The Australian Competition and Consumer Commission (‘ACCC’), the agency responsible for enforcement of competition, consumer and product safety laws in Australia has issued its 2020 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 2020 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;
- competition and consumer issues in the funeral services sector;
- competition and consumer issues relating to digital platforms;
- ensuring small businesses receive the protections of the competition and consumer laws, with a focus on the Franchising Code of Conduct;
- misleading conduct in the sale and promotion of food products, including health and nutritional claims, credence and country of origin claims;
- competition and consumer issues in the commercial construction sector with focus on secondary boycotts and other conduct impacting small businesses and large public and private projects[iii].
Consumer Guarantee Laws
The ACCC’s focus during 2020 will be on retailers and manufacturers of high value consumer goods including motor vehicles, whitegoods and electrical goods, to ensure that they comply with the consumer guarantee laws relating to defective products[iv]. During 2019, the ACCC received 25,000 complaints from consumers about high value goods[v].
In October 2019, as part of its enforcement strategy, the ACCC commenced proceedings in the Federal Court against Mazda Australia Pty Ltd (‘Mazda’) alleging that Mazda engaged in unconscionable conduct and made false or misleading representations to consumers[vi]. The ACCC allege that Mazda “repeatedly refused to provide a refund or a replacement” car at no cost to consumers with faulty cars and “pressured them to accept lesser offers” which were made by Mazda after repeated attempted repairs[vii].
In addition, in October 2019, the ACCC accepted court enforceable undertakings under section 87B of the Competition and Consumer Act from Target Australia Pty Ltd (‘Target’) and Woolworths Group Ltd trading as BIG W (‘Big W’)[viii]. The alleged conduct involved:
- Target’s customer service staff advising consumers who had purchased faulty Sony PlayStations to complain directly to Sony to obtain a remedy and that Target was not obliged to remedy the faulty good because the fault had occurred after 30 days from the purchase[ix].
- Big W customer service staff advising consumers who had purchased faulty Dyson branded products to complain directly to Dyson to obtain a remedy, and that Big W was not obliged to take action where the complaint was made more than 14 days from the date of purchase[x].
The section 87B undertakings provided that Target and Big W publish notices on their websites for consumers to contact the respective retailers if they believe their concerns were not addressed properly and for the retailers to review and improve its Australian Consumer Law compliance program[xi].
Funeral Services Sector
The funeral sector is concentrated with a small number of suppliers having significant market power[xii]. Some funeral service providers offer services across the funeral home, cemetery and crematoria markets, giving them the opportunity to bundles services and block new entrants to the market[xiii]. The ACCC will be investigating anti-competitive conduct such as misuse of market power and exclusive dealing within the funeral sector[xiv].
The funeral services sector continues to be the source of consumer complaints to the ACCC, as “consumers engage with the funeral sector at a time when they are grieving, vulnerable and at a disadvantage”[xv]. The ACCC is concerned about allegations of unconscionable conduct in which some funeral operators inflate the price of services[xvi]. The ACCC intends to closely examine complex and opaque pricing[xvii].
Digital Platforms
The ACCC is concerned that consumers are being misled over the collection and the use of their personal data and also competition issues[xviii].
In October 2019, the ACCC commenced proceedings in the Federal Court against Google LLC and Google Australia Pty Ltd (‘Google’), alleging that Google has made false representations about the personal location data Google collects, keeps and uses[xix]. The ACCC allege that “Google has collected, kept and used highly sensitive and valuable personal information about consumers’ location without them making an informed choice“[xx].
Further, the Australian Federal Government has committed to the funding of the establishment of a permanent Digital Platforms Branch at the ACCC to ensure the ACCC’s ongoing scrutiny of the digital sector[xxi].
Franchising Code of Conduct
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 the Code and the Australian Consumer Law including provisions prohibiting unfair contract terms.
