Increased competition & consumer law sanctions and unfair contract modifications to be implemented in Australia | So Good News
On 27 October 2022, the Australian Parliament passed the Treasury Bill Amendment (More Competition, Fair Prices) 2022 (“Bill”). The Act gives effect to the Labor Government’s decision to pledge to increase the penalties for breaches of the Competition & Consumer Act 2010 (“CCA”) and to make unfair competition in consumer contracts and small businesses illegal.
The new maximum penalties
The new penalties for violating the CCA will be:
1. For companies: larger:
- $50 million (up from $10 million);
- 3 x the value of the profit obtained, if it can be determined;
- If the amount of profit cannot be determined, 30% of the amount changed during the violation (for example, during the time when the violation occurred, and 12 months) (from 10% of the annual income in the 12 months before the violation.
2. For individuals: maximum penalties will be $2.5 million (up from $500,000).
The new sanctions will come into effect one day after receiving Royal Assent, which usually happens several weeks after the document is issued. Changes to non-contractual agreements will come into force after 12 months Royal Assent will allow businesses time to renew their contracts.
What does this mean for you?
The new penalties also apply to violations of the competition section of the CCA (including cartel practices, abuse of market power, anti-competitive agreements and mergers) and to consumer law (including misleading or deceptive practices). Australia’s sanctions are often seen as low compared to other jurisdictions and this change will bring the sanctions into line with foreign ones. Although the Courts will continue to consider various factors when choosing sanctions that prevent anti-competitive behavior, there has been a trend towards higher penalties in recent years and we expect to see higher penalties due to higher rates. The increasing number of sanctions could change the risk of competition-related business and consumer issues in Australia and is a good reminder of the need to ensure that competition law enforcement mechanisms are fair and secure and to monitor unfair product agreements. . In particular, the five-fold increase in penalties for individuals (including directors and managers who are ‘knowingly involved’ in the conduct of the company) is something the public should be aware of.