Tougher Penalties for Breaches of Consumer Law Pass Federal Parliament
Monday 27 August 2018 @ 11.05 a.m. | Legal Research | Trade & Commerce
A new Bill, which has recently passed the Commonwealth Parliament, is set to increase maximum financial penalties under the Australian Consumer Law (the “ACL”) (Schedule 2 to the Competition and Consumer Act 2010 (Cth)). The new legislation been welcomed by the Australian Competition and Consumer Commission (the “ACCC”).
The Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 (Cth) (the “Bill”) passed the Senate on 23 August 2018, and is currently awaiting assent.
Background
According to an ACCC Media Release, in its Final Report on the ACL Review (the “Review”), Consumer Affairs Australia and New Zealand (“CAANZ”):
"recommended penalties for a breach of the ACL be raised from $1.1 million for companies to the greater of $10 million, three times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of annual turnover in the preceding 12 months. Penalties against individuals under the ACL will also increase from $220,000 to $500,000 per breach."
The Review found that the current maximum penalties available in the ACL are insufficient to deter non-compliant conduct that can be highly profitable. Some entities see these penalties as “a cost of doing business”.
Brief Overview of the New Law
The Bill proposes to make amendments to the Competition and Consumer Act 2010 (Cth) (the “CCA”). According to the Bill’s Explanatory Memorandum (the "EM"), Schedule 1 of the Bill:
The Bill’s EM indicates (at page 8):
In the Senate, Senator James McGrath said in his second reading speech on the Bill:
Schedule 2 to the Bill amends the ACL:
Schedule 3 of the Bill amends the CCA to support the role of the Australian Energy Regulator to monitor the wholesale electricity market. It will do so by removing inconsistencies between the treatment of confidential supplier information in the National Electricity Law and the CCA.
Comment from the ACCC
The Chair of the ACCC, Rod Sims said in a recent ACCC Media Release:
Previous Court Action from the ACCC
The highest penalty the Federal Court of Australia has ordered for breaches of the ACL, is $10 million (in ACCC actions brought against Coles and Ford). The highest penalty the Federal Court has ordered for breaches of competition law is $46 million (in an ACCC action against Yazaki). For more information, see the previous TimeBase article on action against Yazaki.
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Sources:
Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 (Cth) - Bill and supplementary material available from TimeBase's LawOne Service.
Consumer law penalties set to increase – ACCC Media Release MR163/19 (23 August 2018)