The Competition and Consumer Act 2010

What is the purpose of Australian consumer law?

The Australian consumer law is designed to accomplish three tasks, all of which aim to enhance the welfare of Australians:

• To promote competition;
• To promote fair trading; and
• To protect consumers.

What is the Australian Competition and Consumer Act 2010?

The Australian Competition and Consumer Act 2010 (CCA) is a law to protect consumers, promote competition and fair trading. It covers a broad portion of the market, from interactions between consumers and the retail stores they purchase from, those stores and their suppliers, as well as wholesalers.

This legislation covers areas including:

• Price monitoring;

• Product labelling;

• Product safety;

• Unfair market practices;

• Industry codes;

• Regulation for the airport, electricity, gas, & telecommunications industry; and

• Mergers and acquisitions (M&A).

It establishes four regulatory bodies tasked with administering the act:

• The Australian Competition and Consumer Commission (ACCC)

• The National Competition Council

• The Australian Competition Tribunal

• The Australian Energy Regulator.

What does the Competition and Consumer Act 2010 do?

The CCA outlines the practices that business and individuals must adhere to when engaging in the market. The CCA covers a broad range of interactions, such as specific laws regarding minimum prices of goods, to country of origin representations, to restrictive trade practices such as cartel conduct and price-fixing.

The intention is to protect buyers from anti-competitive or unfair behaviours. It is the role of the board of directors to ensure it maintains regulatory compliance with the relevant aspects of this legislation.

What does the Competition and Consumer Act cover?

The CCA covers most sectors of the market. Effectively anywhere a relationship or transaction occurs. This includes at the consumer level as they purchase from a store, but extends to wholesalers and suppliers.

Essentially, if you operate a business or in a director capacity you should be aware of your responsibilities under the CCA.

What penalties are there for directors in breach of the CCA?

The law relating to anti-competitive conduct is important for all directors because it affects almost every business and because penalties involved in breaches of the law are extremely severe.

The conduct prohibited includes anti-competitive arrangements, misuse of market power and exclusive dealing.

Most directors are aware that offences in this area can carry penalties of millions of dollars against directors because of high profile cases.

Directors should also be aware that there can be prison sentences of up to 10 years for a breach of some of the anti-competitive provisions of the Competition and Consumer Act 2010.

On a more positive note, directors should make use of these laws to ensure that competitors do not engage in anti-competitive behaviour against their business. When the regulator receives a complaint of an alleged breach of the legislation, it will undertake steps to firstly assess and mediate the matter. However, where complaints are determined to be substantive, ACCC investigations may be initiatited.

'Cartel conduct' draws particularly heavy penalties (10 years' imprisonment). It is a breach of the Competition and Consumer Act 2010 for competitors to have a contract, arrangement or understanding containing a cartel provision and a further breach to put it into effect. A 'cartel provision' is one that has the purpose or effect of fixing, controlling or maintaining prices and/or the purpose of:

• allocating customers, suppliers or territories

• preventing, limiting or restricting output

• bid rigging (such as collusive tendering)

On 1 January 2011, the new Australian Consumer Law (which is set out in Schedule 2 of the Competition and Consumer Act 2010) commenced operation. It applies throughout Australia and can lead to severe penalties against directors who are knowingly involved in a breach of the law.

The wide coverage of the prohibition against false or misleading representations means that it should be the focus of all organisations in marketing and selling their goods or services.

A court may, on application by the regulator, make an order disqualifying a person from managing corporations if the court considers that the disqualification is appropriate and the court is satisfied that the person has contravened, attempted to contravene or been involved in a contravention of certain provisions of the Australian Consumer Law.

What is the purpose of Australian consumer law?

The purpose of Australian consumer law broadly fits within three categories aimed at enhancing the welfare of Australians:

• Promote competition;

• Promote fair trading; and

• Protect consumers.