Five things you need to know…about ACCC substantiation notices

Published On 12/09/2010 | By Peta Stevenson | Consumer protection, Enforcement, Notifications

Amendments to the Trade Practices Act introduced in April 2010 as part of the new Australian Consumer Law give the ACCC power to issue notices requiring a person to substantiate a claim or representation made by it.

1. When can the ACCC issue a substantiation notice?

Where a business or individual makes a claim or representation in trade or commerce promoting:

  • the supply of goods or services;
  • an offer of employment; or
  • a sale or grant of land,

the ACCC can issue a substantiation notice to the business or individual requiring them to provide information or documents which substantiate the claim or representation.

Unlike section 155 notices, the ACCC’s traditional information gathering tool, the ACCC does not need to have reason to believe a person is capable of providing information relating to a matter that may constitute a breach of the TPA before issuing a substantiation notice. In its “News for Business” publication released on 29 June 2010, the ACCC described substantiation notices as a “preliminary investigative tool that helps the ACCC determine whether further investigation is warranted.”

2. Compliance with a substantiation notice

A person served with a substantiation notice must comply with the notice within 21 calendar days. The period for compliance may be extended where a person applies for the extension during the compliance period and the ACCC considers it appropriate to grant the extension.

Individuals are not required to provide information or documents if the information or documents may incriminate them or expose them to a penalty. There are some other exemptions under the TPA, including, for example, for prescribed information providers and publishers.

3. Penalties for non-compliance

Where a person does not respond to a substantiation notice within the compliance period, the ACCC may issue an infringement notice penalty of $3,300 for a body corporate or $660 for an individual. Alternatively, the ACCC may seek an order from the court for payment of a pecuniary penalty of up to $16,500 for a body corporate or $3,300 for an individual.

Penalties also apply where false or misleading information is provided.

4. How to prepare for potential substantiation notices

21 days to comply with a substantiation notice is not very long and being issued substantiation notices can have serious financial and having reputational repercussions. From the outset, your organisation should:

  • ensure that all claims (including marketing and advertising) it makes can be supported;
  • maintain a record or repository of the supporting materials; and
  • ensure staff within your organisation are aware of this new power.

5. What to do if you receive a substantiation notice

If you or your organisation receives a substantiation notice, you should:

  • ensure the notice has been validly issued under the TPA and relates to the supply (or possible supply) of goods or services, or a sale or grant of an interest in land, or an offer of employment;
  • ensure the notice is sufficiently clear to enable you to respond. If the notice is unclear, seek clarification from the ACCC at an early stage;
  • check whether your organisation can rely on an exemption under the TPA;
  • ascertain whether you have the resources to respond to the notice within the 21 day compliance period. If you are unsure whether compliance will be possible within the compliance period (for example if you need to retrieve information stored on back up tapes), seek an extension early; and
  • do not disclose any documents protected by legal professional privilege.

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About The Author

is a partner in the Sydney office of King & Wood Mallesons where she specialises in competition litigation with experience in a wide range of jurisdictions. Peta also advises clients on the application of the anti-competitive conduct, consumer protection and access provisions of the Competition & Consumer Act 2010 (Cth) and related state legislation. In 2001/02 she undertook her LLM at the University of Cambridge, during which time she developed a passionate if fleeting interest in rowing.

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