The Australian Competition and Consumer Commission (ACCC), the agency responsible for enforcement of competition, consumer and product safety laws in Australia has issued its 2019 Compliance and Enforcement Policy[i]. The ACCC’s focus will remain on product safety issues likely to cause serious harm to consumers and on conduct that will or has the potential to harm the competitive process, and result in widespread consumer or small business detriment[ii].
The ACCC 2019 Compliance and Enforcement Policy identifies a number of key areas which will be the subject of ACCC scrutiny. These include:-
- retailers and manufacturers compliance with consumer guarantee laws;
- customer loyalty schemes in airline, retail and hospitality sectors;
- advertising practices on social media platforms and subscription services; and
- unfair contract terms and the Franchising Code of Conduct.
Consumer Guarantee Laws
The ACCC’s focus will be on retailers and manufacturers of high value consumer goods including whitegoods and electrical goods, to ensure that they comply with the consumer guarantee laws relating to defective products.
During 2018, the ACCC received about 9000 complaints about electrical appliances and whitegoods of which the majority related to quality issues[iii]. As a part of its enforcement strategy the ACCC took Federal Court proceedings against Apple Inc. (Apple US) and Apple Pty Ltd (Apple Australia) in respect of misleading or false representations made to customers with faulty iPhones and iPads and their consumer guarantee rights under Australian Consumer Law (ACCC). The Federal Court ordered Apple US to pay $9million penalties for making the misleading and false representations. The Court’s declarations held Apple US liable for the conduct of its Australian subsidiary[iv].
Global companies supplying consumer goods into the Australian market must ensure that their manufacturer’s warranties and return policies comply with Australian Consumer Law.
On the 22 March 2019 the ACCC accepted court enforceable undertakings under s 87B of the Competition and Consumer Act from Pandora Jewelry Pty Ltd, the importer, distributor and reseller of Pandora jewellery, in relation to conduct that may have misled consumers about their consumer guarantee rights and contravened sections 18, 29(1)(m) and 102(2)(a) of the Australian Consumer Law. The alleged conduct involved:
- Pandora staff members making statements to customers to the effect that Pandora does not provide refunds and that Pandora’s warranty against defects overrides the Australian Consumer Law consumer guarantee provisions;
- Pandora’s on-line store website not including mandatory text required under regulation 90 of the Competition and Consumer Regulations 2010 (Cth) (‘CCR’) stating that consumers are entitled to a replacement or repair, and in some cases a refund, if their goods are faulty.
The section 87B undertakings provided by Pandora Jewelry included undertakings by Pandora to comprehensively review and make any necessary changes to its Australian Consumer Law compliance program and training material, policies and procedures relating to exchanges, repairs and refunds and customer complaint handling systems and website and to undertake staff training[v].
Customer Loyalty Schemes
The ACCC will be closely examining competition and consumer law issues arising from customer loyalty schemes used by retailers, airlines and hospitality sectors, including:
- Whether consumers are being properly informed and receive the benefits promised by the programs;
- Whether the programs are transparent in relation to the use of any personal data collected and the adequacy of disclosure to consumers;
- The extent to which the schemes impact on competition in the relevant market and new entrants[vi].
Advertising practices on social media platforms and subscription services
The ACCC as a part of its digital platforms inquiry, is continuing to analyse the digital advertising supply chain, including competition issues and the ability of advertisers to verify where and when their advertisements are displayed and to whom.
It is estimated that more than 68 cent in every advertising dollar in Australia is going to Google and Facebook in the digital marketing space.
ACCC is specifically looking at whether the advertising practices are, or potentially are creating competitive or consumer harm[vii].
Franchising Code of Conduct and unfair contract terms
The ACCC is responsible for regulating compliance with the Franchising Code of Conduct (‘the Code’) and this includes assessing franchise agreements and disclosure documents for compliance with with the Code and the Australian Consumer Law including provisions prohibiting unfair contract terms.
The ACCC as a part of its next round of Franchise Code compliance checks is targeting the café, restaurant and take away food sector[viii].
Non-compliance with the Franchising Code and the Australian Consumer Law can result in ACCC taking court action and significant penalties. The Federal Court imposed a penalty of $2.6 million on Ultra Tune Australia Pty Ltd for breaching the Code and the Australian Consumer Law[ix].
The Australian Parliamentary Committee on Corporation and Financial Services completed an inquiry into the Australian franchising sector and released its report in March 2019[x]. The committee recommended that extensive changes be made to laws regulating the franchise sector including expanding disclosure requirements, strengthening unfair contract terms compliance and enhancing the dispute resolution scheme to include compulsory arbitration. As a part of its recommendation the committee has recommended the establishment of a Franchising Taskforce which includes the ACCC, to examine the feasibility of the implementation of a number of the committee’s recommendations.
Authored by Katarina Klaric
This article is not intended to be a substitute for obtaining legal advice.
© Stephens Lawyers & Consultants. April 2019
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[i] ACCC 2019 Compliance and Enforcement Policy and Priorities, February 2019.
[ii] Ibid, p2-4.
[iii] ACCC 2019 focus on consumer guarantees and anti-competitive practices, Media Release dated 26 February 2019.
[iv] Australian Competition and Consumer Commission v Apple Pty Ltd (No. 4) (2018) FCA 953
[vi] ACCC 2019 Compliance and Enforcement Policy and Priorities, February 2019. p.1;
[vii] ACCC Media Release. ‘More input needed on digital advertising’. 27 February 2019.
[viii] ACCC Media Release, ‘ACCC to focus on franchisors’ disclosure in the food services sector‘. 7 February 2019
[ix] Australian Competition and Consumer Commission v Ultra Tune Australia Pty Ltd  FCA 12 Also see: ACCC Media Release. ‘Ultra Tune to pay $2.6 million penalty‘. 18 January 2019
[x] Parliamentary Committee on Corporation and Financial Services, Fairness in Franchising, March 2019.