On 23 February 2016, the ACCC's Chairman, Mr Rod Sims, launched the 2016 ACCC Compliance and Enforcement Policy, and announced the ACCC's enforcement priorities for 2016.
Since 2012, the ACCC has released its annual Compliance and Enforcement Policy, which explains the ACCC's strategies to achieve compliance with the Competition and Consumer Act 2010. The announcement of the ACCC's priorities provides an indication of likely areas of enforcement activity by the ACCC. As such, it enables businesses to reassess their exposure to competition and consumer laws, particularly those covered by the ACCC's priorities, and review their existing practices, policies and procedures to minimise their exposure in high risk areas.
Interestingly, this year's Policy expressly states that the ACCC will "…tend to prioritise enforcement action in relation to the conduct of larger companies ahead of smaller businesses." In launching the Policy, Mr Sims provided the following rationale for this aspect of the Policy:
First, misconduct by larger companies is likely to cause greater consumer harm given their greater volume and reach.
Second, larger companies are often seen as benchmarks for behaviour and compliance and accordingly have a disproportionate influence on market place behaviour. Addressing poor behaviour at these levels is important to send clear messages to the market.
The 2016 ACCC Compliance and Enforcement Policy outlines the following areas of enforcement priority.
Competition and consumer issues in the agriculture sector is a new priority in 2016. The focus for the ACCC in 2016 will be conducting specific market studies that will enhance the ACCC's understanding of the "competiveness of particular agricultural supply chains". The prioritisation of the agricultural sector is consistent with concerns expressed in the Federal Government's Agriculture White Paper about "increasing consolidation beyond the farm gate and unfair trading practices through the agricultural supply chain." It also follows the ACCC's establishment of a specific Agriculture Enforcement and Engagement Unit in 2015 and the ACCC's announcement of the appointment of an ACCC Commissioner, Mr Mick Keogh, with "a long history of involvement in the agriculture sector" on 24 February 2016.
Health and medical sectors
The Health and medical sectors are a continuing priority from 2015. The ACCC intends to build on successful interventions in the last year involving exclusive dealing that was likely to have an anti-competitive effect on the supply of day surgery services, unconscionable conduct promoting and supplying medical services and medications for men suffering from sexual dysfunction, and misleading conduct in claiming that pain relief products were each formulated to treat a specific type of pain when they were identical. The ACCC has also indicated that it has important investigations underway "to ensure that health service providers ensure that their disclosure practises are in line with the Australian Consumer Law" and focussing on "misleading health claims in relation to certain food products".
Cartel conduct impacting on government procurement
In addition to cartel conduct being an enduring priority area (see below) for the ACCC, the ACCC is specifically prioritising cartel conduct impacting on government procurement. The ACCC has indicated that it has "around 20 cartel investigations underway at any one time and we expect at least one or two criminal prosecutions this year and some other important civil proceedings". Cartel conduct has been both a criminal and civil offence since 2009, and the foreshadowed criminal prosecutions will be the first in Australia.
The ACCC will focus on ensuring that small businesses receive the protections of the new legislative provisions extending unfair contract term protections to small businesses by "laying the groundwork for the new laws and ensuring small business owners know where they stand". By way of background, you can read the article we wrote late last year about the extension of the unfair contract provisions to small business contracts here.
Secondly, following the landmark judgment and outcome in the Coles unconscionable conduct case, and with the Woolworths 'mind the gap' case before the Federal Court, the ACCC is focussing on the Food and Grocery Code of Conduct. The ACCC has warned that it "will take enforcement action whenever needed to ensure the code succeeds".
Recall of unsafe consumer products
Product safety is another enduring priority area for the ACCC. In 2016 the ACCC will focus on highlighting the dangers of button batteries, quad bikes and Infinity cables. Following successful action against Woolworths Ltd, which was ordered to pay over $3 million in penalties for breaches of the ACL relating to safety issues, Chairman Rod Sims says that the "judgment should send a warning to companies that they must do more to detect unsafe products and remove them from their shelves".
In 2016 the ACCC will focus on "representations made by large retailers about express and extended warranties". The ACCC has advised that "large companies should avoid misleading consumers into paying for extra protections they already have under the law". Further, the ACCC has warned that misstatements of consumer rights, such as no refund statements, and "blanket refusals to consider warranty claims after the expiry of a manufacturer's warranty without considering the application of the consumer law" will attract the ACCC's attention.
New car retailing
This is a new priority area and it appears that the focus will be on whether manufacturers' and retailers' responses to consumer complaints are consistent with their obligations under the consumer guarantees. The ACCC is calling for vehicle manufacturers and new car retailers to invest in aftersales care, reminding them that the "consumer guarantees provide that vehicles will be fit for purpose, free from defects and as durable as a reasonable consumer would expect". In the event that a vehicle fails the consumer guarantees, the consumer will have rights against the supplier and in some cases the manufacturer. The ACCC reiterates that "these rights are not limited by a manufacturer's warranty and blanket refusals to consider warranty claims after the expiry of a manufacturer's warranty or solely through the strict conditions of those warranties will be of concern to us".
The ACCC also indicated that it will soon conclude its investigation into emission issues involving VW.
Last year the ACCC received more than 105,000 scam related contacts, with a significant portion relating to relationship scams. The ACCC is responding to this issue by "providing consumers with information via our Australasian Consumer Fraud Taskforce campaign and our Scamwatch website" and "attempting to disrupt relationship scams by writing to people who are sending money to overseas scams hotspots".
Vulnerable and disadvantaged consumers
Following on from 2015, the ACCC will continue to prioritise the protection of older consumers and consumers who have recently arrived in Australia. Recent enforcement action includes proceedings against a retirement village for misleading residents about their right to choose a telecommunications service provider, successful claims against two retailers of adjustable beds for misleading conduct, and a successful claim of false or misleading representations and unconscionable conduct against a company that offered recent migrants assurances of sponsors, jobs, and permanent residency in return for large sums of money.
As well as its 2016 priorities, the ACCC has reiterated that cartel conduct, anti-competitive agreements and practices and misuse of market power will always remain enduring priorities because they are "so detrimental to consumer welfare and the competitive process".
In addition, the ACCC confirmed that it will always prioritise the assessment of product safety issues, "which have the potential to cause serious harm to consumers" and also announced that Indigenous consumers will become an enduring priority due to "challenges in relation to asserting their consumer rights".
The release of the 2016 ACCC Compliance and Enforcement Policy provides businesses with an opportunity to:
- reassess their exposure to competition and consumer laws, in particular to the areas covered by the ACCC's 2016 enforcement priorities; and
- reassess their practices, policies and procedures, including the adequacy of their compliance procedures, to effectively manage risk in these areas.