China is Peru's main trading partner, the largest destination of exports and the main source of imports for Peru. Peru is China's second largest investment destination in South America. The two countries have established a comprehensive strategic partnership and signed a free trade agreement. In the next five to 10 years, Peru will become another destination for Chinese enterprises going global. More Chinese companies will enter Peru and expand into the broader South American market through Peru. AllBright Law is actively exploring the legal service market in South America, providing reliable host country legal service resources and doing legal research on various host countries for Chinese enterprises going to South America, so as to provide legal protection for serving China's high-level opening-up and the "the Belt and Road" strategy. To this end, AllBright Law, together with Rodrigo, El í as &Medrano Law firms in Peru, launched this Series of Articles on Peru Business Environment, including Peru's going global, Peru's corporate structures, Peru's promotion of investment and legal stability, operational legal environment, business winding up and restructuring a business.
I. Consumer Protection and Product Liability
The Consumer Protection and Defense Code (Act No. 29571) guarantees consumer access to suitable products and services, and to effective mechanisms to protect their rights, and establishes several criteria to reduce information asymmetry to benefit consumers. Thus, it establishes supplier obligations and consumer rights, and includes rules regarding the information that must be provided to consumers, suitability of products and services, advertising requirements, consumer health and safety, contracts with consumers, and provisions regarding specific products or services.
A. GENERAL RULES
In Peru, Law No. 29571 - the Consumer Protection and Defense Code- establishes the rules for the protection and defense of consumer rights. It also regulates contracts with consumers and prohibits the use of coercive commercial methods, aggressive or misleading commercial methods and abusive collection methods.
The Consumer Protection Commission of INDECOPI is the competent national administrative authority responsible for verifying compliance with consumer protection regulations. Its decisions may be appealed before the Specialized Consumer Protection Chamber of the INDECOPI Court.
Likewise, depending on the amount or matter in dispute, the Summary Proceedings Resolution Bodies are competent to rule on consumer protection matters in the first administrative instance. In these cases, the Consumer Protection Commission will review the decisions in second administrative instance.
The Consumer Protection and Defense Code protects consumers in a “consumer relationship” or in a preliminary stage thereof. It applies to:
1. any “consumption relationship” originating in Peruvian territory or producing effects in such territory (even if originating elsewhere); and,
2. transactions not involving the payment of a consideration but having a commercial purpose aimed at promoting consumption.
For the purposes of the Code, consumers are understood as:
1. natural or legal persons who acquire, use or enjoy as final recipients of products or services for their own benefit or that of their family group, acting outside a business or professional activity; and
2. suppliers are understood as natural or legal persons who habitually manufacture, process, handle, condition, mix, package, store, prepare, dispense or supply products or provide services of any nature to consumers.
B. MAIN OBLIGATIONS
The Consumer Protection and Defense Code imposes two main obligations on sellers/service providers: (i) information and (ii) suitability, in relation to the goods or services provided.
1. Information: the supplier is obliged to provide the consumer with all relevant or material information so that the consumer may make a correct choice and use or consume the goods or services in an appropriate manner.
The information provided by the supplier must be truthful, sufficient, easy to understand, appropriate, timely, easily accessible and in Spanish language.
Relevant or material information means any information without which the consumption decision would not have been made or would have been made in substantially different terms. This information includes, for example, the following:
(1) False or misleading information: by action or omission, information that may mislead an average consumer into making a transaction decision that he or she would not have made otherwise.
(2) Total price information: the price offered (or advertised) must include taxes, commissions, fees and any other applicable charges. It must be the total final price.
(3) Prices in local currency: prices displayed or advertised in a foreign currency (e.g. US dollars) will also be displayed or advertised in local currency, under the same conditions and with the same characters as those used with the foreign currency, and the exchange rate must be indicated.
(4) Payment methods: if there is any difference in price depending on the payment method, this information must be informed to the consumer in a visible and accessible way. Otherwise, the consumer will not be obliged to make any additional payment due to a difference in payment methods.
