On 20 February, Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims announced the ACCC’s compliance and enforcement priorities for 2018. Addressing the Committee for Economic Development of Australia, Sims confirmed the ACCC’s decision to target a number of areas including energy, commercial construction and persistent consumer guarantee issues. Of particular relevance is the continued focus on small business contracts and competition in the financial services sector, each of which is likely to see an increase in activity over the coming year. Enduring issues, such as cartel conduct and product safety, are also to remain as priorities for the ACCC in 2018.
Unfair contract terms
Building on the recent changes extending the unfair contract terms regime to business-to-business contracts, the ACCC remains committed to the supporting and prioritising small businesses, particularly in relation to protections afforded under industry codes and the Franchising Code of Conduct. Fresh-off the back of its success against JJ Richards and with proceedings against Servcorp still ongoing, 2018 will no doubt see an increase in ACCC-initiated proceedings around these issues.
In light of this, larger businesses, especially franchisors, should remain vigilant and review their existing standard form contract terms. A failure to comply with the regime can expose a business to fiscal penalties, severe reputational damage and undermine rights under existing contracts.
Competition in the financial services sector
The ACCC has also placed a priority on competition in the financial services sector and, with the introduction of two newly established investigative units, 2018 has the potential to be a big year for regulation in competition. Between them, the Financial Services and Substantial Lessening of Competition Units will target anti-competitive conduct and competition issues in the financial sector, conduct market studies on general competition issues and investigate cases under the recent Harper Reform legislation.
The ACCC is also waiting on an Organisation for Economic Co-operation and Development report, due for release at the end of March and expected to provide insights into how Australia compares to other competition law jurisdictions. The ACCC hopes to use the report to build momentum for the introduction of penalties commensurate to a business’s size, a self-declared ‘huge priority…for the ACCC in 2018’.
In what is an ongoing battle for the ACCC, it is again prioritising the systemic misrepresentation of consumer guarantee rights by business. The focus will be on large, national traders who mislead consumers as to their legal rights or foster processes which fail to deliver appropriate remedies.
Businesses should take note of this ongoing focus, particularly given recent proposed changes to the Australian Consumer Law. If passed, the Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 could see body corporate penalties increased significantly beyond the current $1.1 million ceiling, to the greater of:
- $10 million;
- three times the value of the benefit obtained by the body corporate from the offence; or
- if a court cannot determine that value, 10% of the annual turnover of the body corporate.
Inquiry into digital platforms
In addition to the announcement of its enforcement priorities, the ACCC also launched its new inquiry into digital platforms. In an issues paper foreshadowed in December and released on 26 February, the ACCC called for public comment on the impact of digital platforms on media and advertising markets in Australia, particularly with respect to the collection of consumer data, production of quality news and journalistic content and the spread of bargaining power between media organisations and platform operators. Although the terms of reference for the ACCC’s inquiry make clear that the inquiry is not to be limited to specific platforms, comments from the ACCC Chairman suggest that key technology companies such as Google and Facebook will be a focus of the inquiry, noting that these platforms are driving ‘sweeping technological and cultural changes overhauling the media landscape’. The inquiry will consider the impact of these changes on the level of choice, content and quality available to consumers.
In addition to seeking public comment, it is expected that the ACCC will flex its compulsory information gathering powers under section 155 of the Competition and Consumer Act 2010 (Cth) to obtain data from key industry players. The ACCC’s preliminary report is due for release in December 2018 and its final report is required to be provided to the Government in June 2019.
A common theme among the ACCC’s priorities for 2018 is the focus on regulating large businesses, especially franchises and those providing consumer products. Combined with the proposed increases in penalties and the new inquiry into digital platforms, the ACCC’s concentration on investigation, regulation and enforcement against larger commercial enterprises signals an eventful year for the ACCC.