This article will discuss the new Competition and Consumer Act 2010 that has come into operation. It completely replaces the old Trade Practices Act 1974.
The Competition and Consumer Act 2010 contains rules against anti-competitive conduct within Australia, and also contains consumer protection rules which businesses must abide by in their dealings with consumers. The Competition and Consumer Act 2010 has given the Australian Competition and Consumer Commission (“ACCC”) new powers. These include:
The Competition and Consumer Act 2010 has introduced civil pecuniary (financial) penalties ranging from $5,000.00 to $1.1 million for corporations, and from $1,000.00 to $220,000.00 for individuals, who breach the unconscionable conduct and certain consumer protection provisions. A civil pecuniary penalty may be imposed by a Court if it has found that a breach of the Australian Consumer Law has occurred on the civil standard of proof, that is, on the balance of probabilities, not beyond reasonable doubt.
The Competition and Consumer Act 2010 also gives businesses a right of private action if they have been adversely affected by any conduct that may breach the Act. The courts can now also, on application by the ACCC, make an order disqualifying a person from managing corporations for a given period if the court is satisfied that the person has contravened or attempted to contravene the law and that the disqualification is justified.
The Competition and Consumer Act 2010 contains the Australian Consumer Law which creates a single, national consumer law for Australia. It applies to all businesses regardless of their size or business structure. The Australian Consumer Law is enforced by the Australian Competition and Consumer Commission (“ACCC”), the state and territory Fair Trading agencies and, where it applies to financial services, the Australian Securities and Investments Commission (“ASIC”).
The Australian Consumer Law provides a range of general and specific remedies to consumers and others for contraventions of the consumer guarantees including rights to damages, injunctions, compensation, repairs or replacement of goods or services. Damages which may be recovered may include consequential losses, such as loss of value or loss of profit, if the losses are reasonably foreseeable, in relation to some contraventions.
The most litigated provision of Section 52 of the old Trade Practices Act 1974 relating to misleading representations is now contained in Section 18 (1) of Schedule 2 of Competition and Consumer Act 2010, which provides: A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Businesses must not make false or misleading representations about specific characteristics or aspects of a goods or service – for example, sponsorship, price or place of origin – or about the consumer guarantees. A business also has a right to take action against a competitor if the business has suffered a loss because the competitor has engaged in conduct that may breach the Act.
The Act includes a set of twelve consumer guarantees which apply to all goods and services purchased (where the price or cost does not exceed $40,000.00) by consumers from 1 January 2011.
The consumer guarantees provide that all goods must be of acceptable quality, be fit for any disclosed purpose and match any description, sample or demonstration model shown. Repair facilities and spare parts must be reasonably available for a reasonable time, and any express warranty made by a supplier or manufacturer must be complied with. Goods must come with clear title and without any undisclosed securities or charges attached to them. Consumers also have a right to undisturbed possession of the goods. Services must be delivered with due care and skill, be fit for any disclosed purpose and, if the contract for services doesn’t set a time frame, be completed within a reasonable time.
The Competition and Consumer Act 2010 creates a national unfair contract terms regime which applies to standard form consumer contracts and enables a court to find that a term of such a contract is unfair, and so void. This law applies to contracts in all forms, whether written or oral, and made by all means, including online, over the phone or face to face. It should be noted that the contract itself remains binding on the parties to the extent that it can operate without the unfair term. The unfair contract terms provisions provide a three-pronged test of unfairness. A term is unfair if:
When deciding whether a term is unfair, the court must also consider the transparency of the term within the contract, and the contract as a whole. The law applies to contracts that are entered into on or after 1 July 2010 and to the terms of existing contracts that are renewed or changed on or after 1 July 2010.
The list of unfair practices in Part 3-1 of Schedule 2 is long and includes false or misleading representations, or misleading conduct, in relation to goods and services, sales of land, employment, offering rebates, gifts and prizes, bait advertising, accepting payments without an intention to supply, pyramid selling and other matters.
The Competition and Consumer Act 2010 prohibits specific unfair practices in trade or commerce. It addresses areas including:
The ACCC can allow anti-competitive conduct in some circumstances. The ACCC is able to grant legal immunity for conduct that would otherwise breach the Act. In particular, the ACCC may grant immunity to small businesses to collectively negotiate terms and conditions (including price) with suppliers if this is in the public interest.
© Comasters June 2011.
Important: This is not advice. Clients should not act solely on the basis of the material contained in this paper. Our formal advice should be sought before acting on any aspect of the above information.