The latest in competition and consumer law 6 min read
The Australian Government has launched consultation on possible reforms to the Australian Consumer Law (ACL) to address currently unregulated unfair trading practices.
The ACCC has defined 'unfair trading practices' as commercial conduct that is:
- harmful but does not reach the legal threshold for unconscionable conduct;
- not misleading or deceptive but distorts consumer choice by creating confusion or hiding or omitting relevant information; and
- not captured by the unfair contract term provisions as harmful terms in non-standard form contracts or unfair conduct engaged in pursuant to a contract term that is, on the face of it, a reasonable contract term.
Such conduct is currently not prohibited in Australia.
The ACCC has welcomed the Government's call for consultation. It has recommended that an unfair trading practices prohibition be introduced into the Australian Consumer Law in a number of contexts, including the final report of the 2019 Digital Platforms Inquiry.
The ACCC Deputy Chair Catriona Lowe noted in a press release on 1 September 2023 that 'the ACCC has been advocating for some time for an unfair trading practices prohibition to be introduced into the Australian Consumer Law to better protect consumers and small businesses.'
Consultation is now open, with submissions due to the Department of Treasury by 29 November 2023.
On 7 September 2023, the Federal Court ordered Swift Networks Pty Ltd (Swift) to pay a penalty of $1.2 million for its involvement in cartel conduct, specifically bid rigging, during the tender process for technology infrastructure and services contracts related to three Pilbara mining village projects.
Swift admitted that it reached agreements with competitors DXC Connect Pty Ltd and DXC Technology Australia Pty Ltd in relation to these bids. The agreements entailed one of the parties intentionally inflating their bid price in response to a request for bids.
Swift was also ordered to establish Competition and Consumer Act compliance, education and training programs and pay part of the ACCC's costs.
On 15 September 2023, the ACCC issued a draft determination proposing to deny authorisation for Qantas Airways Ltd (Qantas) and China Eastern Airlines Corporation Limited (China Eastern) and their related entities (including Jetstar) to continue coordinating operations between Australia and mainland China.
Qantas and China Eastern are seeking authorisation for an agreement that enables them to coordinate passenger and cargo transport operations between Australia and China until the end of March 2024.
In a press release, ACCC Commissioner Anna Brakey said, 'At this stage we are not satisfied that the likely harm to competition from Qantas and China Eastern’s proposed coordination would be outweighed by any potential benefits. We are concerned that the authorisation would provide Qantas and China Eastern with the opportunity and incentive to increase prices, compared to what they would charge absent the alliance, by limiting or delaying the introduction of additional capacity on the Sydney-Shanghai route as passenger demand continues to grow.'
If an agreement for coordination between two key competitors is likely to cause a substantial lessening of competition in the market, the ACCC may only authorise such an agreement if the public benefits from the coordination outweigh the harm to competition.
Ms Brakey added that a key difference between the ACCC's support for authorisation in 2021 and 2015 and its opposition now was the parties' failure to provide it with sufficient evidence that their continued alliance would lead to additional services on other routes between Australia and China.
The ACCC is currently seeking submissions in response to the draft determination by 6 October 2023, before making its final decision.
On 22 September 2023, the ACCC commenced proceedings in the Federal Court against EnergyAustralia for allegedly breaching the Electricity Retail Code (the Code) and the ACL when notifying its customers of impending price changes. The ACCC is alleging that EnergyAustralia:
- breached the Code by failing to state the ‘lowest possible price’ when sending price change notices to customers;
- breached the Code by failing to state the percentage difference to the reference price, as well as the lowest possible price, in electricity price offers advertised on its website; and
- made false or misleading representations in breach of the ACL in estimates of annual costs provided to customers in price change notices.
The ACCC is seeking penalties, declarations, costs and other orders.
This action follows the ACCC's audit of electricity retailers' compliance with the Code and is the first time that the ACCC has commenced litigation in relation to an alleged breach of the Code.
The ACCC is urging businesses to review their standard form contracts for compliance with the unfair contract terms (UCT) regime before new penalties take effect.
From 9 November 2023, changes to the ACL will mean that UCTs in standard form contracts will be illegal and can attract substantial penalties. Currently, a court can only declare certain terms of a contract to be unfair and therefore void.
The ACCC has provided the following tips for businesses in reviewing their contracts for UCTs:
- consider terms from the perspective of both parties;
- include counter-balancing terms;
- avoid broad terms;
- avoid terms that seek to avoid obligations under the ACL;
- use clear and simple language; and
- ensure key terms are transparent.
The changes will also expand the coverage of the UCT laws to apply to small businesses that employ 100 people or fewer, or have an annual turnover of less than $10 million.
On 7 September 2023, the ACCC commenced proceedings in the Federal Court against dating site eHarmony Inc. (eHarmony), alleging that it made false or misleading representations and engaged in misleading or deceptive conduct concerning the pricing, renewal and duration of its memberships.
The ACCC alleges that eHarmony contravened the ACL by:
- representing to consumers that they could engage in ongoing communication with other people on eHarmony for free, when in fact free 'basic' memberships did not offer access to this feature;
- failing to display accurate minimum and total prices during the purchase process;
- giving consumers the false impression that the subscription period for its premium membership was only for an initial 6, 12 or 24 months, when in fact the subscription automatically renewed; and
- representing to consumers that they would have an opportunity to cancel their subscription after signing up, in circumstances where consumers had to pay the remainder of the subscription period upon cancellation.
The ACCC is seeking penalties and declarations, as well as injunctions, consumer redress, costs and other orders.
On 31 August 2023, the ACCC commenced proceedings in the Federal Court against Qantas Airways Limited (Qantas) for alleged false or misleading representations and misleading or deceptive conduct in contravention of the ACL.
The ACCC alleges that Qantas made false or misleading representations by:
- continuing to offer for sale on its website, and accepting payments for, more than 8,000 cancelled flights; and
- displaying flight information on the 'Manage Booking' web page for ticketholders for more than 10,000 cancelled flights.
ACCC Chair Gina Cass-Gottlieb has stated that the ACCC intends to seek a record penalty of more than $250 million against Qantas. This reflects a recent focus in the ACCC's enforcement action on pursuing substantially higher penalties against large companies for serious consumer law contraventions.
Following an investigation by the ACCC, Millell Pty Ltd (trading as Pet Circle), an online supplier of pet food and supplies, paid penalties of $26,640 after admitting that it likely contravened the ACL. Pet Circle admitted to making false or misleading representations on its website by:
- representing to consumers that the price that they would be charged was the price displayed at checkout after a discount code or voucher had been accepted, when in fact Pet Circle subsequently charged those consumers an additional amount to the value of the discount code or voucher; and
- advertising a range of products with the statement 'Don’t pay $X, save Y%', when in fact, in some cases, the higher 'Don't pay' price reflected the recommended retail price of the manufacturer and had not been recently offered by Pet Circle or one of its competitors.
Pet Circle provided a court-enforceable undertaking to the ACCC that it will cease engaging in the contravening conduct and provide a refund to affected consumers.
Pet Circle also undertook to provide a remediation report to the ACCC within six months and establish an ACL compliance program. A copy of Pet Circle's undertaking is available here.