As foreshadowed in our recent alert, a bill to increase the maximum penalties for contraventions of the Australian Consumer Law (ACL) has been tabled before Parliament. The Treasury Laws Amendment (2018 Measures No. 3) Bill 2018, proposes to amend the ACL to align the maximum civil penalties with those currently applicable to the competition provisions of the Competition and Consumer Act 2010 (Cth) (CCA).
Under the current law, the maximum civil penalty for a contravention of the ACL is AUD 1.1 million for a body corporate and AUD 220,000 for an individual. These maximums have long been criticised as insufficient to have any real deterrent effect, particularly in relation to contraventions by large corporations. The Final Report of the ACL Review found that the overall mix of penalties and remedies is effective, but the maximum financial penalties are insufficient to deter highly profitable non-compliant conduct and can be seen by some entities as merely a 'cost of doing business'. The proposed reforms will give effect to the recommendation in the Final Report to increase the ACL penalties so that they are consistent with those applying to the competition provisions of the CCA.
The new maximum penalties for a body corporate will be the greater of:
- AUD 10 million;
- three times the value of the benefit obtained from the contravention or offence (where the value can be determined); or
- if the value of the benefit cannot be determined, 10% of the annual turnover of the body corporate in the 12 months preceding the month in which the contravention started to occur.
The maximum penalty for individuals will also increase to AUD 500,000.
The proposed amendments will apply prospectively to conduct in respect of which civil penalties may currently be imposed - being unconscionable conduct, unfair practices (excluding unfair contract terms), safety of consumer goods and product related services, and information standards. They will provide the courts with much greater flexibility to impose penalties that are appropriate and proportionate, with real deterrent effect, having regard to the size of the contravening company or the quantum of the benefit gained as a result of the contravening conduct.
As presently drafted, the amendments will take effect from the later of the date that the Bill receives royal assent, or 1 July 2018.
The ACCC has been vocal in advocating for increased penalties under the ACL and these amendments will likely result in increased enforcement action by the regulator and submissions in appropriate cases for much higher penalties than have been imposed to date. Businesses and any individuals engaged in practices to which the ACL applies should take careful note of these changes, which will significantly increase the financial risk associated with contravening practices.