ACCC wins major ‘unconscionable conduct’ action

Posted by AFN Staff Writers on 21st August 2013

A judgment handed down last week by the Full Federal Court of Australia provides new guidance on the application of “unconscionable conduct” provisions of the Australian Consumer Law (the ACL).

Although the case did not relate to a food company, a leading food industry lawyer has said that the Court’s judgment may have broader implications for other business relationships such as arrangements between supermarkets and their suppliers.

The judgment in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90, handed down on 15 August 2013, dealt with a company that sold vacuum cleaners to householders. Nonetheless, the Full Federal Court’s decision said that disregard of other legislative provisions which serve the purpose of regulating fair conduct in trade and commerce may contribute to establishing that there was an instance of unconscionable conduct.

According to food lawyer Joe Lederman of FoodLegal, “if the Federal Parliament were to pass a law (for example) that a major supermarket must not seek proprietary information from a supplier relating to the supplier’s product or marketing information that a supplier describes as proprietary, it might be then unconscionable for the supermarket to demand the supplier provide it”.

Mr Lederman said however it might also require further evidence of an imbalanced relationship or additional ‘special disadvantage’, before such an offence could be established.

“Likewise, broader consideration of the conduct within the scope of the relationship is important,” Mr Lederman said.

ACCC wins 'unconscionable conduct' case against Lux