Should you give a voluntary undertaking to the ACCC?
The ACCC sometimes invites a company to give a voluntary undertaking to the ACCC. The company is not being specifically investigated by the ACCC, and is not alleged to be involved in any wrongdoing, but the ACCC might be concerned about some of the practices in the industry in general.
If you are approached by the ACCC to give a voluntary undertaking, there are a few factors to consider. Key points to keep in mind are that:
- Undertakings have the force of law. In most cases it will be easier for the ACCC to prove a breach of an undertaking, rather than a breach of the law.
- Undertakings are public and appear on the ACCC’s website. Entering into the undertaking might give the public (including your customers and suppliers) the impression that you have engaged in wrongdoing (even if this is not the case). This is because undertakings are often given by companies as an alternative to being prosecuted by the ACCC.
- Complying with undertakings can be onerous, time-consuming, costly and disruptive. If you already have a strong Australian Consumer Law compliance program in place, it is worth questioning whether there is any value in voluntarily agreeing to a new prescriptive compliance regime.
Factors to consider when you have not breached the Australian Consumer Law
Undertakings are binding
Undertakings given to the ACCC (sometimes called “87B Undertakings” because they are given pursuant to section 87B of the Competition and Consumer Act 2010) have the force of law.
In an undertaking, a company might agree to implement compliance measures – for example, specific training programs, monitoring, and reporting to the ACCC. All of these activities are likely to assist the company to comply with the Australian Consumer Law, which is positive, however it is important to appreciate that once a company formalises its compliance arrangements in an undertaking, the company is then legally bound by them.
This means that if a company breaches an undertaking, the ACCC can take action against that company in court. In most cases, it will be easier for the ACCC to prove that an undertaking has been breached, rather than proving that the Australian Consumer Law has been contravened.
Undertakings are public
In its guidelines on enforceable undertakings, the ACCC states that:
“The ACCC regards s.87B as an important compliance tool for use in situations where there is evidence of a breach, or a potential breach, of the Act that might otherwise justify litigation.”
The ACCC also states in its compliance and enforcement policy that:
“The ACCC often resolves contraventions of the Act by accepting court enforceable undertakings under s.87B of the Act”
Statements like this could reasonably give members of the public, and industry participants, the view that undertakings are often entered into when a company has engaged in wrongdoing.
Undertakings appear on the ACCC website and are usually accompanied by a media release from the ACCC.
Even if there is a statement in an undertaking that the company is not alleged to have contravened the law, it cannot be assumed that every person looking at a media release will read the actual undertaking itself.
There is accordingly a risk that the mere fact of entering into an undertaking might cause a company damage from a reputational perspective.
Complying with undertakings can be onerous
Undertakings will often require a company to comply with a prescriptive compliance regime. The regime could include a risk assessment, regular internal reviews, education and training, complaint-handling systems and independent reviews.
These types of measures are normally a good way of ensuring compliance with the Australian Consumer Law, and a company might be happy to implement some or all of the proposed measures of its own accord. However if the compliance regime in the undertaking is particularly prescriptive or onerous, it can be frustrating and time-consuming for a company to comply with it precisely. An undertaking cannot be amended without the ACCC’s consent, so if a company finds that a different compliance program better suits its needs, it will be unable to simply switch to that new program without consulting with the ACCC.
If you are not involved in any wrongdoing, think about all the practical implications and consequences before giving a voluntary undertaking to the ACCC.