Each year, the Australian Competition and Consumer Commission (ACCC) publically confirms its enforcement priorities for the upcoming year.
The ACCC usually investigates more than 500 matters, taking approximately 30 to 40 cases to Court each year, across its enforcement portfolio. Accordingly, the formal legal action it takes is indicative of where its focus is, and where it may be able to be assumed that a large proportion of the other investigations lie.
The ACCC believes that it can significantly change behaviour across an entire industry by taking to Court one participant in that space.
Some of the Commissions relevant enforcement priorities for 2015 have been:
Compliance with the Franchising Code of Conduct, and exercising its powers to:
- issue infringement notices of $8500 for body corporates and $1700 for individuals where the ACCC has reasonable grounds to believe there has been a contravention of the Code
- seek penalties of up to $51,000 from the Court for serious breaches of certain Code provisions.
Online, which has been a focus of the Commission since 2011. One of its main concerns is that businesses comply with the Competition and Consumer Act in the online space as they do in the ‘bricks and mortar’ space.
Truth in advertising, which the Commission considers underpins the proper functioning of the economy. This focus spreads across industry sectors. The ACCC has said it will prioritise matters where misleading claims are made by large businesses with the potential to result in significant consumer detriment, or where the conduct is likely to become widespread if the ACCC does not intervene.
Protecting vulnerable consumers, and focussing on issues affecting indigenous consumers, older consumers, and consumers who are newly arrived in Australia.
Given that we are now nine months down the track in 2015, what has the ACCC been up to on its public enforcement action? Set out below is a snapshot of some recent matters.
Some of the high profile matters which are not outlined below are the ACCC’s ongoing struggle against the large supermarkets and their conduct regarding suppliers, and its focus on the accuracy of ‘free range’ claims.
The ACCC has also continued its general attention on businesses not complying with their refund and return obligations under the consumer guarantee provisions of the Australian Consumer Law, including obtaining penalties of $100,000 against a sole trader online electronics store operator in May of this year. ‘Electronic Arts’, a global leader in video game publishing and development was similarly targeted for representations it made to consumers about their rights to refunds for downloadable products.
Unconscionable conduct – ‘Expression Sessions’
In September 2015 the ACCC commenced proceedings in the Federal Court against Lifestyle Photographers Pty Ltd, trading as Expression Sessions.
The ACCC has alleged that:
- between 2012 and 2014, Expression Sessions operated pop-up stores and kiosks in shopping centres, and offered prospective customers products including a ‘free’ photo shoot on the basis that the customer would receive ‘no obligation’ photographs at no cost
- such representations were false or misleading representations and comprised unconscionable conduct as customers were not able to receive free photographs, but rather were required to enter into a contract with Expression Sessions to purchase photographs.
Unconscionable conduct – Lux Distributors
The Expression Sessions proceedings came off the back of the ACCC’s successful action against Lux Distributors Pty Ltd, which was found guilty in August of unconscionable conduct and required to pay penalties of $370,000. That case concerned a Lux sales representative who visited elderly women in their homes under the premise of a ‘free’ vacuum cleaner maintenance check. It was found that this was a mere pretence, and the women were subjected to unfair sales tactics, and pressured into purchasing a vacuum cleaner, which was the sales person’s actual purpose.
Misleading and deceptive conduct – Bet365
Following action brought by the ACCC, in September 2015 the Federal Court found that Bet365’s engaged in misleading and deceptive conduct when offering free bets to new customers.
During 2013 and 2014 Bet365 offered ‘$200 free bets for new customers’. The Court found this offer to be misleading or deceptive (or likely to be so), plus a false representation. This was due to the ‘catches’ associated with the offer, being that customers had to gamble their deposit and bonus three times before being able to withdraw any winnings.
This case was part of a targeted sweep of ‘free’ advertising statements made online, by the ACCC. The ACCC Chairman, Mr Rod Sims, said that the Commission was concerned that the free bet offer was directed at new customers, which could include vulnerable inexperienced gamblers and young people.
At the date of this article, penalties are yet to be determined.
Misleading and deceptive conduct – AGL SA
Big business was similarly targeted in the ACCC’s action against AGL SA. The company was ordered by the Federal Court in April 2015 to pay penalties of $700,000 and to offer refunds to 23,000 consumers for making false or misleading representations about the level of discount consumers would receive under AGL SA’s energy plans.
AGL SA got itself into trouble when it increased rates subject to a ‘discount’ representation. It was found that customers understood that they would receive a discount when compared to comparable customers, and although initially correct, the truth of the representation did not continue when the rates were subsequently altered.
Misleading and deceptive conduct – Coles
In a very high profile case, the Federal Court ordered Coles Supermarkets Australia Pty Ltd to pay penalties of $2.5 million for making false or misleading representations and engaging in misleading conduct. The representations concerned baked goods that were promoted as ‘Baked Today, Sold Today’ and ‘Freshly Baked In-Store’, when they were partially baked and frozen off site by a supplier, with the baking process completed on site at Coles supermarkets.
Resale price maintenance – ‘Omniblend’
The Federal Court ordered Omniblend Australia Pty Ltd to pay a pecuniary penalty of $17,500 for aiding, abetting, counselling and procuring an overseas supplier to engage in resale price maintenance.
Omniblend is an online retailer of kitchen appliances. It was found that as a result of Omniblend’s intervention, the overseas supplier attempted to induce Omniblend’s competitor not to sell OmniBlend blenders below the price specified by the supplier. Ultimately, the supplier withheld supply of OmniBlend branded blenders to the competitor.
False customer testimonials – ‘Citymove’
In July 2015 Citymove Pty Ltd paid $30,600 of penalties following the issue of three infringement notices by the ACCC. The infringement notices were issued because the ACCC had reasonable grounds to believe false or misleading representations concerning customer testimonials had been made by Citymove. Specifically, that Citymove used ‘fake’ customer identities to post testimonials on Google+ and YouTube. It is important to note that payment of an infringement notice does not involve any admission of liability.
These cases provide a snapshot of some ACCC activity in the consumer markets area. Obviously the commission has undertaken a number of ‘bread and butter’ misleading and deceptive conduct cases to date this year, and can be expected to continue its focus on online advertising. As its franchising investigations move through the pipeline, additional franchise related activity can be expected as we move into 2016, especially given the ACCC’s education focus on the sector and the new penalties available to it under the Franchising Code of Conduct.
If you require any advice on Competition and Consumer Act compliance, please contact a member of our consumer markets team.
|Consumer Markets team:|
|Greg Hipwell | Partner
Tel +61 3 9258 3354
|Jessica Reid | Senior Associate
Tel +61 3 9258 3539
|Elizabeth Stary | Senior Associate
Tel +61 2 9291 6128
|Mira Martin | Associate
Tel +61 3 9258 3646
|Victoria Bayly | Lawyer
Tel +61 2 9291 6108