Acc Cases

2016Volume 9, No 6 Legal Studies - Lifeline Australian Consumer Law and the ACCC – an update for 2016 and beyond. By Neil Kusi-Appauh Introduction The Competition and Consumer Act, 2010, (Cth), which introduced the broad framework of Australian Consumer Law (ACL) has been operating for 5 years. It is designed to promote vigorous competition and fair trading in the marketplace, and to protect consumers against particular unfair practices. It provides a general standard for the conduct of traders and their dealings with consumers and other businesses. ACL deepened the general level of protection for consumers and extended the regulation of competitive behaviour. Of note were the strengthened consumer guarantees especially the introduction of the concept of durability as integral to an expectation of ‘acceptable quality’. This means consumers are expressly protected if products fail within a reasonable period of time. Importantly, not only does this provide redress in specific instances, it has also raised standards across a range of products. For example, Apple warranties are now for two years rather than the previous 12 months. ACL also extended prohibitions on specific false and misleading representations, attempted to clarify restrictions on contractual terms which are deemed to be unfair, and introduced a single national product safety regime. The peak enforcement body, the Australian Competition and Consumer Commission (ACCC), remains the guardian of ACL. The ACCC was also given enhanced investigation and enforcement Editor: Julie Gleeson (B. Arts; Master of Arts) powers in 2010 with expanded sanctions and administrative proscriptions designed to improve compliance in specific industries and across the entire business landscape. Regulation and enforcement is predicated upon a ‘one law with multiple regulators’ model. The framework is provided by ACL with state fair trading laws complementing federal legislation. The ACCC, ASIC and state Fair Trading departments are pivotal in monitoring compliance and handling consumer complaints. Where there is a jurisdictional overlap, joint investigations between ASIC and the ACCC are also a feature of recent years. Challenges to the ACCC 2016 has seen the ACCC focus on the enforcement of the provisions of ACL. Rod Simms Chairman of the ACCC outlined the following areas1: Indigenous consumers, especially those in remote areas, are now an ‘enduring priority’ for the ACCC. Action has been taken against providers who target remote communities with services, which are 1 Mr Rod Sims, ACCC Chairman, ACCC compliance and enforcement priorities for 2016, speech delivered at the Conference for the Committee for Economic Development of Australia, Sydney, 23 February 2016 ISSN 1835-6451 Published by Legal Studies Assist This is significant. were ordered to pay over $3 million in penalties for breaches of the ACL relating to safety standards. Woolworths Ltd. Despite a motor vehicle being. Product safety is another ‘enduring priority’. The practice is unlawful and should be robustly prosecuted. meaningful sanctions may improve standards across the entire industry. (my emphasis) if a vehicle fails these guarantees. Rod Simms opines ‘Hopefully. State Fair Trading departments retain a pivotal role in identifying and acting upon product safety breaches although the system remains reactive rather than proactive – generally harm occurs then a manufacturer or retailer is brought to account. The statement from Mr Simms that ‘large companies should avoid misleading consumers into paying for extra protections they already have under the law’ is somewhat underwhelming2. portrait photography. not only in terms of prosecuting those who breach the law but also in relation to public perceptions of the effectiveness of the regulatory framework. which in essence remain the same. Vehicles should be of acceptable quality (including reasonable durability) and fit for the purpose. consumers automatically have rights under ACL to a repair. Scamwatch website and specific communication with potential victims of relationship scams who have sent money overseas. Newly arrived migrants are open to exploitation across a range of consumer areas. Noises have also been made by the ACCC that it is finally willing to tackle new car sales. If a product is faulty. the most significant consumer purchase of their lives. There is a dedicated Fraud task force. Moreover. In 2015 there were over 105. 2016 inappropriate.Legal Studies Lifeline Vol 9 No 6. it is unlawful for a retailer to provide an extended warranty that only provides a guarantee which is commensurate to what the statute warrants anyway. Cartel conduct remains a conundrum for the ACCC– despite regulatory emphasis criminal convictions remain elusive. replacement or. the provisions of the Trade Practices Act and now ACL in relation to implied guarantees have not been stringently adhered to. Extended warranties have long provided a significant revenue stream for retailers.000 scam related contacts fielded by the ACCC4. Consequently. a consumer will have rights against the supplier and in some cases the manufacturer’3. first aid kits and tax return services have come under scrutiny. Training courses. The aged are vulnerable in many areas especially in relation to health and medical issues and retirement accommodation options. Consumers who have purchased a brand new “lemon” in the past would appreciate a more forceful expectation. Complaints about scams continue to be an ongoing issue. overly expensive or exploitative. The reality is that vulnerable indigenous communities remain a target for predatory sellers. if there is a major failure. This means the manufacturer’s warranty period is somewhat superfluous unless it extends beyond the reasonable time frame which is implicitly guaranteed. a refund. In practice. This has been an ACCC focus in the past and its re-emergence as a priority reflects the important foundation guarantees play in consumer protection. A general resignation that big business is always going to rort the little guy undermines confidence and erodes the very purpose of the ACCC and ACL. The ACCC is also cognisant of the exposure to exploitation faced by older and newly arrived Australians. for many. companies have renamed and rejigged extended warranties (as “product care” for example). 