Maximum penalties for breaches of the Competition and Consumer Act 2010 increased
The Treasury Laws Amendment (2018 Measures No 3) Act 2018 (Cth) (the Act) received royal assent on 31 August 2018, and commenced on 1 September 2018. The new penalties apply to acts, omissions or offences that occur on or after 1 September 2018.
The Act amends the Competition and Consumer Act 2010 (Cth), which includes the Australian Consumer Law.
The new increased penalties apply in respect of prohibitions against:
- False or misleading representations about goods or services
- False or misleading representations about sale etc. of land
- Misleading conduct relating to employment
- Unconscionable conduct
- Unfair practices
The reforms are the product of a general crackdown by government to protect consumers. In the second reading of the Act before parliament prior to its enactment, Mr Milton Dick MP stated:
The government is just not serious when it comes to protecting Australian consumers from businesses who do the wrong thing by them…penalties for engaging in anticompetitive conduct and for breach of the rights of consumers are simply inadequate. Penalties are too small to act as a deterrent, are low by international standards and are seen as a mere cost of doing business according to the Federal Court, ACCC and legal experts.
Accordingly, under the Act, the minimum penalty a corporation faces for breach of relevant provisions of the Australian Consumer Law has been amended from $1.1 million per contravention to the greater of:
- $10 million; or
- if the court can determine the value of the benefit obtained from the offence by the corporation (and any related bodies corporate) – three times the value of the benefit; or
- if the court cannot determine the value of the benefit – 10% of the annual turnover of the corporation.
These amendments occur against the backdrop of the Australian Competition and Consumer Commission (ACCC) taking further enforcement action. In its 2017-2018 annual report, released in October 2018, the ACCC reported that it had commenced litigation for 14 consumer protection related matters and it had received 16 outcomes for consumer protection related matters which resulted in significant penalties. As set out in the report since April 2018, three large consumer protection penalty outcomes were ordered in the $10 million range: $10 million for Telstra; $10 million for Ford; and $9 million for Apple.
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