Charging entry fee not unfair trade practice

Background: Does the imposition of an entry fee amount to imposing unjustified costs on a consumer? Is it an unfair or restrictive trade practice? This interesting issue has been decided by the National Commission in a case filed by the Gujarat government against Big Bazar.

Case Study: Big Bazar, a department store, is a division of Pantaloon Retail. It has branches all over Ahmedabad and other cities. The store periodically frames different schemes to attract consumers and promote its business.

In 2006, the store declared Republic Day as Mega Savings Day. Advertisements were issued stating that store commodities would be sold at lower-than-usual prices, which led to a consumer rush. As the day progressed, it became impossible to regulate customer movement. To restrict entry to legitimate purchasers, the store came up with a scheme of issuing an entry coupon of Rs 50. The value of the coupons could be adjusted against purchases made, and if a coupon was partially utilized, the balance amount was to be refunded. In all, 3,900 coupons worth Rs 50 each were issued between 4pm and 10pm.

The government of Gujarat, through the weights and measures and consumer affairs department, filed a complaint before the district forum alleging that Big Bazar had adopted unfair and restrictive trade practices by collecting Rs 1,95,000 from the sale of the 3,900 coupons. The Forum observed that if the crowd was uncontrollable, the store should have called the police, but had no right to refuse entry or impose an entry fee. Upholding the Government’s contention, it directed Big Bazar to pay Rs1,95,000 along with 9% interest and Rs 10,000 towards mental agony and costs.

The National Commission said that Big Bazar had adjusted the value of the coupons against purchases and allowed the unutilized coupons to be encashed so the entry coupons did not impose any cost on a consumer. It concluded that Big Bazar had not indulged in unfair or restrictive trade practice.

Conclusion: An entry fee does not bring about a manipulation in the price of a product or service, but merely regulates customer crowd. The practice is prevalent worldwide, and is permissible.

Read the full story by Jehangir Gai in The Times of India – Click Here


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