2 “Ibid” 3 “Ibid” 4 “Ibid” Page 2 Legal Studies Assist . One could argue that the negative publicity is itself a sanction. The ACCC also alleged that Mr Ansell and Woolworths were knowingly concerned in these arrangements. • sold ultra concentrates for the same price per wash as the equivalent standard concentrated products and did not pass on the cost savings to consumers. The ACCC’s own admission suggests that successful prosecutions for such conduct are a rarity. Additionally. the disconnect between a brand on supermarket shelves and the manufacturer means most consumers are unaware of who makes a particular product. the Federal Court ordered Woolworths to pay penalties totalling $9m following admissions that they were a knowing participant in the collusive practices. Legal Studies Lifeline Vol 9 No 6. Unilever was granted immunity from prosecution (because they helped the ACCC). In a nutshell. that they update their trade practices compliance program. Mr Ansell was disqualified from managing corporations for seven years and ordered to pay a contribution of $75. In December 2013. when the products contained an identical active ingredient. The available penalties under the ACL need to be dramatically increased and the judiciary must institute sanctions which act as a genuine deterrent for corporations who have very deep pockets. there are limited alternatives anyway. In a later determination. Detection and supportive evidence to establish corporate responsibility is problematic. Judgement The Federal Court ordered that Colgate pay total penalties of $18 million. Colgate also admitted that it and Unilever shared sensitive market information.000 towards the ACCC’s costs. Case 2 ACCC v Reckitt Benckiser (Australia) Pty Ltd (No 4) [2015] FCA 1408 (11 December 2015) Background The Australian Competition and Consumer Commission successfully established in the Federal Court that Reckitt Benckiser (Australia) Pty Ltd engaged in misleading conduct in contravention of ACL by representing that its Nurofen Specific Pain products were each formulated to treat a specific type of pain. However. 2016 Recent important Cases Case 1: ACCC v Colgate-Palmolive Pty Ltd. or Woolworths. The makers of Nurofen intentionally Legal Studies Assist Page 3 . The issue here is the inadequacy of the penalty. is unlikely given the complex range of factors which determine grocery shopping choice. the ACCC filed proceedings in the Federal Court alleging anticompetitive conduct and collusion in that the parties: • agreed to cease supplying standard concentrate laundry detergents and supplied only ultra concentrates.manufacturers who dominate the laundry detergent market in Australia. and pay a contribution of $450. the colluding parties restricted the supply of detergent and charged inflated prices for what was available. including information about when they would increase the price of their laundry detergents through telephone contact between Mr Ansell and senior Unilever executives. given the extent of the collusion. Woolworths Ltd Background From 2009 Woolworths colluded with Colgate-Palmolive Pty Ltd (Colgate) and their executive Mr Ansell. Pz Cussons Australia Pty Ltd. Whether this case may encourage customers to forsake the manufacturers. PZ Cussons Australia Pty Ltd (Cussons) and Unilever Australia Limited (Unilever) .000 towards the ACCC’s costs. Such relatively lenient penalties are unlikely to act as a significant deterrent. The eventual pecuniary penalty (despite Justice Edelman’s assertions) does little to actually punish the company for their deliberate transgression. Sydney.net. 2016 in Competition Law. "Although the packaging and website promotion was designed for profit. $1. The class action is likely to benefit Bannister Law.ashurst. The court was concerned with how much harm the consumers suffered rather than imposing a sanction which would act as a genuine deterrent for such cynical exploitation. 23 February 2016 The Ashurst View." he said. law and regulatory institutions. It has recommended an overhaul of policy. Nurofen maker fined $1. It will be interesting to see the extent to which the government implements the recommendations.7 million in corporate terms is not a significant sum nor does it really send a message that such behaviour. who are representing consumers."5 Reckitt intentionally misled customers and exploited their desire for pain relief to inflate their profit margins. assess the effectiveness of the legal system in ensuring compliance with the law in order to protect consumers. Why are statutory guarantees important in protecting consumers? 2. ACCC Chairman. While potentially this may amount to a significant cost to the company it is not an ideal mechanism to establish standards for consumer protection. is not acceptable.7m . as it is to mislead and deceive customers. Justice Edelman said in determining the fine that he took into account other similar cases and that the products actually did provide pain relief.Legal Studies Lifeline Vol 9 No 6. Select ONE challenge and examine why this area is important in reflecting ethical values in consumer law 5. far more than the individual aggrieved customers. There is a proposal for a possible class action against Reckitt. 5 http://www. With reference to both the Colgate and Nurofen cases. and that the corporation publish website and newspaper corrective notices. "The products were effective to treat the pain that they represented so that the only potential effect of the conduct on consumers or competitors was monetary.com. The Australian Competition and Consumer Commission had asked the Federal Court to impose a fine of $6 million.abc. designed. The Harper Review The Harper Review of Australia’s competition framework is considered to be the most significant since 1993. Explain the role of the ACCC in encouraging cooperation and resolving conflict in consumer law 4. Apr 2016. 