Wednesday, 28 November 2018

Australian Business Law Review

Needless to say, I am very excited to be taking over the role as the General Editor of the Australian Business Law Review (ABLR). My aim as General Editor will not be to attempt to fill Bob Baxt’s shoes (which would be impossible!) but rather to continue the high standards which Bob set for the ABLR.

Thomson Reuters is very pleased to welcome Michael Terceiro to his new role as General Editor of the Australian Business Law Review (ABLR), taking over from the late Professor Robert “Bob” Baxt, who was the Founding Editor of the Journal. Michael is a competition and consumer lawyer who has run his own legal practice Terceiro Legal Consulting for over 10 years.  Michael is also the Deputy Chair of Small and Medium Enterprise Committee (SME Committee) of the Law Council of Australia and the Deputy Chair of the Mortgage and Finance Association of Australia (MFAA) Disciplinary Tribunal. 
Michael earned his Bachelor of Arts and Bachelor of Laws (Hons) at Macquarie University, and completed his Master of Laws at the University of Sydney, a Professional Certificate in Arbitration at the University of Adelaide and a Master of Dispute Resolution (With Excellence) at the University of New South Wales.  Michael will also be commencing a PhD in Law through the University of NSW in 2019. 
Prior to setting up his own practice, Michael worked at the Australian Competition and Consumer Commission (ACCC) for 15 years in a number of senior positions including as a Director of Enforcement and Compliance, the Director in charge of the Sydney Mergers and Asset Sale Branch, the National GST Enforcement Coordinator and the Director in charge of the ACCC’s Waterfront Team during the Waterfront Dispute. 
Michael authored the Anticompetitive Agreements and Secondary Boycotts chapters of the CCH Australian Competition and Consumer Law Reporter. He has also written numerous articles for Lexis Nexis, CCH’s Australian Competition & Consumer Law Reporter and Tracker, the NSW Law Society Journal, Impact! A National Journal of Environmental Law, and the Keeping Good Companies publication. 
We look forward to working with Michael on future issues of the ABLR and wish him all possible success as General Editor.

Massive fines for property spruiker Rick Otton

Property spruiker Rick Otton and We Buy Houses fined record $18 million While I haven't read the judgment yet, $18 million sounds like a mighty high penalty under the ACL, particularly the $6 million against Rick Otton personally. It will be interesting to see how Judge Gleeson arrived at that number.

My Oh My - can it get any worse?

Judge tears up $35m settlement between ASIC and Westpac in lending case It just doesn't seem to be getting any better for ASIC at the moment, with Justice Perram refusing to sign off on the proposed $35m settlement with Westpac for breaches of the National Consumer Credit Protection Act (NCCPA). Perram has rejected the settlement on the basis that ASIC did not particularise the nature and number of Westpac's alleged contraventions. However, it is not too clear whether Perram thinks the penalty is too low or too high. On the one hand, ASIC proposed a total penalty of $35m which would be twice as much as the previous largest penalty under the legislation. However, ASIC then described Westpac's conduct as being due to an innocent mistake, which is never a good way of getting a big penalty. On the other hand, there were a total of 5041 alleged contraventions of section 128 of the NCPAA at $420,000 each which means a maximum penalty of about $2.1 billion. This makes $35m sound very much on the low side. It seems to me that Perram's concern is that he thinks that the proposed penalty of $35m was just plucked out of thin air and there was no principled basis for arriving at that number.

Milking it?

Murray Goulburn: Gary Helou likely to face fines following ACCC settlement Cases like this one drive me nuts. The ACCC takes legal proceedings against Murray Goulburn (MG) in April 2017. In their action the ACCC decides not to seek any pecuniary penalties against MG. Now here we are 18 months, four case management hearings and seven administrative listings later, and it looks like the case will be settled with MG consenting to declarations and agreeing to make a contribution to the ACCC's costs. Why didn't MG and more importantly its Directors make the call to settle this case 18 month ago? If they had made that decision 18 months ago MG would have saved at least $500,000 in legal costs which they paid to their top tier legal firm, as well as a couple hundred thousand to the ACCC for their costs.

