Competition And Consumers Law: What If You Breach?

Posted on: 15th March 2013

In Australia, we have the Competition and Consumer Act 2010 that protects the rights of consumers. Formerly known as the Trade Practices Act 1974, it ensures that all Australian competitions be fair and effective – without crossing any legal boundaries – by setting out specific rules. It also contains the Australian Consumer Law (ACL), which businesses – whether big or small – must adhere to, for all their transactions with consumers.

The Australian Competition and Consumer Commission (ACCC) is the country’s independent authority responsible for enforcing the ACL among all business organizations. Together with the Australian Securities and Investments Commission (ASIC) as well as the state and territory fair trading agencies, they aim to promote a clean and fair playing field for any business who wishes to venture out in different types of competition.

How does the Competition and Consumers Act protect me?

For business owners, the Act enumerates the competition rights and conditions that must be followed when you make business deals with your customers, competitors, and suppliers. This includes the right to take legal actions if any conduct from another individual or entity hurts or affects you and your business.

It goes the same for consumers. The Act provides the same kind of protection in case their rights have been abused or misused by any dealings with businesses.

What are the guarantees that an individual or a company must provide to the consumers?

[caption id="" align="alignright" width="240"]ACCC ACCC (Photo credit: Rantz)[/caption]

Every time you (supplier, manufacturer, and seller) manufacture and/or sell a product or service to a customer, you must observe to do these consumer guarantees:

•           Goods are of acceptable quality – safe and durable, free from defects, satisfactory in appearance and finish;

•           Goods will perform its expected job, will be fit for its disclosed purpose, will perform like its sample or demonstration model;

•           Goods should have a clear title, should match its description expected by the customer, and should not have any undisclosed security;

•           Services must be given to the consumers with care and skill to avoid further damage or loss;

•           Services must be provided within a reasonable timeframe.

Failure to comply with the goods or service guarantee may result to legal actions set by the consumer. It would be difficult to avoid reducing or limiting your liability because you cannot impose a “no refunds on sale items” or “all care but no responsibility” clauses on your receipts. By imposing consumer guarantees, consumers will gain greater confidence in your business and they are given utmost protection when they make purchases or require your services. Consumers always have the right to demand for a remedy or a solution in case they feel misled or deceived by your business strategies.

What happens if I breach the Competition and Consumers Act?

If you are concerned about breaking terms and conditions of the Act, the first thing you must do is to seek legal advice. It is always best to come forward and cooperate with the ACCC to properly address the possible breaches and the rightful steps to correct it.

Improper trade practices by companies and corporations that breach any provisions laid within the Competition and Consumers Act are subject to civil penalties such as:

  • The      amount of $10 million;
  • Three      times the value of the gain obtained from the breach; or,
  • If the      value of the gain from the breach cannot be determined, 10% of the annual      turnover of the company for the last 12 months prior to the breach.

Individuals who have found guilty of violating any provisions in the Competition and Consumers Act may be subject to the following consequences:

  • Disqualification from any top management post within the company for a duration ordered by a court;
  • Be stripped of rights to demand indemnity from their company or corporation against any financial penalty under Part IV (anti-competitive conduct)
  • Be stripped of rights to ask for reimbursement for legal costs that they incur from unsuccessfully defending or resisting penalty proceedings.

For consumer protection breaches, the maximum fines are $1.1 million for a corporation and $220,000 for an individual. In addition to fines and penalties a court can: vary contracts; impose injunctions or damages orders on companies or individuals; require divestiture of shares or assets; and can order the implementation of compliance programs and corrective advertising.

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