LegalVision Consumer Law Update: ACCC Announces ACL Review

No sooner had the government announced its broad support of 44 of the 56 recommendations of the Harper Competition Review, the chairman of the Australian Competition and Consumer Commission (ACCC), Rod Sims, announced a new consumer law review.  In 2016, Consumer Affairs will place Australia’s Consumer Law under a microscope and produce a final report in March 2017.

The Harper Review was a comprehensive competition policy review, and if implemented, would introduce some wide-ranging changes including deregulating retail trading hours. It would also broaden the scope of the prohibition on the misuse of market power.

This review suggested changes to the Competition and Consumer Act 2010 (Cth) (the Act) which is the Act regulating anti-competitive practices to ensure a fair playing field. A more balanced playing field theoretically means healthier competition and ultimately, a better deal for consumers.

Australia’s Consumer Law Role in Protecting Consumers

The proposed Australian Consumer Law (ACL) review is to be the first since the ACL was introduced in 2010. Schedule 2 of the Act contains the ACL, and its provisions cover issues more likely to affect directly consumers, including:

• Truth in advertising and business dealings generally;
• Unconscionable conduct;
• Unfair contract terms;
• Consumer guarantees; and
• Product safety.

Possible Areas for Review

The ACCC has highlighted the following areas for possible review:

1. Whether the ACL currently addresses any consumer protection issues that may arise within the burgeoning sharing economy.
2. Eliminating duplication in product safety standards by properly referencing trusted international standards within the mandatory safety standards.
3. The problem of phoenix companies. That is, companies entering liquidation, and then continuing to trade under a new company structure. Consequently, avoiding their obligations to consumers, including business consumers. The ACCC is eager to review and address this problem.
4. Finally, the adequacy of the ACL penalty regime. Currently, a maximum of $1.1 million for a corporation and $220,000 for an individual.

Notably, the ACL’s penalty regime falls far short of the Competition Law penalty regime, particularly for cartel conduct. Currently, penalties under the competition law include:

• The greater of $10 million;
• Three times the gain of the contravention; or
• 10% of the corporation’s annual turnover in Australia.

This discrepancy was brought into sharp relief when Coles agreed in late 2014 to pay $10 million in penalties for breaches of the ACL. The ACCC sought to impose these tough penalties for Coles’ unconscionable conduct against suppliers.

The prevailing concern is that the ACL’s existing fines are insufficient to deter large corporations engaging in unconscionable conduct and misleading advertising. We will keep you updated as the review gets underway in 2016.

Questions? Please get in touch on 1300 544 755. LegalVision’s specialist competition and consumer lawyers would be delighted to assist.