Hiring the best

ASIC says it’s now free to hire the best I can't believe the Government fell for the line that ASIC's woes arise from having to hire staff under the Public Service Act (PSA) and as such they could not hire "the best"! Not only is that claim wrong but very insulting to all the hardworking ASIC staff who are doing their best. If that were problem, how is it that the ACCC has had such incredible success in enforcing their legislation, whilst having to hire staff under the PSA? When I worked at the ACCC we attracted the best by selling the advantages of working at he ACCC - ie great training, a wide variety of different types of work and significantly more responsibility than they would get elsewhere. We were also content to get 4 or 5 years out of many new starters who we could see were just passing through. We certainly got value for money out of these people in the 4 to 5 years they were with us! The problem at ASIC is not that they are unable to hire the best but rather a failure of ASIC leadership to instil the right culture. One of ASIC's major failures has been settling cases which it should have litigated which has nothing to do with hiring the best but everything to do with an ineffective, risk averse leadership.

Recent work - Airbnb

Just completed the third and final independent review of Airbnb’s Australian Compliance Program. It has been fantastic working with Airbnb over the last three years - a highly professional and switched on compliance team and organisation with a very strong culture of compliance.

PhD in Law 2019

Very excited to be starting a PhD in Law through UNSW in 2019 under the supervision of Professor Deborah Healey and Professor Alex Steel. My topic is Criminal cartel investigation and enforcement- a comparative analysis of US and Australian approaches. I’ll be looking at the significant differences between the two approaches particularly in relation to criminal cartel investigation, which may mean that the ACCC will struggle to replicate the highly successful criminal prosecution record achieved by the Antitrust Division of the Department of Justice in the US. Also, glad to see the ACCC has ramped up its own criminal cartel enforcement in recent times as that will give me a lot more to go on in terms of my research.

Labor's plans for ACCC

Labor outlines plans to tighten competition policy and boost regulator Apart from giving the ACCC more money, I am not too sure what Labor could do boost the ACCC's powers. The ACCC recently secured the highest maximum penalties anywhere in the world for breaches of consumer protection laws. The ACCC can already fine companies 10% of their annual turnover for competition law breaches and put individuals in jail for 10 years for cartel conduct.

Ugg outcome falls short of mark

Ugg boot retailer pays penalties for alleged false Australian-made representations I share Australian Leather's concerns about the very low penalty ($25,200) imposed on Ozwear Connection by the ACCC for making misleading representations about the origin of their ugg boots. The use of a swing tag in the shape of Australia with green and gold writing was highly likely to mislead consumers into believing that Ozwear's ugg boots were being made in Australian rather than entirely in China. While the ACCC gets it right most of the time, occasionally they drop the ball - this is one case where the ACCC has let down the Australian ugg boot manufacturing industry by not taking more aggressive enforcement action against Ozwear.

SME Annual Conference

Had a great time attending the SME Committee of the Law Council of Australia's Annual Conference at the Monash University Law Chambers in Melbourne yesterday and chairing the session with the ACCC. Thanks to Mick Keogh, David Salisbury and Kristie Pinuita for their excellent presentation.

RFG executives summoned to appear

Former Retail Food executives called to Canberra for grilling Apparently the Senate Committee looking into the effectiveness of the Franchising Code of Conduct has issued summonses to three former RFG executives to force them to appear before the Committee and give evidence. I will have to make a point of turning on the Parliament live feed for that evidence.

Samuel slams Federal Court judges

Banking royal commission lessons likely to be short-lived, warns former ACCC boss I saw this article quoting Graeme Samuel in relation to the Banking Royal Commission. I still find it hard to believe he made the following comment about Federal Court judges: "Professor Samuel believes a specialised group of judges with expertise in complex corporate and securities law needs to be established and maintained to rule on cases. "He says the Federal Court currently does this, but questions whether those Federal Court judges "have an expert knowledge of highly complex notions of corporations and securities law"." Apart from these comments being highly offensive to the Federal Court judges, they are also completely wrong. There is absolutely no evidence that Federal Court judges are out of their depth in relation to corporations and securities law cases.

