Competition and Consumer Law and Consumer Protection in Australia

Posted on: 11th February 2013

The Competition and Consumer Act (CCA) in Australia is the primary Act governing competition in Australia. It is also assisted by common law precedent, referred to as the ‘unwritten law’ in the act. In addition, there are industry specific regulation parts of the CCA, including Part XIB and Part XIC which are responsible for telecommunications regulation. Legislation governing online transactions is governed by separate legislation, the ePayments Code. At the state level, consumer protection is implemented by Fair Trading and Sale of Goods acts. Some key sections of the CCA are examined below.


Part IV: Restrictive Trade Practices

The restrictive trade practices provisions in the Competition and Consumer Act (CCA) are aimed at preventing practices by firms which limit free competition. This part of the act is enforced by the  ACCC. The ACCC can litigate and seek pecuniary penalties of up to $10 million from corporations and $500,000 from individuals. Private actions for compensation may also be available.

These provisions prohibit:

Banning Cartels – Cartel offenses can result in up to ten years imprisonment and $200,000 in fines.

Suppressing Competition – Any agreements between business that are meant to suppress competition are illegal. This includes any informal understandings, private arrangements or public contracts that discourage competitors.

Aggressive Use of Market Share – Using advantages made actionable by having a large share of a market cannot be used to stop competitors from entering the market. An example is predatory pricing, in which costs to the consumer are artificially low in order to force out competitors who lack the might to survive the price drop.

Exclusivity – Refusing to sell to certain companies with the intention of stopping their competitive ability is prohibited. However, since some allowances of exclusivity can occasionally produce benefits, authorizations for exclusivity can be granted on the grounds of public benefits.

Merger Control – A merger of companies will not be approved in Australia if it will lower competition and consumer options. Mergers can only be authorized by the Australian Competition Tribunal if the merger is shown to benefit the public.

Competition And Consumer ActUnconscionable Conduct (Part 2-2 of the Australian Consumer Law)

The inclusion of unconscionable conduct in the Trade Practices Act is a codification and extension of the equitable principle of ‘unconscionability’ which was clarified as a cause-of-action in the case of Commercial Bank v Amadio (1983) 151 CLR 447. In that case, the failure by a bank to disclose the unlimited amount of the guarantee an elderly couple who could not read English was held to be unconscionable.The High Court of Australia held that an act was unconscionable if a party to a transaction is under a ‘special disability’, the other party is or ought be aware of that disability, and that other party acts in a way that makes it unfair or unconscionable to accept the offer of the weaker party.

Part 2-2 of the ACL (Volume 3, Schedule 2 of the CCA)  bans unconscionability in consumer transactions, and gives factors that indicate unconscionability. This clarifies the application of unconscionability and circumstances where a consumer is at a “special disability”. Subsection 2 of s21 also allows for the relative bargaining power of consumers and businesses to be taken into account. This section also makes it clear that consumers must have understood any documents relting to the supply of goods or services.

Misleading or Deceptive Conduct

Misleading or deceptive conduct (s18 of ACL) allows individuals and the ACCC to take action against corporations who employ conduct that is misleading or deceptive, or likely to mislead or deceive.

In order to determine whether conduct is misleading or deceptive, the court will take an objective assessment of the circumstances. This is determined by determining whether a reasonable member of the class to whom the conduct was directed at would have been mislead or deceived. For example, a medication advertisement may be directed at both consumers and doctors. As a result, these two classes will be considered separately and a higher standard of reasonableness will be applied to the class of doctors in relation to the ad.

Conditions and Warranties

The State Sale of Goods Acts imply into contracts with consumers certain conditions and warranties, but these acts have slightly different jurisdictional limits (e.g. ‘consumer’ and ‘goods’) and the legislative phrases may have been interpreted slightly differently.

Guarantees to Customers

The competitions and consumer act 2010 Chapter 3, Part 3-2, s1, sets out consumer guarantees that provide consumers with a statutory basis for seeking remedies, including when

  • Goods are not of acceptable quality;
  • Goods are not fit for a purpose that the consumer made known to the supplier;
  • repairs and spare parts are not available for a reasonable period;
  • a person does not comply with and express warranty;
  • services are not rendered with due care and skill;
  • services are not rendered within a reasonable time.
[caption id="" align="alignleft" width="300"]Taken inside the High Court of Australia. Taken inside the High Court of Australia. (Photo credit: Wikipedia)[/caption]

Unfair Contract Terms Regime

Sections 23-28 establish the ways in which terms may be found unfair. In order for a term to be found to be unfair, it must cause a significant imbalance in the rights or obligations of the parties, such as causing detriment.

Product safety and information —ACL, Ch3, Pt 3-3 and Actions Against Manufacturers/Importers of Goods – ACL Ch3 Part 3-5

These sections details the powers of the minister to declare product safety standards and the consequences of breaching these standards which include bans and criminal penalties resulting in fines of up to $1.1 million for corporations. Regulations on the requirements of saftey warnings are also detailed.

Product Liability – ACL Ch3 Part 3-5

This section details how the safety standard of the relevant goods is evaluated by considering th purpose and how the goods were marketed, warnings given, what might reasonably be expected to be done with the goods and the time the goods were supplied. This section also details the limits of damages which can be claimed and defences, such as a reduction in damages if the consumer’s own negligence contributed to the loss suffered.

 Part VIIA: Prices surveillance, Notification, and Monitoring

The ACCC's functions under this part include examining proposed price rises on ‘notified’ goods, subject to instruction from Minister. The ACCC can also monitor the prices, costs and profits of an industry or business and to publicly report the findings. However, the CCA does not establish the ACCC as a price-fixing body. For example, the ACCC is permitted to monitor, but not set, the price of petrol.

If you have a problem as a consumer, see here for more information on getting assistance from authorities to resolve it.

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