeholders consulted by the Department of Trade and
Industry (dti) contributed positively and were supportive and co-operative.
Consumer rights
The committee found that it is a consumer's basic right to be informed that
the manufacturers warranty does not apply when an unauthorised distributor
sells parallel or grey goods. If such information is withheld from consumers,
they are misled, which means that the relevant business practices is unfair to
consumers.
As a result, the Minister of Trade and Industry requires sellers of
parallel/grey goods to alert consumers that they are not authorised
distributors of these products and that authorised distributors are not obliged
to honour manufactures' warranties or guarantees or to provide after-sales
support.
Sellers should inform consumers of these goods of its parallel or grey
status by the following words in all advertising and in-store promotions,
websites, brochures and whilst being displayed for sale, in conspicuous size,
without change. "The authorised South African distributor of this product is
under no obligation to honour the manufacture's guarantees/warranties or to
provide after sales service."
Any contravention of the Minister's order is a criminal offence, punishable
by a fine not exceeding R200 000, or imprisonment for a period not exceeding
five years, or both a fine and imprisonment.
Should you require any additional information or clarification you can
contact:
The Chief Director
CCRD: Office of Consumer Protection
Private Bag X84
Pretoria
0001
Tel: (012) 394 1507
E-mail: ebimo@thedti.gov.za
Issued by: Department of Trade and Industry
Source: Department of Trade and Industry (http://www.dti.gov.za)
