Are you complying with consumer laws? Penalties have increased significantly!

The ACCC told us to expect further Competition and Consumer Law interventions in 2018, following a significant number of enforcement actions in 2017, and they were not kidding!

Is your house clean?

In the first half of 2018, we have seen increased consumer law penalties, major investigations commenced by the ACCC and one of the largest ever fines for breaching competition law imposed by the Federal Court.

In light of all this, it is important to ensure that your ‘house is clean’. Now is the time to review and update your compliance policies and training programs to ensure you do not fall victim to the new penalties regime.

What are the new penalties going to look like?

The consumer law penalty regime, effective from 1 September 2018, mirrors the competition law civil penalty provisions, with the maximum penalty for a body corporate being the greater of:

• $10 million; or
• if a court can determine the value of the benefit, 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.

This is a considerable increase from the current maximum penalty of $1.1 million.

The changes also increase the maximum penalty for individuals from $220,000 to $500,000.

These are significant increases and emphasise the need to ensure that you are complying with your consumer law obligations.

The key message from the penalty increase is that breaches of the Australian Consumer Law provisions will be considered as seriously as breaches of cartel and other anti-competitive conduct provisions.

Earlier this year, a Full Federal Court’s decision imposed one of the largest ever fines for a breach of competition law. Japanese company Yazaki Corporation  was ordered to pay a penalty of $46 million for engaging in anti competitive cartel conduct in the supply of wire harnesses used in the manufacture of the Toyota Camry.

The ACCC submitted to the Court that the appropriate penalty should be considered against the seriousness of their conduct and the size of their organisation. ACCC Chairman Rod Sims said:

[I]t is of considerable importance that penalties imposed by the Courts are large enough to act as a sufficient deterrent to prevent companies and their employees contravening Australia’s competition laws.

Take home message

Given the strong stance being taken by the ACCC and the significant increase to potential penalties, it is extremely important for organisations to ensure they are complying with these laws. Reviewing and updating your compliance and training programs will help minimise any exposure to breaches.

If you would like assistance reviewing and updating your compliance and training programs, please contact David Grace or Adelaide Hayes from our competition and consumer law team.