Harsher penalties could be in store for businesses which find themselves on the wrong side of Australian Consumer Law, with ACCC Chairman Rod Sims ensuring the watchdog will continue to advocate for harsher financial penalties which act as a real deterrent to cashed up companies.
At the launch of the 2015 edition of the ACCC’s Compliance and Enforcement Policy in Sydney today, Sims delivered a wide ranging speech outlining the watchdog’s priorities for the year ahead.
Sims highlighted that penalties for breaches must be harsh enough to act as a deterrent rather than being seen as part of ‘the cost of doing business’.
“Some companies think they have a lot to gain from breaching our competition and consumer law; they should have much to lose as well,” he said.
Sims referred to comments that the $11 million penalty against Flight Centre for attempted price fixing was “immaterial” [Flight Centre is appealing this decision], and the statements by Justice Gordon that the penalties available against Coles for unconscionable conduct were “arguably inadequate”.
In December 2014 Coles was fined $10 million for engaging in unconscionable conduct in its dealings with certain suppliers in 2011.
Coles also provided a court enforceable undertaking to the ACCC to establish a formal process via an independent arbiter, Jeff Kennett, to provide options for significant financial redress for over 200 suppliers referred to in the proceedings.
In her judgement, Justice Michelle Gordon said it was a matter for Parliament to review whether the maximum available penalty of $1.1 million for each contravention of the ACL was sufficient when a corporation with annual revenue in excess of $22 billion acts unconscionably. “The current maximum penalties are arguably inadequate for a corporation the size of Coles,” she said.
The decision against Coles, which included how it implemented its rebate scheme, “sends a clear signal to larger businesses about appropriate conduct in commercial dealings with smaller suppliers,” Sims said.
“We believe the Coles outcome sets a benchmark for conduct which can be applied to other businesses and other sectors.
“This outcome has very important economic consequences. This is about smaller businesses being able to have faith in their contracts with larger businesses so they can plan and invest.”
Australia’s other supermarket giant, Woolworths, still has a case initiated by the ACCC making its way through the Federal Court.
“Another important matter is the proceedings in the Federal Court where we allege that Woolworths engaged in misleading and deceptive conduct and made false or misleading representations about product safety in relation to a range of home brand goods,” Sims said.
Sims reinforced that product safety will continue to be a key priority this year for the ACCC by focusing on good practice in the manufacture, importing and quality assurance of consumer products.
“Suppliers need to manage the quality assurance of the goods they procure. Consumers are entitled to expect that every manufacturer, importer, distributer and retailer in Australia adheres to appropriate levels of product stewardship.”
Online traders can also expect to receive more attention from the ACCC this year.
Sims said the ACCC will concentrate on emerging consumer issues in the online marketplace to ensure the rights and obligations that exist in the bricks and mortar world are not ignored online.
“One problem is significant delays by online businesses in addressing consumer complaints about either the product itself or delivery. We and other ACL regulators will be working with industry to improve responsiveness to consumer concerns.”