11 March, 2016
If you operate in the automotive, franchise, food and grocery, government procurement, agriculture, health and medical fields, are a small business (or contract with a small business), provide products subject to consumer guarantees under the Australian Consumer Law (ACL), or have to undertake a product recall, you could be in the sights of the Australian Competition and Consumer Commission (ACCC) in 2016.
On 23 February 2016 the ACCC released its 2016 Compliance and Enforcement Policy (Policy), which sets out the ACCC's priorities for the coming year. As the ACCC cannot pursue all complaints it receives regarding breaches of the Competition and Consumer Act (2010) (CCA), it exercises its discretion to pursue enforcement in areas that provide an overall benefit for competition and consumers. Each year, it releases a list of 'priority areas' providing some guidance as to the industries or practices which it sees as red flags in the coming year.
The priorities the ACCC will focus on this year are in addition to the enduring priorities of consumer rights issues in indigenous communities, consumer product safety, cartel conduct, anti-competitive agreements and practices, and the misuse of market power, which the ACCC states it will always consider a priority.
The 2016 priorities for the ACCC include:
Car retailers – Following the ACCC's investigations into Fiat Chrysler Australia in 2015, and its current investigation into VW's emission issues, the ACCC has made it a priority this year to ensure that car retailers comply with their obligations under the ACL.
Car retailers should ensure that they are aware of, and complying with their obligations under the consumer guarantees, particularly the guarantee that a vehicle will be fit for purpose, and free from defects. Mr Rod Sims, Chairman of the ACCC, in his speech before the Committee for Economic Development of Australia (CEDA) on 23 February 2016, encouraged car retailers to invest in aftersales care.
Industry Codes of Conduct: Food and Grocery Code of Conduct, Franchising Code of Conduct, Horticulture Code of Conduct – With the amendments to the Franchising Code of Conduct which came into force on 1 January 2015, and the implementation of the Food and Grocery Code of Conduct in March 2015 (see the article here ) this year the ACCC has stated that it will prioritise enforcement action to ensure the codes are complied with by those that are bound by them.
Government procurement – While cartel conduct is always a priority for the ACCC, given its detrimental effects on markets, this year the ACCC has placed a particular focus on cartel conduct that impacts on government procurement. This is evidenced by recent proceedings brought by the ACCC concerning the NSW Government's coal exploration licence tender process at Mount Penny.
Agriculture, Health and Medical – In its policy, the ACCC has identified the agriculture and health and medical industries as being in its sights for 2016.
This follows a busy 2015 for the ACCC in the health and medical industry, including intervention regarding exclusive dealing conduct in day surgery services in Wagga Wagga, unconscionable conduct claims regarding the promotion and supply of medical services and medications to men with sexual dysfunction, and misleading and deceptive conduct claims regarding product claims by Nurofen.
As for 2016, Mr Rod Sims, Chairman of the ACCC, stated in his speech to CEDA that the ACCC will be focussing on ensuring that disclosure practices of private health insurers are in line with the ACL, and that health claims in relation to food products are not misleading.
Small Business – Changes to the Unfair Contract provisions – On 12 November 2016, new provisions will come into force in the ACL to address unfair standard form contracts in a business to business relationship. Where previously the unfair contract provisions only applied where a consumer was a party to the agreement, the changes to the ACL mean that some business to business contracts will also be caught.
This will require some businesses to review their standard form agreements with small business in light of the anticipated legislative changes and ensure compliance.
Consumer guarantees – The ACCC will focus again this year on the consumer guarantees under the ACL, and particularly on representations made by large retailers about express and extended warranties. Particularly, warning should be heeded regarding representations made about extended warranties available to consumers to be purchased, or express warranties, that could be seen to be misleading or deceptive as to the consumer's statutory rights.
Companies are to be encouraged to ensure their returns processes are compliant with the consumer guarantees, and that consumer facing staff are knowledgeable about the consumer guarantees in light of the Policy.
Product Recalls – Following on from the recent $3million penalty handed down by the Full Federal Court against Woolworths Ltd regarding breaches of the ACL regarding safety issues, the ACCC has stated a priority for 2016 will be assessing the effectiveness of action taken by suppliers in recalling unsafe consumer products. This is a reminder to suppliers to keep the ACL recall requirements and procedures in the forefront of their decision making with regard to product recalls.
Disruption of scams and consumer protection – the ACCC also prioritises working with other agencies to disrupt scams. Mr Rod Sims noted in his speech at CEDA that last year the ACCC received more than 105,000 contacts relating to scams.
In addition to this, a 2016 priority for the ACCC is to act on consumer protection issues that arrive regarding vulnerable and disadvantaged customers (particularly older consumers and consumers who are newly arrived in Australia).
Just because you may not be in the ACCC's sights, it does not mean that you are 'safe'. The release of the Policy is a timely reminder to all that compliance with the CCA is critical to avoid being mentioned in next year's priority report as an example of a successful ACCC investigation in 2016.
For further information, please contact:
Kathryn Edghill, Partner, Bird & Bird
kathryn.edghill@twobirds.com
