On 18 July 2018 in Sydney, reasons for judgment in Australian Competition and Consumer Commission v Apple Pty Ltd (No 4) [2018] FCA 953 were published. Apple had earlier been penalised $9 million for suggesting it was not obliged to fix a software fault in its mobile devices if a third party had worked on it, based on agreement between and joint submissions of the ACCC and Apple. In delivering reasons for judgment, Justice Lee expressed unease that the penalty was very low relative to the size of Apple and was “loose change” that would not, in practice, act as a deterrent. (http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2018/2018fca0953).

As Crocodile Dundee would have said if he was a competition and consumer law enforcer, that’s not a knife.

On the same day in Brussels, the European Union fined Google €4.3 billion (A$6.8 billion) based on its conclusion that Google had abused its Android market dominance by:

  • bundling its search engine and Chrome apps into the operating system;
  • blocking phone makers from creating devices that run forked versions of Android; and
  • making payments to certain large manufacturers and mobile network operators to exclusively bundle the Google search app on handsets.

(http://europa.eu/rapid/press-release_IP-18-4581_en.htm).

Now THAT’s a knife!

Australia competition and consumer law penalties are low by international standards, and potential consumer law penalties in Australia remain a fraction of potential competition law penalties. Maximum consumer law penalties per contravention remain almost 1/10th of competition law penalties, but the former are also constrained because they cannot be based on corporate size as the latter can (based on turnover).

Legislative change to bring competition and consumer law penalties into line in Australia has long been advocated, with the Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 introduced to parliament to give effect to the change on 15 February 2018, but it remains unpassed in the Senate (https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6053)

Momentum for passage of the legislation is building, with the Chairman of the ACCC delivering a speech Companies behaving badly? on 13 July 2018, refraining multiple earlier calls for increased penalty levels for competition and consumer law contraventions (https://www.accc.gov.au/speech/companies-behaving-badly).

The Courts have also supported and in part advocated higher penalties, notably most recently in Justice Lee’s consumer law judgment in Apple and in the Full Federal Court’s competition law judgment in May 2018, in which it increased penalties for cartel conduct from $9.5m to $46m in Australian Competition and Consumer Commission v Yazaki Corporation [2018] FCAFC 73.  (http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCAFC/2018/73.html).

It will likely not be long before the cost of doing business badly increases significantly in Australia.