The extent of relevant or material information to be provided to the consumer will depend on the nature of the goods or services offered. The Consumer Protection and Defense Code contains various provisions establishing the information to be provided to the consumer for certain types of goods and services.
2. Suitability: the “service supplier” has the obligation to provide the consumer with appropriate goods or services. Suitability is assessed by taking into account what the consumer expected when buying the goods or contracting the service (depending, for example, on what the seller or service provider offered, the natural and customary characteristics of the goods or services, the price) and what he or she actually got. Suitability is assessed according to the nature of the goods or services and their ability to satisfy the purpose for which they are sold.
The supplier is responsible for the suitability and quality of the goods and services offered, as well as for the authenticity of the marks and labels contained on the goods or services, and for any contradictory statements between the advertising and the product.
The Consumer Protection and Defense Code prohibits consumer discrimination. The supplier may not discriminate against consumers because of race, sex, language, creed, opinion, economic status, or any other reason. Individual exclusion from a business establishment is prohibited, except in the case of disturbance of the security of the establishment or the serenity of the customer or any other similar reason.
Different treatment of consumers must be due to objective and reasonable grounds. Preferential care in a business establishment should be subject to different factual situations that justify different treatment and there should be a proportion between the purpose and the different treatment granted.
C. GUARANTEES
The Consumer Protection and Defense Code establishes that there are three types of guarantees: legal, explicit and implicit.
1. Legal guarantee: imposed by law and applicable to certain goods and/or services that cannot be marketed or provided without such guarantee. In this sense, it is not possible to exclude such guarantee by agreement between the parties and it prevails over an explicit guarantee. (Legal guaranties are not imposed on optical products).
2. Explicit guarantee: arises from the terms and conditions expressly offered by the “seller or service provider” to the consumer in a contract, label, advertising, invoice or any other means that may evidence what has been offered to the consumer. An explicit guarantee prevails over an implied guarantee.
3. Implied guarantee: exists when, in accordance with the silence of the “seller or supplier of services” or the agreements between the parties, the goods and/or services are understood to meet the foreseeable (expected) purposes and uses for which they have been acquired by the consumer taking into account, inter alia, the uses and customs of the market. In case there are no legal guarantees, an explicit or implicit guarantee will be applied.
The indication of exclusions or limitations to the guarantee cannot be unjustified or go against the nature of the good or service.
D. BOOK OF COMPLAINTS
Through Law No. 31435, published on March 22, 2022, the Consumer Protection and Defense Code was amended reducing the deadlines for addressing consumer claims and complaints. Thus, currently, the supplier must address any claim or complaint from the consumer and must respond to it within fifteen (15) calendar days, which cannot be extended.
The attention of the claims cannot be subject to any payment made by the consumer (nor to the effective purchase of the good or service object of the claim).
All suppliers that carry out economic activities in establishments open to the public are required to have a Complaints Book.
The complaints book is a document of a physical or virtual nature provided by suppliers in which consumers register their claims or complaints about the products or services offered in a particular commercial establishment.
A claim is filed when the consumer expresses a disagreement related to the goods or services provided. On the other hand, a complaint is filed when the consumer expresses a disagreement that is not related to the goods sold or supplied or the services provided.
Each of the commercial establishments (physical or virtual) open to the public must have a Book, which must be in a visible place on the premises and easily accessible to the public and with a Notice indicating its existence. The Book must follow the format approved by Indecopi, which is included as ANNEX 2 of Supreme Decree No. 011-2011-PCM.
E. SANCTIONS FOR NON-COMPLIANCE
According to the Consumer Protection and Defense Code, failure to comply with its provisions could be sanctioned with the following:
1. Pecuniary sanctions: from a warning (without a monetary fine) to a fine of up to 450 UIT (US$520,000.00 approximately) depending on the infraction.
2. Precautionary measures: these measures may be ordered at any stage of the proceedings. These are, for example, the cessation of the infringing action, the closure of an establishment, the prohibition of a website, the immobilization of assets, etc.