Parliamentary Enquiry backs SME Committee proposals

Parliamentary Enquiry into the Operation and Effectiveness of the Franchising Code of Conduct Good to see both the Senate Committee and the Australian Small Business and Family Enterprise Ombudsman seem keen on the SME Committee of the Law Council's idea of establishing a new Code Ombudsman with jurisdiction to both mediate and determine disputes under all existing Mandatory Codes at p.48 "ACTING CHAIR: You might want to have a look at the evidence that we received from the Law Council of Australia, but there was a suggestion in the course of evidence today that it might be beneficial to have an ombudsman who oversees the codes and to have some core elements across codes, because there are multiple codes emerging. The idea is that there would be a standard element of codes that would set the parameters for the whole business sector, I suppose. Dr Latham: This is a really good idea. Ms Scott: Absolutely. At the moment they are all very ad hoc, so I think that's a very, very good idea.";query=Id:%22committees/commjnt/d0d1b8c0-7a6a-41de-be35-078aa5800910/0000%22

The Two that Got Away (or were given away?)

Optus misled customers over ‘Direct Carrier Billing’ charges ACCC has taken another case, this time against Optus, under a delegation from ASIC. The ACCC states in its media release that the action was taken pursuant to a standing delegation of ASIC powers to the ACCC: "The ACCC has a standing delegation of certain of ASIC powers and functions for the purposes of investigation and commencement and conduct of any proceedings in relation to matters involving financial products and services provided as part of, or in connection with, the supply or possible supply of telecommunications services." Why would ASIC delegate such powers to the ACCC? It is not like this is particularly hard work - major Australian corporations agreeing to give up and pay $10 million in penalties. Maybe ASIC has delegated this work to the ACCC because they don't see the work as particularly important? Interestingly, the ACCC is on the way to securing $20 million in penalties from these types of cases so far (ie $10 million from each of Telstra and Optus) which is equivalent to approximately 2/3 of the total amount of penalties secured by ASIC in the last financial year!

ACCC Franchising Try On

Stronger penalties required for franchising codes and UCT laws The ACCC is making a very strong play for increased penalties for contraventions of the Franchising Code of Conduct. I must admit I don't quite understand the ACCC's reasoning. Is the ACCC claiming they need bigger penalties because they have been taking lots of franchising cases to court and securing very small penalties which are failing to achieve general deterrence? Recent ACCC outcomes do not support this view: Fastway - $9000 paid pursuant to infringement notice Pastacup - $100,000 paid by consent Domino's - $18,000 pursuant to two infringement notices Ultratune and Geowash - still before the courts The more significant issue is that the ACCC has only pursued 26 franchising cases over the last 15 years, despite receiving 12,640 franchising complaints over the same period. The ACCC needs to ramp up the number of enforcement actions it is taking in the franchising sector and also to make sure that it is taking action against larger, national franchisors with high brand recognition. Having said that, I guess having access to bigger penalties may incentivise the ACCC to pick up its game in the area of Franchising Code enforcement.

Hayne gives ASIC F Grade

Excellent article summarising Kenneth Hayne’s preliminary views about ASIC's performance from his interim report. Hayne has really nailed the issues around ASIC's performance. Indeed, a lot of Hayne's views are very similar to the views which I have been expressing about ASIC's performance in LinkedIn posts over the last few months.

Australian Self Incrimination Commission?

ASIC review finds unacceptable delays by financial institutions in reporting, addressing and remediating significant breaches I was very surprised to read ASIC's report criticising financial institutions for not reporting their illegal conduct to ASIC. Isn't it incumbent on ASIC to uncover breaches of the law itself rather than relying on businesses to turn themselves in? I also wonder whether ASIC has considered the possibility that businesses are deciding not to turn themselves in because they are pretty confident that ASIC aren't going to catch them! During my 15 years at the ACCC I can recall maybe a half dozen cases where a business came in to admit its illegal conduct. A voluntary admission from a business was seen very much as the exception rather than the rule. It looks to me like ASIC may be sitting back just waiting for "mea culpas", rather than going out and doing the hard investigatory yards needed to establish a contravention.