The ACCC as a part of its 2019 round of Franchise Code compliance checks targeted the café, restaurant and take away food sector[xxii]. In August 2019, the ACCC released its key findings of these targeted compliance checks. The findings included that:
- 8 out of 12 franchisors made it difficult to contact former franchisees;
- 7 out of 12 franchisors did not adequately disclose what essential goods were subject to supply restrictions;
- Most franchisors had supply restrictions, did not share rebate benefits, and could set maximum retail prices;
- A third of franchisors are not sufficiently disclosing key unavoidable costs such as wage, rent or inventory[xxiii].
Non-compliance with the Franchising Code and the Australian Consumer Law can result in ACCC taking court action and significant penalties. In January 2020, the Federal Court ordered former carwash franchisor, Geowash Pty Ltd, to pay $4.2 million in penalties for breaches of the Australian Consumer Law[xxiv]. This included penalties of $1.045 million against its director and $656,000 against its franchising manager[xxv].
The Australian Parliamentary Committee on Corporation and Financial Services completed an inquiry into the Australian franchising sector and released its report in March 2019[xxvi]. 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. The Franchising Taskforce has been established to examine the feasibility of the implementation of a number of the committee’s recommendations and has concluded stakeholder consultation[xxvii].
Misleading conduct in the marketing and supply of food products
In addition to the Australian competition and consumer laws, manufacturers, processors, importers and suppliers of food products have to comply with country of origin labelling standards, the Australian New Zealand Food Standards Code and other food laws. The ACCC as a part of it compliance program undertakes market surveillance to check that food products and advertising and marketing of food products complies with these laws.
As a part of its 2020 compliance priorities, the ACCC will be taking a more active role in preventing misleading and deceptive conduct in the marketing of food products. The ACCC is concerned about misleading claims being made about health and nutritional benefits of certain food products which consumer pay more for without receiving the benefits claimed[xxviii].
In Federal Court proceedings taken against H.J. Heinz Company Australia Ltd (‘Heinz’), the Court ordered Heinz to pay penalties totalling $2.25 million for making a misleading health claim that its product, Little Kids Shredz, was beneficial to young children when the product contained approximately two-thirds of sugar[xxix].
For Further Information contact:
Katarina Klaric
Principal
Stephens Lawyers & Consultants
Suite 205, 546 Collins Street
Melbourne VIC 3000
Phone: (03) 8636 9100
Fax: (03) 8636 9199
Email: [email protected]
Website: www.stephens.com.au
All Correspondence to:
PO Box 16010
Collins Street West
Melbourne VIC 8007
Disclaimer: This update is not intended to replace obtaining legal advice
Authored by Katarina Klaric and Peter Divitcos, 7 April 2020
Copyright April 2020 — Stephens Lawyers & Consultants.
[i] ACCC, 2020 Compliance and Enforcement Policy and Priorities, February 2020; ACCC 2020 Compliance and Enforcement Policy and Priorities Media Release, 25 February 2020, https://www.accc.gov.au/media-release/accc-2020-compliance-and-enforcement-priorities.
[ii] Ibid.
[iii] ACCC, 2020 Compliance and Enforcement Policy and Priorities, February 2020, p 1; ACCC 2020 Compliance and Enforcement Policy and Priorities Media Release, 25 February 2020, https://www.accc.gov.au/media-release/accc-2020-compliance-and-enforcement-priorities.
[iv] ACCC, 2020 Compliance and Enforcement Policy and Priorities, February 2020, p 1.
[v] Rod Sims, ACCC 2020 Compliance and Enforcement Priorities, 25 February 2020, https://www.accc.gov.au/speech/accc-2020-compliance-and-enforcement-priorities.
[vi] ACCC Media Release, Mazda in court for alleged unconscionable conduct and false or misleading representations, 31 October 2019, https://www.accc.gov.au/media-release/mazda-in-court-for-alleged-unconscionable-conduct-and-false-or-misleading-representations.
[vii] Ibid.