3. Corrective remedial measures: these measures are intended to compensate for any monetary damages.
4. Paid or a measure is not complied with, additional sanctions may be ordered.
F. UNFAIR COMPETITION AND ADVERTISING
Legislative Decree No. 1044, Law for the Repression of Unfair Competition, regulates acts of unfair competition, which include acts that are configured through advertising.
The referred rule applies to those acts whose effects or purpose, directly or indirectly, is to compete in the market. It also applies to any act of unfair competition that produces or may produce effects in all or part of the national territory, even if such act has originated abroad.
The Commission for the Control of Unfair Competition of INDECOPI is the national administrative entity responsible for the verification of compliance with the rules governing acts of unfair competition and advertising activity. Its decisions may be appealed before the Antitrust Chamber, which resolves in the second and final administrative instance.
The Law for Repression of Unfair Competition is applicable to any person, natural or juridical, that competes in the market offering or demanding goods or services.
It should be noted that advertising does not require prior authorization or supervision by the authority for its dissemination. The supervision of compliance with the rules regulating advertising will be carried out once the advertisement has been disseminated in the market.
The evaluation by the authority of an advertisement is made in a comprehensive manner, that is to say, on the whole content of the advertisement, including words, images, sounds, among others, considering that the addressee of the advertisement makes a comprehensive and superficial analysis of the advertisement. In the case of an advertising campaign, all the pieces that compose it will be analyzed as a whole.
The responsibility for proving the truthfulness and accuracy of the objective statements disseminated in the market with respect to certain goods or services lies with the person who has disseminated such statements in its capacity as advertiser.
The Law for the Repression of Unfair Competition includes an enunciative (not exhaustive) list of acts that are considered as acts of unfair competition.
The administrative liability arising from the commission of acts of unfair competition through advertising corresponds, in all cases, to the advertiser. Notwithstanding the foregoing, the media shall also be administratively liable for the commission of acts of unfair competition that infringe broadcasting rules that regulate, condition or prohibit the communication of certain contents or the advertising of certain types of products. This liability is independent of the liability of the advertiser. Additionally, the advertising agency will also be administratively liable when the commission of acts of unfair competition is generated by an advertising content different from the characteristics of the advertised good or service. This liability is also independent from that of the advertiser.
In accordance with the provisions of the Law for the Repression of Unfair Competition, the contravention of any of the provisions set forth therein may be sanctioned according to the following detail:
1. Financial sanctions: from a reprimand to a fine, depending on the type of infringement:
(1) minor infringement that did not have any real effect on the market: a reprimand;
(2) minor infringement: up to 50 UIT (US$ 65,500 approximately);
(3) serious infringement: up to 250 UIT (US$ 327,500 approximately); and,
(4) very serious infringement: up to 700 UIT (US$ 920,000 approximately).
For purposes of determining the seriousness of the infraction and the application of the corresponding fines, the Commission shall take into account the following criteria:
(1) The illicit benefit resulting from the commission of the infraction;
(2) The probability of detection of the infringement;
(3) The modality and scope of the act of unfair competition;
(4) The size of the market concerned;
(5) The market share of the infringer;
(6) The effect of the act of unfair competition on actual or potential competitors, on other agents participating in the competitive process and on consumers or users;
(7) The duration in time of the act of unfair competition; and,
(8) The recidivism or reiteration in the commission of an act of unfair competition.
2. Precautionary measures: measures intended to ensure the effectiveness of the final decision and prevent further damage to the concerned party. Among these measures are: the cessation of the infringing act, the confiscation and/or immobilization of the infringing products, the temporary closure of the establishment, among others.
3. Corrective measures: are those measures whose purpose is to reestablish fair competition in the market. These measures include the cessation of the infringing act, the removal of the effects produced by the infringing act, the confiscation and/or destruction of the infringing products, the temporary closing of the establishment, the rectification of misleading information, the publication of the conviction, among others.
4. Fines for non-compliance: if the fine imposed or any of the ordered precautionary or corrective measures are not paid, additional sanctions may be imposed.
Source: AllBright Law Offices
Contributor：Peru Rodrigo, Elías & Medrano Law Office
Chinese Translation: WANG Liang, E-mail: wangliang@allbrightlaw.com
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