Some sellers buy products to sell or import into Australia without permission from the original manufacturer or authorised distributor. This is essentially parallel importing. Parallel importing is not unlawful in Australia. However, the Australian Consumer Law (ACL) sets out mandatory obligations when parallel importing. This article unpacks the various obligations imposed on your business when parallel importing products to Australia. It is a helpful guide if your business currently engages in parallel importing or is considering adopting this importing channel.
Key Indicators of 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;
- is not generally available in the Australian market;
- is not brand new but has been refurbished;
- range or model is not ordinarily available or made for the Australian market; and
- purchase price is cheaper than what a customer would expect to pay in Australia.
Key Obligations for Businesses When Parallel Importing
Businesses which are parallel importing products have the same legal obligations as any other Australian business providing goods or services. These obligations include, but are not limited to:
- selling products which comply with labeling requirements and meet product safety standards;
- ensuring that the information provided to a customer about the product is accurate;
- 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.
You should also adopt 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 to identify and reduce breaches of the ACL.
As parallel importing bypasses the original manufacturer or authorised distributor, your business can potentially be the original manufacturer or authorised distributor in Australia under the ACL. Therefore, you could have additional obligations imposed upon you by the ACL. This is called “manufacturer’s liability”.
For example, if a product is faulty, you would be responsible for providing an appropriate remedy. This will include a replacement, repair or refund (not only as the supplier but potentially as the original manufacturer or authorised distributor).
This is because the original manufacturer or authorised distributor is not involved in the supply of the product in Australia. Manufacturer’s liability also allows an Australian customer to bring an action against a manufacturer where a product causes injury, loss or damage as a result of a product safety defect. If you have sourced the product through parallel importing, the customer can bring the action against your business directly, as though you are the original manufacturer.
Tips for Best Practice 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 important to adopt procedures and practices that assist your business to comply with its obligations. Three key tips for best practice include:
- always make it clear to customers when you source a product through parallel importing;
- explain to your customers that the original manufacturer is not responsible for repairs or technical support and that this is your responsibility; and
- when relevant, explain to your customers that the product is not made for the Australian market. For example, if you are selling software that is not configured to the Australian market, this should be made clear to a potential customer prior to purchase. If you do not do this, it may be misleading and deceptive conduct.
Parallel importing can be a useful tool to introduce new products to the Australian market while expanding your portfolio. However, it is important to understand your obligations under the ACL and to comply with them. This is particularly crucial given that a business parallel importing products faces manufacturer’s liability and additional obligations.
If you are, or are considering, parallel importing products to Australia, get in touch with LegalVision’s compliance lawyers on 1300 544 755 or fill out the form on this page.
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