Consumer law changes – what business owners need to know

The Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth) (Act) amends various pieces of legislation to provide stronger competition and consumer protections.  In particular, the Act bolsters the penalties applicable for offences relating to unfair practices and unfair contract terms under as contained within the Competition and Consumer Act 2010 (Cth) (CCA) and the Australian Consumer Law (ACL), contained within Schedule 2 of the CCA.^[1]

Penalties for unfair practices

By the newly amended section 76 of the CCA, the penalties that apply to the conduct that contravenes provisions relating to it have been amended:

• restrictive trade practices;^[2]
• certain news media and digital platforms mandatory bargaining code;^[3]
• compliance with gas market instruments;^[4]
• excessive surcharge payments;^[5]
• consumer data rights;^[6]
• motor vehicle service and repair information sharing scheme;^[7]
• price exploitation or false and/or misleading representations about the effect of the carbon tax repeal on prices;^[8] and
• providing information to the Australian Competition and Consumer Commission or a Tribunal.^[9]

The table below summarises the maximum penalties applicable under the CCA both pre-enactment and post-enactment of the Act, against corporations found to have breached the CCA, being the greater of:

Pre-enactment of the Act	Post-enactment of the Act
$10 million; Three times the value of the benefit obtained; or If the value of the benefit cannot be determined, 10% of annual turnover.	$50 million; Three times the value of the benefit obtained; or If the value of the benefit cannot be determined, 30% of the adjusted turnover during the breach turnover period.

Post-enactment of the Act, it is clear that steeper penalties are a direct result of the amendment.  It is less clear when the penalty to apply in circumstances where the benefit obtained by conduct breaching relevant provisions of the CCA is unable to be determined.  That penalty is to be calculated with reference to the ‘adjusted turnover’ and the ‘breach turnover period’.  But what do those terms mean?

Adjusted turnover and breach turnover period

By section 4 of the CCA, adjusted turnover is defined as:

“… the sum of the values of all the supplies that the body corporate, and any body related to the body corporate, have made, or are likely to make, during the period, other than:

• supplies made from any of those bodies corporate to any other of those bodies corporate;
• supplies that are input taxed;
• supplies that are not for consideration;
• supplies that are not made in connection with an enterprise that the body corporate carries on; or
• supplies that are not connected with the indirect tax zone.”

In short, where a company (or body corporate) makes a supply of goods or services in exchange for consideration, which is ordinarily money, and will be counted towards its adjusted turnover unless it falls into the above listed excluded categories.

The breach turnover period in relation to contravening conduct varies in accordance with peculiarities of each contravention but it is generally a period of 12 months ending at the end of the month in which the contravening conduct ceases.^[10]

Unfair contract terms

The Act provides an express provision for penalty in circumstances in particular circumstances where, amongst other things, a contract or part of it, is found to be unfair.  In fact, a person or company will contravene section 23(2A) of the ACL if:

• the person makes a contract;
• the contract is a consumer contract or small business contract;
• the contract is a standard form contract;
• a term of the contract is unfair; and
• the person (or company) proposed the unfair term.

A term of a contract will be unfair if it creates a significant imbalance in the parties’ rights and obligations under the agreement, is not reasonably necessary, and would cause detriment.^[11]

A court may order a person found to be contravening protections against unfair contracting by section 224 of the ACL and have them be liable to pecuniary penalties as the court determines to be appropriate or the unfair part of the contract may be declared void.

Takeaways

Changes to the various pieces of legislation implemented by the Act strengthen the pecuniary penalties open to courts in redressing unfair conduct and the use of unfair contract terms in standard form contracts.  The amendments substantially increase the severity of the penalties which may be imposed and expand remedial powers of the courts to address unfair contract terms by establishing an express obligation that standard form contracts do not contain unfair terms.

Links and further references

Legislation

Competition and Consumer Act 2010 (Cth)

Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth)

Further information about Australian Consumer Law

If you need advice on the changes to the ACL and what it means for your business, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1]               Part IV of the CCA.

[2]               Certain sections of Part IVBA of the CCA as specified in section 76(4A).

[3]               CCA ss 53ZQ(1)-(3), 53ZV, 53ZQ(1).

[4]               CCA s 55B.

[5]               CCA ss 56BO(1), 56BU(1), 56CD.

[6]               Part IVE of the CCA.

[7]               CCA ss 60C and 60K.

[8]               CCA s 92.

[9]               CCA s 4 “breach turnover period”.

[10]             ACL s 24(1)(a)-(b).

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