Are competition and consumer law penalties just a “cost of doing business”? Not anymore…
1 mins reading time
The Federal Labor government is pushing to see changes to competition and consumer laws to deter businesses from non-compliance. The current level of penalties are viewed by some commentators as a simple “cost of doing business”, and in some respects are not taken seriously to protect consumers and business counter-parties.
In August 2022, the government released a draft Bill which aims to significantly increase maximum penalties for breaches of the Competition and Consumer Act (CCA), including the Australian Consumer Law (ACL).
Once enacted, the Bill will bring about significant changes, meaning businesses should prioritise reviews of current contracts, policies, and trading procedures to ensure they are compliant for when the increased penalties are introduced. A key focus should also be the training of staff.
What’s changing?
The biggest penalties for breaches of the CCA including the ACL are proposed to increase as follows:
| Current Law - FROM | Proposed Change - TO | |
|---|---|---|
| Corporations; the greater of: | • $10 million; • 3 X the obtained benefit from the contravention; • 10% of Australian turnover during the breach period of an offence. | • $50 million; • 3 X the obtained benefit from the contravention; or • 30% of Australian turnover during the breach period of an offence. |
| Individuals: | • $500,000 | • $2.5 million |
The proposed significant increases in penalties will mean that businesses cannot consider breaches of the CCA to be just a “cost of doing business”. Additionally, given the proposed heightened consequences for personal liability, there may be an increase in whistleblowers and immunity applications.
The penalty increases will apply to offending conduct that occurs after the laws have taken effect. Any conduct prior to this date will fall the current regime.
It was less than 5 years ago when we saw the last penalty increase under the CCA, and there is a strong push to continue to increase these penalties until businesses are deterred from non-compliance. Each increase has continued to be significantly higher than the last, and businesses should be prepared that this is not the last penalty increase they will see.
Need more information or assistance?
For further information or a review of your compliance with the upcoming changes to Australian Competition and Consumer Law, please contact one of our experts.
The same Bill also proposed to substantially strengthen the “unfair terms” laws in relation to “standard form” contracts.
For more detail, read here.
The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.
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Are competition and consumer law penalties just a “cost of doing business”? Not anymore…
The Federal Labor government is pushing to see changes to competition and consumer laws to deter businesses from non-compliance. The current level of penalties are viewed by some commentators as a simple “cost of doing business”, and in some respects are not taken seriously to protect consumers and business counter-parties.
In August 2022, the government released a draft Bill which aims to significantly increase maximum penalties for breaches of the Competition and Consumer Act (CCA), including the Australian Consumer Law (ACL).
Once enacted, the Bill will bring about significant changes, meaning businesses should prioritise reviews of current contracts, policies, and trading procedures to ensure they are compliant for when the increased penalties are introduced. A key focus should also be the training of staff.
What’s changing?
The biggest penalties for breaches of the CCA including the ACL are proposed to increase as follows:
| Current Law - FROM | Proposed Change - TO | |
|---|---|---|
| Corporations; the greater of: | • $10 million; • 3 X the obtained benefit from the contravention; • 10% of Australian turnover during the breach period of an offence. | • $50 million; • 3 X the obtained benefit from the contravention; or • 30% of Australian turnover during the breach period of an offence. |
| Individuals: | • $500,000 | • $2.5 million |
The proposed significant increases in penalties will mean that businesses cannot consider breaches of the CCA to be just a “cost of doing business”. Additionally, given the proposed heightened consequences for personal liability, there may be an increase in whistleblowers and immunity applications.
The penalty increases will apply to offending conduct that occurs after the laws have taken effect. Any conduct prior to this date will fall the current regime.
It was less than 5 years ago when we saw the last penalty increase under the CCA, and there is a strong push to continue to increase these penalties until businesses are deterred from non-compliance. Each increase has continued to be significantly higher than the last, and businesses should be prepared that this is not the last penalty increase they will see.
Need more information or assistance?
For further information or a review of your compliance with the upcoming changes to Australian Competition and Consumer Law, please contact one of our experts.
The same Bill also proposed to substantially strengthen the “unfair terms” laws in relation to “standard form” contracts.
For more detail, read here.