2016 marketed their products as targeting specific pain types. implement a consumer protection compliance program. Page 4 Legal Studies Assist . June 2016] Syllabus links: HSC course: Consumers – Principal focus: Investigate the legal rights of consumers and the effectiveness of the law in achieving justice for consumers Student Activities – Australian Consumer Law and the ACCC – an update for 2016 and beyond. The Court also ordered that the products be removed from retail shelves. Outline the challenges facing the ACCC in 2016 3. the contravening conduct did not cause any physical harm to any consumer. viewed from www. and they charged more accordingly (almost double) despite knowing that each separate product was in fact exactly the same.7 million. speech delivered at The Conference for the Committee for Economic Development of Australia.au/news. [Source: Mr Rod Sims. Instead the fine was a manifestly inadequate $1. and pay the ACCC’s costs. 1. including mass greyhound killings and live baiting. Legal Studies Lifeline Vol 9 No 6. his alterative recommendation is extensive reform including tighter regulation. Mr Baird and Mr Grant released the report of the Special Commission of Inquiry into the Greyhound Racing Industry in NSW. Inquiry Commissioner Michael McHugh AC. 2016 Emerging Legal Issues – Stay Connected Greyhound racing shut down in NSW Media Release from Premier Mike Baird and Deputy Premier and Minister for Racing Troy Grant NSW will become the first Australian state to shut down greyhound racing after a Special Commission of Inquiry found overwhelming evidence of systemic animal cruelty. The report states up to 20 per cent of trainers engage in live baiting and 180 greyhounds a year sustain “catastrophic injuries” during races. On Thursday. but Mr McHugh stated there was a “very real risk” that practices such as live baiting would continue.000 and 68. QC (former High Court judge) has recommended Parliament considers whether the industry had lost its “social licence” to operate and should be shut down. such as skull fractures and broken backs that resulted in their immediate deaths. 7 July 2016.000 greyhounds – or at least half of all greyhounds bred to race – were killed in the past 12 years because they were deemed uncompetitive. Premier Mike Baird and Deputy Premier and Minister for Racing Troy Grant announced that the NSW Government is acting to protect animal welfare as a priority. If the industry continued. and is planning for an orderly industry shutdown as of 1 July 2017. which found that between 48. Legal Studies Assist Page 5 . quality assistance to students and teachers of the NSW Legal Studies course.au/ [Sources: Justice NSW] Syllabus links: Preliminary course: Law Reform in Action – a contemporary law reform issue. we are left with no acceptable course of action except to close this industry down. through a subscription service available to schools in NSW. Mr Grant said he asked Mr McHugh “to leave no stone unturned and thanked him for delivering a comprehensive report that shone a light on sickening animal mistreatment.legalstudiesassist. we are following in the footsteps of so many jurisdictions across the United States and the world which have banned greyhound racing to protect animal welfare. Legal Studies Assist provides the most experienced. o sport and the law.com.Legal Studies Lifeline Vol 9 No 6. and will include: o A welfare plan for existing greyhounds.” Mr Baird said. 2016 “As a humane and responsible Government. What role did the Special Commission of Inquiry into the Greyhound Racing Industry in NSW play in the development of this law reform? 3. “This is the inevitable conclusion to be drawn from the appalling revelations in Mr McHugh’s report and his considered view that any other measures are unlikely to protect animals from further cruelty. A summary of key findings and observations of the inquiry are attached and the Commission of Inquiry’s report is available at: http://www.au Legal Studies Assist publishes Legal Studies – Lifeline. The Government will prepare and consult on legislation to be presented to Parliament to cease the industry’s operation and to appoint an administrator for Greyhound Racing NSW. What are the conflicting issues involved in this controversial law reform? © 2016 Legal Studies Assist Phone: 9522 6352 PO Box 549 Fax: 9522 5240 SYLVANIA SOUTHGATE 2224 Email: LegalSt@tpg. and o A transition arrangement for existing Greyhound Racing NSW assets that will ensure they are used for open public space.nsw.au ABN: 46 259 338 617 Website: www. The information contained in Legal Studies – Lifeline is written for the teachers and students of the Legal Studies course in New South Wales and should not be considered legal advice.’’ Mr Grant said. “NSW is the first Australian state to ban greyhound racing but. including opportunities for re-homing.greyhoundracinginquiry.justice.com.gov. What were the main agencies and mechanisms of reform? 4. alternative sporting facilities or other community use. Subscription allows schools to copy this publication only for the students in their school. The transition plan will set a path for the winding down of the industry as of 1 July 2017. o animal welfare Student Activities – Greyhound racing shut down 1. as Mr McHugh notes. What conditions gave rise to the law reform of banning greyhound racing? 2. o An adjustment package for industry participants.” Mr Baird said the Government will announce a detailed industry shutdown plan during the second half of 2016 following consultation with stakeholders in industry and animal welfare organisations. as long as Legal Studies Assist is acknowledged Page 6 Legal Studies Assist . Why is this both an ‘animal welfare’ and a ‘sport and the law’ reform issue? 5.