Katarina Klaric, Principal, Stephens Lawyers & Consultants (June 2017)
|Is your business compliant with the ACCC’s latest 2017 compliance priorities?|
The Australian competition and consumer laws are complex and apply to all industries and market sectors. The purpose of these laws is to promote competition among businesses, promote fair trading by businesses and provide protection for consumers in their dealings with businesses, including product safety and labelling standards[i].
To minimise the risk of breaches of the Competition and Consumer Act 2010 (the Act), businesses must understand how the consumer and competition laws apply to their businesses and the type of anti-competitive conduct or unfair trade practices that are prohibited.
The Australian Competition and Consumer Commission (ACCC) is the government regulator responsible for compliance and enforcement of these laws.
ACCC has issued its specific compliance and enforcement priorities for 2017 which focus on the following areas[ii]:
Competition and consumer issues in the agriculture sector
The ACCC’s Agricultural Unit has examined competition and supply issues in the agricultural supply chains with the objective of improving compliance with the Act and identifying issues for enforcement, investigation and prosecution. The Unit has also completed a market study of the cattle and beef sector which looked at the competition, transparency and efficiency in the cattle and beef supply chains[iii]. The ACCC is also conducting a public inquiry into the competitiveness of prices, trade practices and the supply chain in the Australian dairy industry and its final report is due to be released by November 2017[iv].
The revised Horticulture Code of Conduct was released by the ACCC in April 2017. The code sets out the mandatory requirements for traders and agents operating in the Australian fresh fruit and vegetable markets.
Ensuring that small business receives the protection of the new unfair contract terms law
Most standard form contracts (including on-line contracts) for the supply of goods, services or the sale or grant of an interest in land, to small business entered into or renewed after the 12 November 2016 have to comply with section 23 of the Australian Consumer Law which prohibits unfair contract terms in these types of contracts. The new law applies where:
- The contract is presented as a standard form contract, in that the terms cannot be negotiated or there is little opportunity to negotiate the terms.
- At least one business is a small business[v].
- The upfront price payable under the contract is no more than $300,000 (or $1million if the contract is for more than 12 months)[vi].
Whether a contract term is unfair is determined by the Court and not the ACCC. However, the ACCC can take legal action for contravention of unfair contracts terms law if it considers that the terms are unfair. For a standard form contract term to be “unfair” the term must:
- Cause a significant imbalance in the parties’ rights and obligations.
- Not be reasonably necessary to protect the legitimate interests of the party disadvantaged by the term, and
- Cause financial or other detriment to a small business if it is relied upon[vii].
The court in determining whether a term of a contract is unfair is required to consider the transparency of the term, that is whether the term is expressed in reasonably plain language, presented legibly and clearly and readily available to any party affected by the term. The courts are also required to look at the contract as a whole including the overall obligations of each of parties and any benefits offered to the party which may counter balance an unfair term[viii].
Providing education to business and consumers in relation to new country of origin and labelling laws
The Country of Origin Food Labelling information Standards 2016 commenced on 1 July 2016 under the Australian Consumer Law[ix] and introduced new labelling requirements for most foods offered for sale or sold in Australia, whether on-line or in retail stores. Businesses have until 30 June 2018 to transition to the new labelling requirements. The new labelling requirements are complex and different requirements apply depending on whether the food is:
- Grown, produced or made in Australia;
- Packaged in Australia;
- Grown, produced or made in another country;
- Packaged in another country[x].
ACCC has produced guidelines in relation to the new country of origin food labelling standards to assist businesses with the transition to new labels[xi]. ACCC will continue to actively monitor claims on product labelling or advertising which represents that food is made in a particular country[xii].
Ensuring compliance by business with new excessive payment surcharge laws [xiii]
Businesses who choose to impose a surcharge on their customers for making payment for goods and services using a credit, debit or pre-paid cards must ensure that the surcharge is not excessive. The ban on excessive payment surcharges has applied to large businesses since 1 September 2016 and will apply to all businesses irrespective of size from 1 September 2017. A payment surcharge will be excessive if it exceeds the permitted surcharge as defined by the Reserve Bank of Australia (RBA) standard.