Coat tailing

ASIC joins ACCC in pursuing ANZ over $2.5b share placement ASIC has taken legal proceedings against ANZ Bank over the $2.5bn share placement which led to the ACCC's criminal cartel prosecutions. Interesting that ASIC has decided to purse a civil penalty case rather than a criminal prosecution. Also, the maximum fine for a breach of section 674 is only $1 million, so we are not talking big dollars here.

Wednesday, 12 September 2018

Has ASIC dropped the ball on record Westpac penalty?

Judge baulks at record $35m Westpac fine

I must admit I don't like criticising ASIC but sometimes I just can't help it!

How can ASIC hope to secure a record $35 million for breaches of the National Credit Act, which is twice as large as the previous largest fine, when they put forward agreed facts which state that Westpac's conduct was due to an "innocent mistake"?

ASIC has to ensure that the agreed facts support the proposed penalty and by far the biggest consideration in the severity of a pecuniary penalty is whether the conduct was intentional or not - even recklessness can support a significant penalty.

However, ASIC are now facing the distinct possibility that Justice Perram will not accept the agreed penalty of $35 million for an "innocent mistake" and instead impose a significantly lower penalty.

Operation and Effectiveness of the Franchising Code of Conduct

Our SME Committee has been invited to appear at a public hearing into the Operation and Effectiveness of the Franchising Code of Conduct which is being conducted by the Parliamentary Joint Committee on Corporations and Financial Services.

Hank Spier, a longstanding member of our Committee, will be appearing on behalf of our Committee on 21 September 2018.

Four years too late?

Volkswagen undertakes to fix consumer guarantees approach

While it great news that VW is finally fixing its approach to consumer guarantees, the question is why did it take so long.

I remember writing to the ACCC in 2014 on behalf of a probono client pointing out that Skoda, a subsidiary of VW, was failing to honour its consumer guarantee obligations under the ACL. I also provided the ACCC with compelling evidence of Skoda's misrepresentations about consumer guarantee rights.

In response to my complaint letter, I received the following No Further Action letter. Four years later the ACCC has been able to get VW to do the right thing in relation consumer guarantees.

PS: Fortunately for the client, I was able to assist him with a claim against Skoda in the NSW Civil and Administrative Tribunal and he was successful in securing a full refund.

Westpac to pay $35 million penalty

Westpac admits to breaching responsible lending obligations when providing home loans and a $35 million civil penalty.

That's more like it ASIC! 

Well done for holding out for a substantial penalty!

This also means that ASIC has almost recovered the same amount of penalties in the first two months of the 2018-2019 financial year that they recovered in the whole of the 2017-2018 financial year. Last year total recoveries were only $35.1m whilst this year ASIC has already already recovered $35m.

Terceiro Legal Consulting signs up to National Pro Bono Target

I decided to sign up my firm to the National Pro Bono Target.

I should have done this years ago given the amount of pro bono work I do, which has probably averaged around 100 hours a year for many years now. 

I have to say that pro bono matters are always very rewarding and often much more interesting that my regular work!

For example, I assisted in a military compensation matter that went all the way to the High Court, as well as acting for a whistleblower in a major corporate corruption matter which is still going through the courts!

Certainly beats reviewing incredibly dense thirty page IT contracts on the lookout for potentially unfair contract terms (no offence intended to either past, present or future clients)!

Special Children's Christmas Party

Happy to be supporting the Special Children's Christmas Party again in 2018. We first started supporting this event seven years ago, in 2011.

Independent Review of the Food and Grocery Code of Conduct

I recently assisted in the preparation of the submission of the Small and Medium Enterprise Committee of the Law Council of Australia in response to the Draft Report into the Independent Review of the Food and Grocery Code of Conduct. Our Committee is calling for the Grocery Code to be made a Mandatory Code. A copy of our submission is available here:

ACCC appoints CFMMEU as ethics cop (seriously!)

