On Friday 21 February 2014, the Australian Competition and Consumer Commission (ACCC) released its 2014 Compliance and Enforcement Policy (2014 Policy). The 2014 Policy provides a valuable insight into the ACCC’s enforcement priorities for the forthcoming year and, based on past experience, it is reasonable to expect that much of the ACCC’s enforcement activity in the immediate future will be in the areas identified in the 2014 Policy. Accordingly, the 2014 Policy highlights areas of high competition and consumer law regulatory risk for businesses.
Many of the priorities announced in the 2014 Policy are an extension or modification of priorities from the ACCC’s 2013 Compliance and Enforcement Policy (2013 Policy), while others indicate new areas of enforcement priority for the ACCC.
The 2014 Enforcement Priorities
The 2014 Policy outlines the following 9 current areas of enforcement priority:
- Telecommunications and energy sectors: Both sectors were 2013 priorities, and have been the subject of considerable enforcement activity. This year there is a particular focus on savings representations. The ACCC is concerned about potentially misleading representations made by energy retailers about discounts and savings promoted in energy plans.
- Consumer issues in the online marketplace: Again, this was a 2013 priority, but this year there is a particular focus on “…the incremental disclosure of additional fees and charges (including credit card charges) by traders (often referred to as “drip pricing”), and comparator websites”.
Drip pricing is where consumers purchasing online are incrementally exposed to fees and charges as they progress through the online purchasing process, such as when purchasing airfares or sporting event tickets. The ACCC is concerned that drip pricing involves a lack of transparency, and makes it hard for businesses with more transparent pricing to compete.
Comparator websites allow consumers to compare pricing by various retailers, and are popular in the energy, travel and insurance sectors. While the ACCC appreciates that comparator websites can be a powerful marketing tool, it is also concerned that the presentation of information on them can be misleading.
- Highly concentrated sectors: Again, this was a 2013 priority, and again, specific reference is made to the supermarket and fuel sectors. The ACCC currently has major investigations in both sectors, which appear to be close to finalisation.
- Scam disruption: This new priority area focuses on disrupting “…scams that rely on building deceptive relationships and which cause severe and widespread consumer or small business detriment”. The ACCC is concerned that over the past two years, it has received 80,000 complaints about scams, and in 2012 consumers are reported to have lost over $93 million to scammers; possibly the ‘tip of the iceberg’. The ACCC hopes to disrupt scams by working with state and territory consumer agencies, contacting victims to stop money being sent to scammers and working with money remitters.
- Complexity and unfairness in consumer or small business contracts: While this is new as a stated enforcement priority area, the ACCC has already commenced enforcing the provisions of the Australian Consumer Law which render unfair consumer contract terms void and unenforceable. It appears that the ACCC will now step up enforcement in this area.
- Credence claims: Credence claims were a 2013 priority, but the focus was on the food industry. In recent years, the ACCC has taken action over a variety of credence claims in relation to food, including ‘free range’ eggs, ‘free roaming’ chickens (and ducks), ‘fresh baked’ bread and ‘extra virgin’ olive oil.
For 2014, the priority has moved to credence claims “…with the potential to adversely impact the competitive process and small businesses”. The ACCC’s particular concern here is representations which make large manufacturers look like small niche businesses, thereby potentially misleading consumers who would prefer to support Australia’s small business community.
- Misleading carbon pricing representations: If the carbon tax is repealed, the ACCC will make a priority of ensuring that prices, particularly in the energy sector, do not reflect the carbon tax.
- The Australian Consumer Law’s consumer guarantees regime: This was a 2013 priority but this year the focus is on “…representations made about a consumer’s rights when buying products, particularly representations made in the context of the sale of extended warranties”. The ACCC appears to be concerned that, when consumers buy extended warranties, they may be misled about their rights under the Australian Consumer Law’s consumer guarantees and, as a result, may pay for rights they already have under the consumer guarantees.
- Consumer protections issues impacting on Indigenous consumers.
The 2014 Policy reiterates that there are some areas “..so detrimental to consumer welfare and the competitive process that the ACCC will always regard them as a priority.” They include:
- cartel conduct;
- anti-competitive agreements; and
- misuse of market power.
The announcement of the 2014 Policy is an opportune time for businesses to reassess their specific risk exposures under competition and consumer laws, including those included in the 2014 Policy, and review whether their competition and consumer law compliance measures adequately address these risk exposures.