Current trends in the ACCC’s enforcement of consumer protection laws
Over the past nine months, we have tracked a trend of lower ACCC enforcement activity involving Court proceedings, particularly with regard to its 2023 enforcement priorities. We have also observed an apparent willingness on the part of the ACCC to settle some Court proceedings without obtaining admissions or pecuniary penalties.
These two factors suggest that the ACCC may be adopting a more pragmatic approach to its enforcement activities. While the non-judicial resolution of consumer law breaches is consistent with the ACCC’s overall remit, could it also reduce general deterrence and lessen the impact of their annual enforcement priorities?
Annually commenced proceedings - trending down
One of the ACCC’s most active enforcement areas is the prosecution of businesses for engaging in misleading or deceptive conduct or making false or misleading representations in breach of the Australian Consumer Law (ACL). While some of this activity is carried out with the use of infringement notices, for the most serious conduct, the ACCC commences proceedings in the Federal Court of Australia, opening the door to obtain pecuniary penalties and other orders against companies that have contravened the ACL.
A summary of the number of proceedings commenced by the ACCC each year concerning alleged misleading or deceptive conduct and/or false or misleading representations is set out in the table below, extracted from publicly available data:
No. of proceedings commenced
2023 (to date)
The table shows that, from 2018 to 2022 (excluding 2021), the ACCC has commenced an average of 11 Federal Court proceedings each year for misleading or deceptive conduct and/or false or misleading representations. This average excludes the notable outlier of 2021, during which the ACCC’s prosecutorial activity was impacted by the consequences of the COVID-19 pandemic. Setting aside this outlier year, it is clear that (so far) 2023 appears to be a year in which the ACCC has commenced an unusually low number of Court proceedings in the area of consumer protection.
ACCC’s Annual Enforcement Priorities
In February/March of each year, the ACCC publishes its compliance and enforcement priorities for the upcoming year. Through these priorities, the ACCC aims to target the issues that it believes are impacting Australian consumers and businesses. For the past several years, priorities have included consumer, fair trading and competition issues relating to environmental and sustainability claims, the digital economy and financial services. We estimate (based on publicly available data) that over half of the court proceedings commenced by the ACCC since 2018 have fallen within one of the annual enforcement priorities in that year.
Interestingly, the majority of the proceedings commenced in 2023 do not appear to fall within the ACCC’s 2023-2024 enforcement priorities. The first commenced in May 2023 against Meg’s Flowers Pty Ltd regarding alleged false or misleading representations that the defendant was a “local” florist. The second commenced in July of 2023 against Secure Parking Pty Ltd regarding alleged false or misleading claims about its “Secure-a-Spot” service for commercial car parks. The third proceeding, is the ACCC’s high-profile action against Qantas concerning ‘no fee for service’ style ticketing allegations. It’s not until we get to the fourth and fifth ACCC proceedings this year, commenced against eHarmony Inc. and against a large energy retailer for misleading membership and pricing statements, do we see matters falling within the priorities of ‘digital platforms’ and ‘essential services’.
While there is undoubtedly a good reason for this, it’s possible that this reduced focus in its “priority” areas may reduce the effectiveness of the ACCC’s traditional approach of announcing such priorities.
Greenwashing slow burn
Since June 2022, the ACCC has frequently voiced its concerns regarding greenwashing and even included environmental claims as a priority area for 2022-2023 and 2023-2024. In its March 2023 report titled ‘Greenwashing by businesses in Australia’, the ACCC identified that, following an internet ‘sweep’, 57% of the 247 Australian businesses subject to the ‘sweep’ had made concerning claims about their environmental credentials. However, despite these concerns and various high-profile announcements, the ACCC has yet to take any steps to prosecute businesses for misleading greenwashing claims. This is notable when compared to the activity of Australia’s other business regulator, ASIC, on this issue. Since 1 July 2022, ASIC has issued 12 infringement notices (for total fines over $150,000) and commenced three civil penalty proceedings in the Federal Court of Australia focussed on alleged greenwashing.
Although the ACCC has yet to act on any of the alleged greenwashing claims, Deputy Chair, Ms Catriona Lowe recently indicated, in her keynote at the General Counsel Summit on 8 August 2023, that several investigations are underway. In the speech, Ms Lowe suggested that the ACCC will take a different approach to that of ASIC, which has been aggressively prosecuting alleged serious breaches. According to Ms Lowe, the ACCC will be directing its resources to issues that “may result in widespread harm”. In other words, it will focus its enforcement strategies on more widespread conduct or conduct of a more serious nature – potentially by larger businesses. A possible problem for the ACCC is that the longer it takes to act on misleading greenwashing claims, the harder it will be to get businesses to focus on them.
More pragmatic enforcement outcomes?
In the last nine months, we have also observed the ACCC settle two matters against major companies on (what we regard to be) more moderate terms. The first of these was its high-profile action against Retail Food Group Pty Ltd (RFG), one of Australia's largest multi-brand franchise operations. These proceedings were an opportunity for the ACCC to make an example out of RFG for alleged serious breaches of the ACL and Franchising Code of Conduct and potentially obtain a significant penalty, which would have deterred similar behaviours, particularly among other franchisors. However, in December 2022, the ACCC agreed to settle the proceedings without RFG making any admissions, paying any pecuniary penalty, or being subject to any injunction or adverse publicity order.
The second matter related to allegations against Mitsubishi for making misleading claims about entitlements to discounts on Mitsubishi vehicles. These misleading claims were included in flyers sent to members of the Queensland Farmers Federation and stated that they were entitled to a 15% discount on all Mitsubishi vehicles when, in fact, that discount only applied to a specific model of the Mitsubishi Triton.
Unlike in previous cases regarding misrepresentation of discount entitlements, the ACCC did not commence proceedings, instead settling with Mitsubishi without any undertakings or penalties for their misrepresentations and merely an agreement that any impacted consumers would be compensated.
Possible impacts of a new strategy?
If the first half of 2023 is anything to go by, it would appear that there has been a shift in the ACCC’s enforcement strategy towards quicker and more pragmatic outcomes aimed at providing redress to consumers.
Historically, the ACCC has regarded active, public-facing enforcement as instrumental to the ACCC in achieving deterrence of prohibited conduct. The previous ACCC Chair, Mr Rod Sims, explained that since the ACCC cannot pursue all breaches of the ACL, its compliance model is aimed at bringing “certain cases and us[ing] these to spread wider deterrence messages to all other companies.”
More recently, during an address to a conference in 2023, the Ms Lowe, advocated court-based enforcement “as both a deterrence for misconduct as well as adding heft to other compliance tools that we have at our disposal”. Given the obvious importance of having an active regulator willing to bring Court proceedings for both specific and general deterrence, the question is whether the ACCC has adopted a new strategic approach and, if so, what that means for business.
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