Introduction

The previous chapter examined why we protect the consumer. A second question to consider is how to provide that protection. To some extent, this choice will be influenced by the specific objective being addressed. Lack of competition might be tackled by opening up markets and strengthening competition law, and inadequate information by, for example, the imposition of mandatory disclosure requirements. However, identifying an area where consumers are not adequately protected by the market does not mean that the law should necessarily become involved. In some cases it will be extremely difficult, or extremely expensive, to provide a solution. Even where market failure exists, it is generally agreed that government should only intervene where it is cost effective to do so.

One way of characterising the techniques available is by the extent to which they intervene in the market. At one extreme is prior approval, which requires a product or trader to be authorised before entering the market. In the case of consumer products, this approach is likely to be reserved for sectors that are particularly hazardous, such as pharmaceuticals. In the case of traders, it is likely to be reserved for professionals whose activities pose a considerable degree of harm when undertaken poorly. At the other extreme, we might allow an industry to regulate itself, for example by a code of practice. Self-regulation is most likely to be used where industries are trusted to put their own houses in order, and where statutory intervention might be unduly burdensome.