Competition and consumer law

Competition law

Part IV of the Competition and Consumer Act prohibits the following anti-competitive practices:

• cartel conduct;
• concerted practices and arrangements which substantially lessen competition;
• misuse of market power;
• anti-competitive exclusive dealing;
• resale price maintenance; and
• mergers or acquisitions that are likely to substantially lessen competition in a market for goods or services in Australia.

Cartel conduct

Cartel conduct may be prosecuted as either a civil or criminal offence and can expose company executives and employees to imprisonment for up to 10 years. In addition, executives and employees can potentially face fines of up to A$550,000 per contravention and be banned from being a company director or company manager for life. Corporations are subject to fines of up to A$50 million, or three times the value of the benefit gained, or, if the gain cannot be ascertained, 30% of annual group turnover — whichever is the highest — for each violation.

Cartel conduct involves contracts, arrangements, or understandings between competitors that have:

• the purpose or effect of fixing, controlling or maintaining the price of goods or services; or
• the purpose of
  • restricting output (production and supply);
  • allocating customers, suppliers, or territories; or
  • bid-rigging.

There are limited statutory exceptions to the prohibition against cartel conduct in relation to:

• joint ventures;
• collective bargaining arrangements duly notified to the Australian Competition & Consumer Commission (ACCC);
• collective acquisition or joint advertising of goods;
• cartel provisions authorised by the ACCC; and
• arrangements between related bodies corporate.

Misuse of market power

Section 46 of the Competition and Consumer Act prohibits misuse of market power. It prohibits any corporation with a substantial degree of power in a market in Australia from engaging in conduct which has the purpose or is likely to have the effect of substantially lessening competition in that market or in any other market in which the corporation supplies or acquires goods or services. The mere acquisition or possession of substantial market power does not violate Section 46, however, once market power is acquired, the corporation must avoid conduct which has the proscribed purpose or effect.

Merger clearance

Section 50 of the Competition and Consumer Act prohibits acquisitions of shares or assets which have the effect or likely effect of substantially lessening competition in a market in Australia.

There is no mandatory pre-merger notification requirement and the ACCC has no power itself to prevent a merger. However, it may seek orders from the Federal Court if it forms the view that a merger is likely to contravene Section 50. The ACCC encourages parties to prospectively inform the ACCC of any proposed merger or acquisition where the relevant market share of the merged entity will be greater than 20%. If informal clearance is sought from the ACCC, it will consider the likely effects of the proposed acquisition, usually after making market enquiries, and will indicate whether it intends to intervene in the transaction.

Informal clearance can be sought confidentially, but the ACCC will usually decline to express a view without seeking input from other market participants.

Alternatively, parties can seek authorisation from the ACCC based on the net public benefit of the proposed acquisition.

Authorisation provides complete legal immunity with respect to the acquisition.

Consumer law

Anyone offering to supply goods or services to end users in Australia will be affected by federal, state and territory laws, regulations, and codes which provide rights and protections for consumers.

The key legislation is the Australian Consumer Law (ACL) which is a Schedule to the Competition and Consumer Act. The ACL contains various protections including:

• a general prohibition on misleading or deceptive conduct in trade or commerce;
• specific prohibitions on false or misleading representations in relation to the supply of goods or services or interests in land;
• consumer guarantees which apply to supplies of goods or services to a consumer;
• a prohibition on “unfair” terms in standard form small business and consumer contracts; and
• actions against manufacturers in respect of unsafe goods.

The ACL provides a set of consumer protection laws which apply both nationally and in each state and territory, and which apply to anyone engaged in business conduct (corporations, partnerships, associations, individuals) that involves or may affect consumers.

The ACL does not apply to conduct in relation to financial products and services, which is covered by the Australian Securities & Investments Commission Act 2001 (Cth).

As well as the ACL, consumer protection regulation in Australia includes:

• mandatory codes of conduct (which are given force of law under various Acts and regulations); and
• voluntary codes of conduct (which are generally administered through industry-based bodies and associations).

Unfair contract terms

From 9 November 2023 the unfair contract terms regime in the Australian Consumer Law will be significantly strengthened, affecting any standard form contract with a "small business". A small business is now defined to include a business that has fewer than 100 employees (previously 20) or has a turnover for the last income year of less than A$10,000,000.

Penalties have also been increased. The maximum penalty (for each contravention) for an individual will be A$2.5m. The maximum penalty for a company will be the greater of:

• A$50m;
• three times the value of the benefit (if able to be determined); and
• 30% of the adjusted turnover during the period of the breach, or the previous 12-month period, whichever is longer.

Enforcement of the Competition and Consumer Act

The ACCC is responsible for enforcing the civil penalty provisions of the Competition and Consumer Act, although a variety of other agencies and institutions play roles as well. The Commonwealth Director of Public Prosecutions is responsible for the prosecution of criminal violations under the Competition and Consumer Act.

For consumer law, the ACCC and the various state and territory consumer protection agencies share the administration and enforcement of the ACL.

These agencies have broad powers to investigate breaches of the ACL and to bring proceedings in relation to such breaches, including on behalf of consumers.

Other government bodies and agencies also have responsibility for administration of consumer protection regulation. For example:

• the Australian Securities & Investments Commission is responsible for the administration of regulation governing financial products and services, including consumer credit; and
• the Australian Communications and Media Authority is responsible for the administration of regulation governing certain telecommunications products and services.