Code for ethical treatment of clothing workers reauthorised

I must admit I am a bit concerned and surprised that the ACCC authorised a Code which includes a requirement that businesses submit to audits undertaken by the CFMMEU to check that those businesses are complying with their legal obligations to workers. Submitting to these audits is a condition of the business being accredited under the Code.

I would have to question whether the CFMMEU are an appropriate organisation to be conducting such audits, particularly given the litany of adverse court results against them in recent times which raise serious questions about the CFMMEU's own ethics. These audits should be conducted by either a government body (Fair Work Ombudsman) or a separate company, such as is the case with Australian Made accreditation.

Dodging a bullet!

Franchisee rights denied in Husqvarna code breach

I was a bit puzzled by the ACCC's settlement against Husqvarna Australia (which is part of the Swedish Husqvarna Group with annual revenues of $6 billion).

Husqvarna's Australian subsidiary has been claiming for well over 10 years that its agreements with 343 dealers are not franchise agreements, when that has not been the case. Furthermore, Husqvarna has terminated dealers without complying with the Franchising Code of Conduct (Code).

Husqvarna also has not reviewed its "franchise" agreements to identify potentially unfair contract terms, despite the law changing two years ago.

Finally, the company didn't even have a compliance program in place.

Despite all of this conduct, the ACCC decided not take any legal action against Husqvarna but rather to settle this raft of contraventions with a s87B undertaking.

On the other hand, the ACCC takes legal action against much smaller franchisors, with little brand recognition, that have been engaging in relatively minor contraventions of the Code for very short periods of time.

Such inconsistency in terms of the ACCC's enforcement approaches makes our job as lawyers particularly difficult. How do I explained the Husqvarna settlement to the next small business client who gets taken to court by the ACCC?

Wednesday, 29 August 2018

Federal Government failing small business in legal services procurement

I always like having a brief look at the current Panel Head Agreement for the Provision of Legal Services to the Australian Government just to see how unfriendly it is to small business law firms. The current version of the Agreement continues in that long tradition by requiring law firms to - (1) provide a wide range of value added services at no cost, including training sessions and letting government departments use your offices at no charge (2) take out high levels of insurance cover (3) provide extensive warranties and indemnities (4) commit to highly onerous reporting requirements and (5) pay the AG's a Panel Fee set as a percentage of total billings. Surprisingly, one major legal area which is not covered by the Agreement is the provision of consumer law advice. This seems particularly strange given the extension of the unfair contract term (UCT) laws to small businesses from November 2016.

Surely Federal Government departments are going to need some advice about how not to fall foul of these UCT laws in their standard form contracts, most likely starting with the AG's own Agreement for the Provision of Legal Services!

Wednesday, 22 August 2018

ACCC Essentials – understanding the Australian Competition and Consumer Commission’s 2018 Compliance and Enforcement Priorities


It is vitally important for all Australian businesses to have a thorough understanding of the way in which the ACCC prioritises its enforcement activities, given the highly interventionist and aggressive approach which the ACCC takes to both competition law and consumer protection matters.  Indeed, the ACCC is one of the most aggressive enforcers of the competition law provisions in the world.

Furthermore, the ACCC has been successful in its calls for significant increases to the maximum financial penalties for contraventions of the Australian Consumer Law 2010 (ACL), with the proposed changes likely to be in effect by 1 July 2018.   

It is also important to recognise the strong reputation which the ACCC has amongst consumers as an active and effective regulator. One of the implications of the ACCC’s strong reputation is that any business pursued by the ACCC is usually judged very harshly by the Australian public, the media and their customers.  As a result, businesses which become the subject of an ACCC investigation or legal proceedings brought by the ACCC often suffer significant and long-lasting reputational and brand damage.

This paper will outline the Australian Competition and Consumer Commission’s (ACCC) approach to enforcement and identify the key enforcement and compliance priorities.

