If your business imports or sells products in Australia without permission from the original manufacturer or authorised distributor, you are likely engaging in parallel importing. Parallel importing is not unlawful in Australia. However, the Australian Consumer Law (‘ACL’) sets out mandatory obligations when parallel importing, including meeting the relevant quality and safety standards. This article explains the various obligations imposed on your business when parallel importing products to Australia.
What is Parallel Importing?
Your business may be parallel importing products if the:
- product has been purchased from a supplier who is not the actual manufacturer or the authorised distributor;
- seller is not listed as an authorised seller on the website of the manufacturer or the Australian authorised distributor;
- product is not generally available in the Australian market;
- product is not brand new but has been refurbished;
- product range or model is not ordinarily available or made for the Australian market;
- product packaging has different labels, markings or warnings; and
- purchase price is lower than a customer would expect in Australia.
What Are a Business’ Key Obligations When Parallel Importing?
Businesses that engage in parallel importation have the same legal obligations as any other Australian business providing goods or services. These obligations include, but are not limited to:
- selling products that comply with labelling requirements and meet product safety standards;
- ensuring that the information provided to a customer about the product is accurate;
- ensuring you are not infringing on any trade mark rights of the original brand owner under the Trade Marks Act;
- ensuring that you do not mislead customers on their rights to a refund, replacement or warranty; and
- not engaging in misleading and deceptive advertising and conduct.
What Are the Risks Involved in Parallel Importing?
Parallel importation bypasses the original manufacturer or authorised distributor. As a result, your business can potentially be the original manufacturer or authorised distributor in Australia under the ACL. Therefore, the ACL could impose additional obligations on your business. This is called manufacturer’s liability.
Manufacturer’s liability also allows an Australian customer to bring an action against a manufacturer where a product causes injury, loss or damage due to a product safety defect. If you have sourced the product through parallel importation, the customer can bring the action against your business directly, as though you are the original manufacturer. You will need to consider this and check the product’s terms and conditions to see whether parallel imports are covered.
Best Practice Tips When Parallel Importing
Parallel importing allows businesses to sell products to Australians that would not otherwise be available. Businesses also often sell them at a cheaper price. However, as the ACL regulates this practice, it is essential to adopt procedures and practices that assist your business to comply with its obligations.
Three essential tips for best practice include:
- always making it clear to customers when you source a product through parallel importing;
- explaining to your customers that the original manufacturer is not responsible for repairs or technical support and that this is your responsibility; and
- when relevant, explaining to your customers that the product is not made for the Australian market.
Adopting a Formal Business Compliance Program
You should consider adopting a formal compliance program to help you meet your obligations under the ACL. A compliance program is an internal system or process that is designed to assist businesses in identifying and reducing breaches of the ACL. This program should develop clear policies and procedures to verify the suppliers and the authenticity of the products.
You can mitigate your risks when parallel importing by:
- ensuring the authenticity of the products;
- maintaining accurate records of transactions; and
- ensuring the products meet Australian quality standards.
Key Takeaways
Parallel importing can be a valuable tool to introduce new products to the Australian market while expanding your portfolio. Nevertheless, you must consider the consumer law obligations that parallel importing entails and the impact the manufacturer’s liability will have on your business. Nevertheless, you can mitigate risks when parallel importing by ensuring products are authentic, maintaining accurate records of transactions, and adopting a formal business compliance program.
If you have questions about regulatory compliance regarding parallel importing, our experienced disputes lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.
We appreciate your feedback – your submission has been successfully received.
