At his annual CEDA address on 26 February 2019, ACCC Chair Rod Sims launched the 2019 Compliance and Enforcement Policy announcing the ACCC's key focus areas for the year.
Partners Johnathan Quilty and Greg McKenzie, and Lawyer Luke Callaghan report on the highlights of the announcement and how they may impact your business.
Renewed focus on anti-competitive conduct: The ACCC will renew their focus on key competition issues and utilise their 'SLC Unit' (i.e. the Substantial Lessening of Competition Unit) to investigate and prosecute potential breaches of the new misuse of power and concerted practices provisions, whilst also continuing their previous focus on anti-competitive practices in the commercial construction sector.
Cartels in sight: Cartel conduct will also remain a focus area, with at least three significant cartel investigations expected to be referred to the Commonwealth Director of Public Prosecutions.
Impact of the Financial Services Royal Commission: The findings of the Financial Services Royal Commission highlighted that competition is not vigorous among the major banks or in some parts of the financial sector. The ACCC has established a Financial Services Competition Branch, which includes a permanent competition investigation team to complement the market studies team.
Consumer Law priorities
Significant maximum penalties: The ACCC will have a strong consumer law focus in 2019. Mr Sims lauded a number of key cases in 2018 that brought significant penalties, including:
- consumer guarantees penalties of $9 million (Apple) and $10 million (Ford Australia);
- misleading conduct in telecommunication billing penalties of $10 million (Telstra and Optus); and
- false or misleading representations penalties of a record $18 million (We Buy Houses Pty Ltd and Mr Otton).
We expect these substantial penalties to continue. New maximum penalties for contraventions of the Australian Consumer Law (ACL) were introduced in 2018, bringing the penalties in line with penalties for anti-competitive conduct, being the greater of:
- $10 million per contravention;
- three times the benefit obtained from the conduct; or
- where the benefit cannot be calculated, 10% of annual Australian sales turnover of the offending company.
Mr Sims stated that he '[believes] Parliament intended that in particular cases there should be penalties of over $100 million for breaches of consumer law to improve deterrence'.
New target areas: Mr Sims announced a number of new areas of focus for 2019, including:
- Customer Loyalty Schemes, where questions arise of whether consumers are properly informed and receive the benefits of these programs;
- Consumer guarantee rights in the context of large retailers and manufacturers that supply high value consumer goods (e.g. whitegoods and electrical goods);
- Advertising practices on social media platforms and 'subscription traps';
- Opacity of pricing of essential services, such as energy retailing and telecommunications. In this regard, the ACCC will continue to advance its work on the Consumer Data Right, in order to produce draft rules to give consumers access to their data to facilitate greater consumer choice in the banking, energy and telecommunications sectors.
Continuing priorities: A number of other priorities will continue from 2018, including a focus on the franchising sector, enforcing unfair contract terms in small business contracts, and new car retailing.
Advocacy and market studies
Unfair contract term penalties: Mr Sims will continue to advocate for the introduction of penalties to the unfair contract term regime. Currently, the law only permits an unfair contract term in standard-form contracts to be declared void; there is no penalty for including unfair contract terms in standard-form contracts with consumers or small businesses.
Market studies will continue: The ACCC will also continue its market studies in a number of areas, including gas supply and pricing, financial services, agriculture, wine grape production, and electricity affordability.
Additional advocacy priorities: The ACCC will also advocate for changes to the law to:
- include a general safety provision that would prohibit the sale of unsafe goods; and
- consider the adequacy of laws against companies that engage in 'harsh and unfair conduct' towards consumers, which may not currently be caught by the misleading or deceptive conduct or unconscionable conduct provisions.
2019 is set to be a big year for the ACCC, and all businesses should take care to ensure that their practices are reviewed in light of the key legislative changes in 2018 to the misuse of market power and concerted practices provisions.
The ACCC's lengthy list of ACL priorities should also put all consumer-facing businesses on notice that it intends to vigorously enforce the new substantial maximum penalties introduced in 2018.
Financial services providers and major retailers should be particularly wary of ACCC action in 2019 in light of the comments made by Mr Sims.
The ACCC's enforcement priorities can be found on its website at this link: here.
For further information or to see how this may impact you and your business, contact our Commercial Disputes team.
All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.