Why does the ACCC have priorities?

The main explanation for having priorities is that it provides greater transparency in the way the ACCC will be using its resources. However, there are also important practical reasons for having priorities.

As explained by ACCC in its most recent Annual Report it received 405,382 contacts in the 2016-2017 financial year, of which 234,913 were recorded on the ACCC database.[1]

The following table shows a rough breakdown of how those contact and complaints are processed by the ACCC:

As is apparent, there is no way that the ACCC could pursue all of these complaints. Rather, the only way the ACCC could pursue any of these complaints effectively is by establishing clear and specific enforcement priorities.

While the ACCC received 405,282 contacts last year it was only able to conduct initial investigations into 259 of those complaints. An initial investigation generally involves the ACCC writing a letter to the business which has been complained about, to ask for an explanation of their conduct. This number is significantly lower than in the previous year where the ACCC conducted 427 initial investigations. One explanation for the reduction is that the ACCC is becoming much more selective in the matters it is deciding to pursue.

The ACCC commences in-depth investigations in relation to a much small subset of the total complaints. These are investigations which the ACCC Commissioners have determined are important and need to be pursued in more depth.  These investigations would have been allocated an initial investigatory and/or legal budget and often result in litigation.  The number of in-depth investigations has also declined significantly, from 167 in the 2015-16 financial year to 79 in the last financial year.

Finally, the ACCC listed 24 litigation matters in its 2016-2017 Annual Report. However, if one considered all formal resolutions, such as section 87B undertakings and infringement notices, the total number of formal resolutions is likely to be much higher at around 50 formal resolutions in the 2016-2017 period.

What are the ACCC’s 2017 Enforcement and Compliance Priorities?

ACCC’s Goals
On 20 February 2018, the ACCC released its Compliance and Enforcement Priorities for 2018 (Priorities).[2]  These Priorities must be considered as a whole, as the ACCC takes a multifaceted approach to selecting the matters which it will pursue.

First, the ACCC will consider the overall goals of their legislation. Second, it will consider the outcomes which it is likely to achieve by pursuing a particular enforcement matter and the type of conduct which the relevant business is engaging in.  Finally, the ACCC will determine whether the conduct falls into the specific ACCC 2018 priorities or “hit list”.

As a guiding principle, the ACCC will not pursue any enforcement matter unless it is confident that:

(1)   it can achieve meaningful remedies; and

(2)   the conduct is of a type which has caused or may cause significant consumer detriment, including detriment to small business consumers.

There are many cases where the ACCC could achieve a meaningful outcome but decides not to pursue the matter because the complainant has the resources and motivation to achieve the same outcomes through private action.  Similarly, there are many matters that involve particularly egregious conduct, which the ACCC will not pursue because it will not be able to achieve worthwhile outcomes, for example in relation to some phoenix activity.

The ACCC’s enforcement activity is directed achieving the following three main goals:

·        promoting competition amongst businesses
·        promoting fair trading by business
·        protecting consumers in their dealings with business.

These goals reflect both the competition and consumer law functions of the ACCC, which is to fix market failure and to ensure that consumers have as near to perfect information as possible, so they can make rational purchasing decisions.

ACCC’s 2018 Hit-List
The ACCC has made some changes in the 2018 Priorities document to the way in which it outlined its Priorities in the past. In previous versions of the Priorities, the ACCC would set out the general priority factors before listing the specific priority areas or “Hit List”. 

However, in the 2018 Priorities the ACCC effectively started with its “2018 Hit-List” or the specific areas where the ACCC will be focusing a large proportion of its enforcement resources in the coming year.

