Australian consumer guarantees and cross border internet sales

Published On 29/04/2015 | By Patrick Gunning | Consumer protection

Announcing the result of enforcement action against Electronic Arts, the well-known game developer, the ACCC has issued a press release in which its Chairman says:

“Businesses such as EA selling digitally downloadable goods cannot avoid their responsibilities under the Australian Consumer Law just because they are located outside of Australia. If you sell to consumers in Australia, then the Australian Consumer Law applies to all goods or services you supply. This includes all of the ACL consumer guarantees, which cannot be excluded, restricted or modified.”

No one reading this press release would realise that the correctness of that unqualified proposition is presently the key issue to be decided by the Federal Court of Australia in another case involving the supply of online games to Australian consumers by a foreign corporation with no presence in Australia. We have been reporting on the ACCC’s case against Valve Corporation, operators of the Steam platform, since September last year (see our original post with detailed analysis of the legal issues, and follow up posts here and here). In our view the legal issues are far from straightforward and it is entirely conceivable that the decision could go either way at first instance.

It seems that Electronic Arts decided that in their case the best option was to concede the point and to give enforceable undertakings to the ACCC rather than challenge the ACCC’s position in the courts.

Valve finds itself in a somewhat different position given that the ACCC has commenced proceedings. Given the ACCC’s apparently uncompromising attitude, an enforceable undertaking from Valve will probably not be sufficient to settle that case – the ACCC would be looking for the court to make orders by consent declaring that Valve had contravened the ACL, in addition to remedial orders.

The ACCC and Valve participated in a court sponsored mediation in early April. It seems that discussions between the parties are continuing, with the mediation scheduled to be mentioned before a registrar of the court on 4 May. As we’ve explained previously, if the case does not settle, a timetable is in place to facilitate a hearing on liability in July.

Given the growing importance of cross border internet sales to Australian consumers, it would be beneficial for the courts to clarify the legal uncertainty which, to our minds at least, presently exists.

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About The Author

advises on a wide range of commercial and corporate transactions, with an emphasis on transactions involving material technology or IP. He has particular expertise in the gaming and health sectors and counsels clients on regulatory issues relevant to those sectors. Patrick’s practice extends over the full life cycle of projects, and includes assisting clients to resolve disputes.

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