ACCC Chairman warns of next wave for regulatory actions

Posted by AFN Staff Writers on 10th February 2012

Speaking last night to the Law Society of NSW on the first anniversary of the Australian Consumer Law (ACL), the Chairman of the Australian Competition and Consumer Commission (ACCC) ,  Mr Rod Sims, issued a warning to businesses.

According to Mr Sims, ensuring that businesses do not engage in misleading and deceptive conduct “goes to the heart of a market economy where consumers can make more informed choices.”

“Too many businesses still have a long way to go before they meet legal and public expectations regarding accuracy and honesty in dealing with consumers. “ Mr Sims said.


Tougher Penalties

He noted that the Federal Court has also embraced the tougher penalties under the ACL.

In the area of pecuniary penalties, the court had awarded more than $11.2 million AUD in penalties since July 2010 although two of these outcomes are now subject to appeal.

The high-profile cases – Optus with $5.26 million imposed in penalties, Yellow Pages Marketing/Yellow Pages Publishing with $2.7 million, and Harvey Norman Holdings with $1.25 million,  were all about misleading claims in advertising or sales pitches.

Infringement Notices

Many of the infringement notices, newly provided for in the Law, were also for misleading conduct.

The ACCC have issued 75 infringement notices since the ACL took effect; and more than $450,000 AUD in penalties have been collected under these notices

Non-compliance Cases

In a case which has received a lot of publicity, the ACCC negotiated the recall of several teeth-whitening products that were being sold for home use, because of the quantities of peroxide. This product was subsequently mandatorily recalled.

In another case, the courts imposed a $400,000 penalty on a retailer for supplying children’s dressing gowns which failed to comply with the mandatory standard for fire labelling.

ACCC new areas of focus

Mr Sims said that it is in the public interests for the ACCC to give special attention to the following areas:

Consumer guarantees- Amongst the reform’s major improvements, the ACL provisions set out statutory consumer guarantees. “This requires millions of Australians to understand that they have a new set of statutory rights, some of which are probably not easily understood by many people, and some of which are, as yet, untested.”

Research among consumers undertaken for the ACCC last year showed that only ten percent (10%) of the respondents understood their right to a refund or exchange on faulty products  and only 4% of respondents understood goods or services must be supplied and perform as intended, while only 3% understood warranties and implied statutory guarantees. The ACCC aims  to rectify these figures to improve consumers’ understanding of their new statutory rights.

Closer work with States and Territories-  The relationship between the ACCC and the State and Territory fair trading agencies has enjoyed new life since the ACL took effect.  Co-operation and co-ordination between the respective agencies is high.  Building on this cooperation is a very high priority for the ACCC.

Closer work with New Zealand- In another area of cooperation, the New Zealand Parliament has before it a consumer law reform bill.  One of the stated purposes of the bill is to provide harmonisation with the Australian Consumer Law in line with the joint objectives of the Australian and New Zealand Governments to further the single trans-Tasman market.

According to Mr Sims, Trans-Tasman information-sharing with New Zealand and cooperation on enforcement is very high and he expects that this relationship will only grow and deepen.

More on the 2012 Agenda

Mr. Rod Sims stated that concerns high on the ACCC agenda for 2012, include:

1.       Raising understanding – consumers need to be aware of what they are entitled to.

2.       Unconscionable conduct-  applies to both consumer-to-business transactions and many business-to-business transactions.

3.       Misuse of market power– under section 46 of the Act, by firms which have substantial power, where there is  substantial damage or elimination of their competitors.

4.       Vulnerable consumers– These are often consumers with low financial or language literacy, people in remote locations, and with restricted access to advice or services. Often they are Indigenous people.

5.       Misleading and deceptive conduct– particularly ensuring that any claims, made by businesses or traders, such as price rises flowing from the new carbon-pricing regime or other misleading claims relating to environmental issues.

6.       Online economy – e-commerce provides many opportunities, but brings with it many marketing regulatory risks. The ACCC is keeping a close eye on this ever growing market.