The Federal Government has released exposure draft legislation which proposes to significantly increase the maximum penalties for contraventions of Australia’s competition and consumer laws.
On 18 August 2022, the Federal Government released for consultation the Treasury Laws Amendment (Competition and Consumer Reforms No. 1) Bill 2022: More competition, better prices.
The exposure draft legislation seeks to significantly increase the maximum penalty per contravention to AUD 50+ million for corporations engaging in anti-competitive conduct (including, for example, cartel offences, misuse of market power, and exclusive dealing) under Part IV of the Competition and Consumer Act 2010 (CCA) as well as for contraventions of the Australian Consumer Law (ACL).
Penalties for breach of competition and consumer laws in Australia have increased rapidly in recent years, particularly in the context of consumer law contraventions, which will have seen an almost 50 times increase in the maximum penalty per contravention over a five year period (if the draft legislation is passed).1
The proposed amendments represent another significant stride in this continued increase in penalties for breach of Australia’s competition and consumer laws. This will bring Australia’s penalty regime more into line with major international jurisdictions such as the EU and US.
In more detail
The draft Bill proposes to significantly increase the maximum penalties applicable for contraventions of the CCA and ACL, to the greater of:
- AUD 50 million (increased from AUD 10 million);
- if the court can determine the value of the benefit obtained – three times the value of that benefit (no change); and
- if the court cannot determine the value of the benefit obtained – 30% of the body corporate’s “adjusted turnover”2 during the breach turnover period3 for the offence (increased from 10% of body corporate’s annual turnover in the 12 months prior to the act or omission).
For contraventions by individuals, the draft Bill also proposes to increase the maximum pecuniary penalty from AUD 500,000 to AUD 2.5 million.
The draft Bill introduces equivalent penalties for contraventions of Part IVBA (News Media and Digital Platforms Mandatory Bargaining Code) and Part XICA (the Electricity Industry) of the CCA, and also proposes to increase the maximum penalty for contravention of the “competition rule” in Part XIB, which applies to corporations and individuals in the telecommunications industry.
The Government has recently completed a short consultation period on the draft Bill, which concluded on 25 August 2022.
Assuming the Bill is enacted by Parliament, the increased penalties will commence the day after the Bill receives Royal Assent. Notably, the updated penalties will only apply in relation to contraventions that occur on or after commencement of the Act.
The proposed amendments fulfil one part of the Government’s “Better Competition” election commitment to strengthen Australia’s competition laws. As part of this commitment, the Government has also indicated its support for amendments to introduce pecuniary penalties for unfair contract terms and the introduction of a ‘super complaint’ function within the Australian Competition and Consumer Commission to fast track investigations of issues that could undermine Australians’ consumer rights.
This article was prepared with the assistance of Leandros Pandoulis.
1 Pre-September 2018, the maximum penalty per contravention of the ACL was AUD 1.1 million.
2 Under the draft legislation, “adjusted turnover” means the sum of the value of all the supplies made by the body corporate or related bodies corporate in connection with Australia’s indirect tax zone.
3 The “breach turnover period” provides the formula for determining the period of time for the purposes of valuing the adjusted turnover. The breach turnover period will generally begin at the start of the month in which the act, omission or offence occurred, or began occurring, and conclude at the end of the month in which the body corporate ceased the act, omission or offence. The minimum breach turnover period will be 12 months.