The ACCC has been given wide powers to enforce the ban on excessive payment surcharge. The ACCC can issue surcharge information notices to businesses and banks requiring them to provide evidence of the actual costs incurred by the business in accepting payment by that method. Where the ACCC considers that the payment surcharge charged by the business is excessive the ACCC can:
- Issue infringement notices to the business imposing penalties- in the case of:
- Listed companies – 600 penalty units ($108,000)
- Other companies – 60 penalty units ($10,800)
- Persons – 12 penalty units ($2,160)[xiv]
- Take court action against the business seeking pecuniary penalties –
- Companies – 6,471 penalty units ($1,164,780)
- Persons – 1,295 penalty units ($233,100)[xv]
- Take court action on behalf the group of consumers effected by the excessive surcharge payment, seeking injunctive relief and other remedies.
Other Priority Areas
Other ACCC compliance and enforcement priority areas for 2017 include:-
- Consumer issues arising from commission based sales business model.
- Working with internet platform providers to prevent the supply of unsafe products into Australia.
- Competition issues in the commercial construction sector.
- Consumer issues in the private health insurance.
- Consumer issues in new car retailing, including responses by retailers and manufacturers to consumer guarantee claims.
- Issues arising from the ACCC’s monitoring of broadband speed and performance claims.
- Consumer guarantees, including in relation to services such as those provided by the airline industry.
- Ensuring that small business receives the protection of Industry codes of conduct, including the Franchising Code, the Food and Grocery Code and the Horticulture Code.
These are in addition the ACCC’s enduring compliance and enforcement priorities in respect of breaches of the Act which are detrimental to consumer welfare and competition in Australia including product safety issues, cartel conduct, anti-competitive agreements and practices and misuse of market power[xvi].
Contravention of the Act by businesses may result in the ACCC taking enforcement action which can include the ACCC issuing infringement notices, requesting court enforceable undertakings under section 87B of the Act and/or issuing court proceedings[xvii].
[i] 2017 ACCC Compliance and Enforcement Policy, p2
[ii] Ibid, p4
[iii] ACCC Cattle and Beef market study – Final Report, March 2017
[iv] The inquiry is being conducted by the ACCC at the request of the Treasurer, Scott Morrison, pursuant to subsection 95H (1) of the Competition and Consumer Act 2010.
[v] ‘Small business’ is a business which employs less than 20 people, including casual employees who are employed on a regular and systematic basis. (Sub-sections 23 (4) & (5) of the Australian Consumer Law).
[vi] Sub-section 23(4)(c) of the Australian Consumer Law.
[vii] Section 24(1) of the Australian Consumer Law.
[viii] Sub-sections 24(2) & (3) of the Australian Consumer Law.
[ix] Country of Origin Food Amendment (Packed in Australia) Information Standard commenced on 5 December 2016.
[x] Country of Origin Food Labelling Information Standard 2016, Part 1, Section 6. “Outline of this information standard”
[xi] ACCC Country of Food Labelling Guide, 24 April 2017.
[xii] ACCC Media Release dated 4 May 2017 – “ACCC puts businesses on notice about ‘made in’ country of origin claims”
[xiii] Competition and Consumer Amendment (Payment Surcharges) Act 2016
[xiv] Section 55J, Part IVC, Competition and Consumer Act 2010
[xv] Section 76, Part VI, Competition and Consumer Act 2010
[xvi] Ibid, p4.
[xvii] Ibid, p 4-5.
For Further Information Contact:
Stephens Lawyers & Consultants
Suite 205 Suite 546 Collins Street
Melbourne, Victoria, Australia 3000
Ph (613) 86369100
Email: [email protected]
Disclaimer: This Update is not intended to replace obtaining legal advice.
Copyright June 2017, Stephens Lawyers & Consultants.