A Bigger Stick: Labor Party Promises Changes to the Competition and Consumer Act
Higher competition law fines and penalties
The incoming Albanese Labor government has promised to significantly increase the maximum fines and penalties for anti-competitive conduct from $10 million to $50 million per contravention, which it believes will “give a boost to businesses that play fair, ease the cost of living and help drive down prices for Australian families”.
Labor’s policy announcement refers to “tackling anti-competitive behaviour” and it is unclear if the proposed increase will only apply to the competition law provisions of the Competition and Consumer Act 2010 (Cth) or if it will also apply to the Australian Consumer Law (ACL).
The intention of the new policy may be to increase the overall cost to businesses for engaging in anti-competitive conduct, which has lagged consumer law penalties in recent years. For instance, recent court orders for anti-competitive conduct against Peters ($12 million for exclusive dealing) and Wallenius Wilhelmsen Ocean AS ($24 million for criminal cartel conduct) are significantly lower than recent consumer law penalties against Volkswagen ($125m for false or misleading representations), Australian Institute of Professional Education Pty Ltd ($153 million for unconscionable conduct) and Trivago ($44.7 million for misleading representations).
Although fines and penalties for anti-competitive conduct are typically much lower than the maximum that can be imposed by a court, we expect that judges might interpret the increased penalties as a signal that Parliament’s intention is for much harsher punishment on businesses. However, given that judges already have the ability to calculate a penalty or fine by reference to an offending company’s annual turnover, rather than $10 million, it is not clear whether the new approach will have a meaningful impact on the theoretical maximum for offenders (other than for small companies).
Details and timing of the amending legislation have not been released. However, the Government expects the measure to raise $555 million over the forward estimates.
Super complaints division
Labor has also announced they will establish a ‘super complaint’ function within the ACCC. Although not much detail about this policy has been released, it appears to give trusted consumer groups (e.g. CHOICE) and business sector advocates the ability to make high priority complaints to the ACCC in relation to serious breaches of the ACL.
Labor to push ahead with changes to the Unfair Contract Terms regime
Amendments to the Unfair Contracts Terms regime were introduced into Parliament in early 2022 but lapsed when the election was called.
The new Labor government has indicated that it will revive the Bill and make unfair contract terms illegal for businesses with fewer than 100 staff or a turnover of less than $10 million.
Among other things, the Bill also:
- introduces civil penalties for companies and individuals that propose, apply or rely on an unfair contract term;
- expands the class of small business contracts that are covered by the regime by increasing the small business definition thresholds and removing the contract value threshold;
- empowers courts to make more flexible orders, including the power to make any order that is appropriate to prevent or reduce loss or damage that may be caused, or redress damage that has been caused; and
- adds a presumption that the same (or a substantially similar) unfair term used by that business, or another business in the same industry, is unfair.
You can read more about the changes to the Unfair Contract Terms regime which have previously been proposed in our post ‘Reform Path Clear – Treasury Releases Unfair Contract Terms Exposure Draft Legislation’.
No time frame has been provided for passing the Unfair Contract Terms legislation. However, we expect this will happen relatively quickly because the legislation has already been drafted and has bi-partisan support.
Going forward, businesses will need to keep a close eye on any unfair contract terms cases before the courts to ensure their own contracts comply with any rulings.
By Phillip South & Rob Hirst