[viii] ACCC, Undertaking – Target Australia Pty Ltd, 15 October 2019, https://www.accc.gov.au/public-registers/undertakings-registers/target-australia-pty-ltd-0; ACCC, Undertaking – Woolworths Group Ltd trading as BIG W, 15 October 2019, https://www.accc.gov.au/public-registers/undertakings-registers/woolworths-group-ltd-trading-as-big-w.
[ix] ACCC, Undertaking – Target Australia Pty Ltd, 15 October 2019, https://www.accc.gov.au/public-registers/undertakings-registers/target-australia-pty-ltd-0.
[x] ACCC, ‘Undertaking – Woolworths Group Ltd trading as BIG W’, 15 October 2019, https://www.accc.gov.au/public-registers/undertakings-registers/woolworths-group-ltd-trading-as-big-w.
[xi] ACCC, Undertaking – Target Australia Pty Ltd, 15 October 2019, https://www.accc.gov.au/public-registers/undertakings-registers/target-australia-pty-ltd-0; ACCC, ‘Undertaking – Woolworths Group Ltd trading as BIG W’, 15 October 2019, https://www.accc.gov.au/public-registers/undertakings-registers/woolworths-group-ltd-trading-as-big-w.
[xii] Rod Sims, ACCC 2020 Compliance and Enforcement Priorities, 25 February 2020, https://www.accc.gov.au/speech/accc-2020-compliance-and-enforcement-priorities.
[xiii] Ibid.
[xiv] Ibid.
[xv] ACCC 2020 Compliance and Enforcement Policy and Priorities February 2020; ACCC 2020 Compliance and Enforcement Policy and Priorities Media Release, 25 February 2020, https://www.accc.gov.au/media-release/accc-2020-compliance-and-enforcement-priorities.
[xvi] Rod Sims, ACCC 2020 Compliance and Enforcement Priorities, 25 February 2020, https://www.accc.gov.au/speech/accc-2020-compliance-and-enforcement-priorities.
[xvii] Ibid.
[xviii] Ibid.
[xix] ACCC, Google allegedly misled consumers on collection and use of location data, 29 October 2019, https://www.accc.gov.au/media-release/google-allegedly-misled-consumers-on-collection-and-use-of-location-data.
[xx] Ibid.
[xxi] Rod Sims, ACCC 2020 Compliance and Enforcement Priorities, 25 February 2020, https://www.accc.gov.au/speech/accc-2020-compliance-and-enforcement-priorities.
[xxii] ACCC Media Release, ‘ACCC to focus on franchisors’ disclosure in the food services sector‘. 7 February 2019, https://www.accc.gov.au/media-release/accc-to-focus-on-franchisors-disclosure-in-the-food-services-sector.
[xxiii] ACCC, Disclosure practices in food franchising: Key findings of targeted compliance checks of franchisors in the food services sector, August 2019, https://www.accc.gov.au/system/files/1620_Disclosure%20of%20practices%20in%20food%20franchising_D05.pdf.
[xxiv] ACCC, $4.2 million in penalties ordered against former car wash franchisor Geowash and two executives’ 24 January 2020, https://www.accc.gov.au/media-release/42-million-in-penalties-ordered-against-former-car-wash-franchisor-geowash-and-two-executives; Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 4) [2020] FCA 23.
[xxv] Ibid.
[xxvi] Parliamentary Committee on Corporation and Financial Services, Fairness in Franchising, March 2019.
[xxvii] Australian Government Department of Education, Skills and Employment, The Franchising Taskforce, https://www.employment.gov.au/franchising-taskforce.
[xxviii] ACCC 2020 Compliance and Enforcement Policy and Priorities Media Release, 25 February 2020, https://www.accc.gov.au/media-release/accc-2020-compliance-and-enforcement-priorities.
[xxix] ACCC, Heinz ordered to pay $2.25 million penalty over misleading health claim’ 24 August 2018, https://www.accc.gov.au/media-release/heinz-ordered-to-pay-225-million-penalty-over-misleading-health-claim; Australian Competition and Consumer Commission v H.J. Heinz Company Australia Limited (No 2) [2018] FCA 1286.