The 2018 “Hit List” is as follows:

  • consumer issues in new car retailing, including responses by retailers and manufacturers to consumer guarantee claims, and other matters identified in the ACCC’s 2017 New Car Retailing Industry Report
  • consumer issues in the provision of broadband services, including addressing misleading speed claims and statements made during the transition to the NBN
  • systemic issues involving large or national traders avoiding or misrepresenting consumer guarantee rights
  • competition issues in the financial services sector
  • competition and consumer issues in the provision of energy as an essential service, including matters identified in the ACCC’s retail electricity pricing inquiry report and the ACCC’s wholesale gas inquiry
  • competition and consumer issues concerning the use of digital platformsalgorithms and consumer data, with a focus on emerging markets and matters identified by the ACCC’s digital platforms inquiry
  • ensuring small business receives the protections of industry codes and the unfair contract terms law, with a focus on Franchising Code of Conduct issues involving large or national franchisors
  • ensuring better product safety outcomes for consumers in the online marketplace
  • issues arising from the Takata airbags recall
  • conduct that may contravene the new misuse of market power provisions and concerted practice provisions of the Act
  • competition and consumer issues in the agriculture sector, with a focus on the dairy inquiry, Horticultural Code of Conduct enforcement, and analysis of the viticulture industry
  • competition issues in the commercial construction sector
The interesting aspect of the 2018 Priorities is that many of these Priority areas were identified as Priorities in 2017.   For example, new car retailing, agriculture, commercial construction, unfair contracts, franchising, product safety issues in relation online platforms and broadband speed and performance claims were all identified as Priorities in 2017. This suggests that the ACCC did not achieve everything it wished to achieve in relation to these areas in 2017.

The ACCC has also identified a number of new Priority areas in 2018 - namely:

  • financial services
  • energy
  • digital platforms, algorithms and consumer data
  • Takata airbags recall
  • misuse or market power and concerted practices.

That these specific areas would be Priority areas in 2018 was to be expected.  For example, it was anticipated that financial services would be a priority area given:

  • that the government gave the ACCC additional resources in the 2017-2018 Budget to establish a dedicated Financial Services Unit; and
  • the commencement of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in February 2018
The ACCC has also been doing extensive work in the energy sector for some time, through market studies into the areas of gas and electricity.  The inclusion of energy in the 2018 Priorities may suggest that the ACCC will be looking at taking enforcement action in the energy sector in 2018.

Digital platforms, algorithms and consumer data is clearly a priority area in 2018 due to the commencement of the Digital Platforms Enquiry. In December 2017, the Government directed the ACCC to conduct an 18 months investigation into digital platforms, focusing on such companies as Google and Facebook amongst others. 

The ACCC has also had a long running involvement in the Takata airbag voluntary recall. However, the ACCC’s role was escalated significantly in February 2018 when the Assistant Minister to the Treasurer decided to issue a compulsory recall of the Takata airbags.

Finally, the ACCC will be focusing its attention in 2018 on the investigation and enforcement of conduct which is caught by the new changes to the Competition and Consumer Act 2010 (CCA), primarily the changes to the misuse of market power provisions and the introduction of the concerted practices provisions.

One interesting addition to the 2018 Priorities is the reference to “systemic issues involving large or national traders avoiding or misrepresenting consumer guarantee rights”.  It would appear specific area that this has been added to the 2018 Priorities due to a concern within the ACCC about large national traders are continuing to mislead their consumers about their consumer guarantee rights.[3]

There are also a number of industries which were on the 2017 Priority Hit List which can now breathe a collective sigh of relief as they did not make the cut in 2018 – namely:

  • airlines in relation to their consumer guarantees;
  • businesses involved in country of origin labelling;
  • businesses involved in commission-based sales business models; and
  • private health insurers.
Enduring priorities
The ACCC has also adopted a practice of identifying a number of enduring priorities defined as conduct which is so detrimental to consumer welfare and to the competitive process that the ACCC will always regard them as a priority. The enduring priority areas have not changed in 2018:

Cartel conduct

The ACCC will always prioritise cartel conduct causing detriment in Australia. When dealing with international cartels, the ACCC will focus on pursuing cartels that have a connection to, or cause detriment in Australia; that is, cartels that involve Australians, Australian businesses or entities carrying on business in Australia

Anti-competitive conduct 
The ACCC will always prioritise anti-competitive agreements and practices, and the misuse of market power.

Product safety
The ACCC will always prioritise product safety issues which have the potential to cause serious harm to consumers.

