Trade Practices
We can assist you in a number of areas, including:
- Advising on your obligations under the Competition and Consumer Act
- Reviewing promotional and other material to help identify risk areas
- Reviewing and amending liability clauses in agreements
- Reviewing and amending warranty and refund statements
- Reviewing and advising on conduct engaged in by your competitors
The Competition and Consumer Act governs a wide range of commercial conduct by all forms of businesses ranging from individuals (eg sole traders) through to foreign corporations.
In recent years, the areas covered by the Act have increased, as have the fines and penalties. For example, not stating the price correctly when advertising your products or services can result in a fine of over 1 million Australian dollars. The consequences of breaching cartel provisions (which include price fixing, bid rigging and customer allocation) can result in draconian penalties. Directors can be sent to prison and huge fines can be imposed (for example, the greater of 10 million Australian dollars or 3 times the benefit obtained from the cartel behaviour (or, where the benefit cannot be ascertained, 10% of the annual turnover of the company and all of its related bodies corporate).
These are not theoretical risks. The ACCC (the government body who enforces the Act) has already successfully prosecuted many breaches of the Trade Practices Act (the Act replaced by the Competition and Consumer Act) and penalties in the millions of Australian dollars have been ordered. In many cases, the ACCC can bring an action (so can one of your competitors).
Many businesses are not aware of the scope of the Competition and Consumer Act and do not realise that certain practices that a business might see as aggressive sales strategies or normal marketing content may translate to breaches of the Act. Examples include, third line forcing, misleading and deceptive conduct, misleading representations and anti-competitive conduct.
In addition, many businesses believe that their terms and conditions protect them against claims or limit their liability without realising that the consumer guarentee provisions in the Competition and Consumer Act override those terms and conditions (except in very specific areas and only if the terms and conditions are drafted in a particular way). In some cases, terms and conditions (including, in particular, warranty and refund statements) may breach the Consumer and Competition Act if they mislead a consumer as to their rights.
Apart from risks associated with your conduct, you may also be able to take action against your competitors where you are subject to conduct that breaches the Competition and Consumer Act.