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.


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:

“… amends the ACL, to strengthen and align the maximum penalties under the ACL with the maximum penalties under the competition provisions of the CCA …”

The Bill’s EM indicates (at page 8):

“Schedule 1 to this Bill aligns the existing ACL penalties with the existing maximum penalties under the competition provisions in the CCA, in order to strengthen the penalties regime, deter non-compliant conduct and reduce the financial benefits and incentives for businesses to engage in conduct in breach of the ACL …”

In the Senate, Senator James McGrath said in his second reading speech on the Bill:

“… Currently, the maximum penalties in the Australian Consumer Law are $1.1 million for a body corporate and $220,000 for a person other than a body corporate . These current maximum penalties are failing to deter large corporations from breaching the Australian Consumer Law … For example, the $10 million penalty imposed against Coles in 2014 for unconscionable conduct in its dealings with 200 of its suppliers were referred to in the Federal Court as insufficient for a company with annual revenue in excess of $22 billion.”

Schedule 2 to the Bill amends the ACL:

“… to provide that compliance with an information standard about free range eggs made under the ACL will provide a safe harbour defence to the provisions of the ACL prohibiting false, misleading or deceptive conduct or representations.”

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:

“Companies will now face more serious financial consequences for breaching consumer law that align with competition law breaches. We have strongly advocated for higher maximum penalties to enable courts to impose more substantial penalties. Penalties need to hit the bottom line so they are not simply seen as the cost of doing business. Perhaps more important, penalties need to be high enough to be noticed by boards and senior managers so that compliance with the law is a higher priority. Increased penalties will help to deter large companies from breaching consumer laws. This is a profound change that I believe will improve corporate behaviour significantly, and so improve the Australian economy and how it works for consumers.”

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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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) 

Australian Consumer Law - Final Report (March 2017)

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