Vulnerable and disadvantaged consumers
The ACCC recognises that vulnerable and disadvantaged consumers can be disproportionately impacted by conduct in breach of the Act. The ACCC therefore prioritises conduct that impacts these consumers.

Conduct impacting Indigenous Australians
The ACCC acknowledges that certain conduct in breach of the Act has the potential to specifically impact on the welfare of Indigenous Australians. The ACCC also recognises that Indigenous consumers living in remote areas face particular challenges in relation to asserting their consumer rights. The ACCC will always prioritise its work in these areas while these challenges remain.

Priority factors
Finally, the ACCC outlines the general priority factors which it will weigh up when making a decision to pursue a “non-Priority area” matter. These general priority areas are:
  • conduct that is of significant public interest or concern 

  • conduct that results in substantial consumer or small business detriment 
  • national conduct by large companies, recognising the potential for greater consumer detriment and the likelihood that conduct of large businesses can influence other market participants 
  • conduct involving a significant new or emerging market issue or where our action is likely to have an educative or deterrent effect 
  • where our action will assist to clarify aspects of the law, especially newer provisions of the Act.

The above factors largely duplicate the general priority factors set out in 2017.  Notably two factors which the ACCC will no longer take into consideration when deciding whether to pursue an enforcement action are the blatancy of the conduct and whether the relevant business is a serial offender – both of which appear to be surprising omissions.
Increased ACL penalties
Without doubt the most important development in 2018 will be the introduction of vastly higher penalties for contraventions of the ACL.

Currently, the maximum penalties for contravening the ACL are $1.1 million for corporations and $220,000 for individuals for each contravention.

However, in late 2017, Parliament released the draft amendment bill on ACL penalties.[4] If passed this bill will increase the maximum penalties for civil and criminal contraventions of the ACL to:

  • $10 million; or
  • if the court can determine the total value of the benefit obtained from the offence, three times the value of that benefit; or
  • if the court cannot determine the value of the benefit, 10% of the corporation’s annual turnover in the preceding 12 months. 
The maximum penalties for individuals will increase to $500,000 per contravention.   

These changes are scheduled to take effect from 1 July 2018.

As is apparent, this amendment represents a quantum leap in terms of the size of penalties which may be awarded by the Court for contraventions of the ACL.  This change should be of particular concern for businesses with a history of previous contraventions of the ACL.  Courts are much more likely to impose multi-million-dollar penalties against companies which have engaged in multiple prior contraventions of the ACL.

In order to minimise risks and avoid problems with the ACCC (and other State and territories regulators) it is important for businesses to conduct a detailed Competition and Consumer Law Risk Assessment of every aspect of their operation. This would start with an identification of all risks in the business both from a:

  1. competition perspective – for example, the nature of all agreements with competitors, suppliers and service providers, and other third parties and
  1. consumer law perspective – for example, the representations made to consumers in marketing and promotional materials, the fairness of standard form contract terms and how complaints handling procedures are managed
Once the business has conducted detailed Competition and Consumer Law Risk Assessment, businesses should take steps to implement a comprehensive and up-to-date Compliance Program, consisting of the following elements:

  1. Compliance Policy
  1. The appointment of a Compliance Officer
  1. Other relevant policies such as a Complaints Handling Policy and a Whistle-blower Policy
  1. The establishment of an effective Complaints Handling procedure and
  1. Regular Competition and Consumer Law Compliance Training.
Taking steps to conduct a Risk Assessment and implement a Compliance Program will benefit the business by helping them to better identify and manage all competition and consumer law risks in the business. Taking these steps will also benefit the business in terms of mitigating the extent and severity of the much larger pecuniary penalties which the ACCC will be seeking from the Courts for ACL contraventions in second half of 2018.

[1] ACCC, ACCC – AER Annual Report 2016-2017, Commonwealth of Australia, p 143 at
[3] Rod Sims, 2018 compliance & enforcement priorities, Speech presented at CEDA Sydney, 20 February 2018 at