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ACCC welcomes new penalties and expansion of the unfair contract terms laws


The changes consist of two parts; the introduction of penalties and other changes relating to unfair contract terms, and significant increases in maximum penalties for breaches of certain provisions of the Competition and Consumer Act including the Australian Consumer Law.


“The increase in penalties should serve as a strong deterrent message to companies that they must comply with their obligations to compete and not mislead or act unconscionably towards consumers,” ACCC Chair Gina Cass-Gottlieb said.


“These maximum penalty changes will allow the Courts to ensure that the penalties imposed for competition and consumer law breaches are not seen as a cost of doing business, but rather as a significant impost and something likely to raise the serious attention of owners or shareholders.”


INTRODUCTION OF FIRST-EVER PENALTIES FOR UNFAIR CONTRACT TERMS WELCOMED

The changes also include the introduction of penalties for businesses that include unfair contract terms in their standard form contracts with consumers and small businesses.

The penalty increases take effect immediately, while there is a 12-month delay before the UCT changes take effect, providing companies time to make any necessary changes to their standard form contracts.


MAXIMUM PENALTIES INCREASED FIVE-FOLD

The penalties for competition and consumer law breaches, including the new expanded UCT regime described below, are now, for each breach, the greater of:

  • $50 million (up from $10 million);

  • 3 times the value of the benefit obtained (if it can be determined); or

  • 30% of the company's adjusted Australian revenue during the period of the breach (a minimum of 12 months).

Penalties for individuals also have increased to $2.5 million (up from $500,000).

The increased penalties apply to all breaches of competition law, from "hardcore" breaches such as cartel conduct (which is prohibited regardless of its effect) to exclusive contracts which require a consideration of their competitive impact.

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