25 March 2021
A Decade of the Competition and Consumer Act 2010
2021 marks the 10-year anniversary of the commencement of the Competition and Consumer Act 2010 (Cth) (“CCA”), which came into effect on 1 January 2011. With an increased focus on greater consumer and small business protection, the CCA has been heralded by the Australian Competition & Consumer Commission (“ACCC”) as a milestone achievement in Australian consumer protection laws since its inception.
The History of the CCA
Replacing the Trade Practices Act 1974 (“TPA”) the CCA, which includes the Australian Consumer Law (“ACL”), replaced 13 separate Acts across Australia that represented a disjointed, outdated and overly difficult regime across the different Australian jurisdictions.
The paramount goal behind updating the country’s consumer laws through the ACL was to bolster consumer protection by enacting provisions which were reflective of the fast-changing technological, social, and economic advancements that were shaping our marketplace and, consequently, consumer needs. An important step forward to achieving this goal was the introduction of a new consumer guarantee regime and unfair contract terms, both of which attract higher pecuniary penalties.
Consumer Guarantees
The CCA’s predecessor included implied terms which were criticised for being impractical, uncertain and hard to apply. The new consumer guarantee regime under the CCA operate as statutory rights acting independently of the parties’ contract which raise threshold requirements, shift the onus from consumers to suppliers, and introduce express warranties. Those consumer guarantees provide consumers with more certainty and entitle the ACCC to take enforcement action against suppliers who do not comply with the ACL regime. This noteworthy change meant that consumers no longer need to rely on contract law to provide redress for failure to comply.
Unfair Contract Terms
Another significant achievement was the introduction of unfair contract terms which rendered a term void if it was contained in a consumer contract of a standard form and the term was ‘unfair’. A term will be deemed void if it would cause a considerable imbalance in the parties’ rights and obligations under the contract, is not reasonably necessary to protect the benefiting party’s legitimate interests, and would cause detriment to the reliant party. Similarly to the consumer guarantees, unfair contract terms enable greater consumer protection and place a more stringent burden on businesses to contract fairly with its consumers.
Pecuniary Penalties
Arguably the most powerful change under the CCA was the introduction of civil pecuniary penalties, which strengthened the ACCC’s ability to take enforcement action and provide greater deterrence against contraventions of the ACL. Not only did the ACL increase compliance, but it also provided consistent product safety standards, product recall mechanisms and mandatory reporting requirements aimed to improve public awareness and safety.
The CCA today
The implementation of the CCA was one thing, but the true litmus test of an effective piece of legislation is whether it works in practice at achieving its goals.
The CCA in Practice
According to the ACCC, the Federal Court of Australia has imposed nearly $400 million in civil pecuniary penalties, including the well-known Volkswagen emissions scandal, since the CCA was enacted. The ACCC has also issued 281 infringement notices against 140 businesses over the past decade, proving the CCA is a useful mechanism to deter contravening conduct, increase compliance and promote public awareness of consumer protection laws. Arguably two of the most publicised cases were the Coles and Volkswagen controversies which highlighted the powers of the ACCC under the CCA in holding businesses accountable for their conduct.
Coles
Following a lengthy investigation, the ACCC ordered Coles pay $10 million for engaging in unconscionable conduct in 2011 by misusing its bargaining power to manipulate over 200 suppliers for its own benefit. This case was one of the first findings of unconscionable conduct in a business-to-business (“B2B”) context under the ACL and acted as a powerful warning for other businesses engaging in B2B transactions.
Volkswagen
This case gained world-wide attention when the Federal Court condemned Volkswagen for breaching the ACL by making false representations about its supposed compliance with Australian diesel emissions standards and ordered it pay $125 million in penalties. Not only did this case involve the highest penalty ever ordered for contravening the ACL, but the relentless media coverage showcased to consumers the ability of the ACCC to investigate and penalise a company who intentionally deceived regulators and consumers.
Banning
In addition to the ACCC’s ability to penalise companies, it can also ban individuals from running corporations or engaging in specific conduct where they have been known to operate a business that breaches the CCA. In one case, the director of the company, We Buy Houses, was personally penalised $6 million for his involvement in the misleading and deceptive conduct of the company.
The CCA Tomorrow
As with any new piece of legislation, there have been many amendments to the CCA, including amending the misuse of market power provision, introducing new industry codes of conduct and class exemption processes. The most recent, and arguably most significant from a consumer’s perspective is the impending amendment to the definition of ‘consumer’.
Prior to the amendment, a person or business will be a consumer if; they purchase goods or services that cost less than $40,000, or the goods and services are over $40,000 but are of a kind ordinarily acquired for domestic, household or personal use or consumption, or the goods are a commercial road vehicle or trailer used primarily to transport goods on public roads.
Commencing 1 July 2021, the threshold amount will increase from $40,000 to $100,000, the first amendment to the threshold since it was introduced in 1986. This change was a push from the ACCC in 2018 to reflect inflation rates as well as ensure consumer laws capture a greater range of goods and services.
The past 10 years has seen the harmonisation of Australian consumer laws with a clear focus on promoting public awareness and holding businesses accountable. It is undeniable that these changes brought about more stringent, concise, and uniform provisions and it will be interesting to see what the next 10 years holds for the CCA.
How JHK Can Help
In consideration of the upcoming amendment to the definition of ‘consumer’, it is important for businesses to review their contracts, warranties and terms and conditions to ensure they are complying with the CCA now and in the future.
If you are unsure whether your business is complying with consumer laws or want a second opinion as to whether current internal practices will capture these amendments, you can contact JHK Legal for a free consultation on (07) 3859 4500. You can also read more about the CCA on the ACCC’s website here.
Written by Sabrina Austin, Lawyer