Our readers may have already read our "Doing Business in Australia" series of articles posted before. Recently quite a few relevant facts and policies have been updated. Hence we have produced a new version. You will be able to receive the updated articles about "Doing Business in Australia" in the coming weeks.
Anti-Trust and Consumer law
The Competition and Consumer Act 2010 (Cth) (ACCA), previously known as the Trade Practices Act 1974 (Cth), is one of the most litigated pieces of legislation in Australia and is regulated by the Australian Competition and Consumer Commission (ACCC) which has the aim of ensuring that the ACCA’s competition, fair trading and consumer protection laws are complied with.
With respect to competition or anti-trust issues, the ACCA prohibits a range of anti-competitive behaviour including:
cartel (collusive) conduct
boycotts
price fixing
resale price maintenance
exclusive dealing
abuse of market power
other arrangements (including mergers, takeovers and acquisitions) that have the purpose or effect of substantially lessening competition in a market for goods and services in Australia.
Contraventions of the ACCA can lead to fines of up to $10 million for companies and $500,000 for individuals per breach, as well as injunctions, divestiture orders, and damages under civil action. In particular, cartel conduct (arrangements between two competitors fixing prices, restricting their supplies or fixing a bid) is a very serious offence, with those who are found to be in breach at risk of facing criminal prosecution and penalties including imprisonment (and substantial financial penalties).
However, some of the conduct above may be approved, on application, by the ACCC on the grounds of public benefit.
Consumer Protection
The ACCA imposes controls on the composition, design and labelling of consumer products, by means of a schedule to the ACCA known as the Australian Consumer Law (ACL). Similar state provisions apply to individuals. They also detail minimum safety and information requirements to enable consumers to make informed purchases. Authorities conduct random inspections to determine compliance. Investigations may also be initiated by a consumer or competitor complaint.
Failure to comply can result in penalties, and non-compliant goods may be refused entry into Australia. Consumers can also take private legal action.
Misleading or Deceptive Conduct and Unconscionable Conduct
Section 18 of the ACL (former Section 52 of the TPA) prohibits a corporation from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. There is a corresponding prohibition in State Fair Trading legislation that applies to sole business operations and other types of business structures.
Intention to mislead or deceive is not required
The common law, under the tort of passing off, also protects the goodwill and reputation of a business from wrongful appropriation and is directed at preventing competitors from damaging or wrongfully attempting to take advantage of that goodwill and reputation.
Country of origin labelling
A product which has labelling which incorrectly states that it has been made in a particular place or country may give rise to liability for misleading and deceptive conduct. A country of origin representation is any labelling, packaging, logo or advertising that makes a statement, claim or implication about which country goods come from, such as ‘Made in Japan’ or ‘Product of France’.
Australian Standards
Whilst often voluntary and not binding, unless adopted by legislation, Australian Standards impose requirements on certain goods to comply with specific performance characteristics, composition, methods of manufacture or process, construction, packaging rules, or they may dictate the type of information required to be distributed to consumers.
Failure to comply with a standard adopted by legislation is an offence. However failure to observe a voluntary or mandatory standard may be evidence of negligence, indicating that the product is defective or not fit for its purpose.
Hazardous and unsafe goods
Products containing ingredients which are deemed to have the potential to harm people or the environment are subject to regulatory control. Mandatory safety standards are declared for products that are likely to be especially hazardous. The ACCC enforces mandatory product safety and bans of unsafe goods.
Trade measurement
Importation of various items is regulated in Australia, where the Minister has power to declare certain goods to be unsafe or to apply certain regulations to them. Further, state legislation imposes particular labelling specifications for packaged foods.
Advertising claims
Certain types of false, misleading or deceptive claims regarding products (including in an advertisement) are specifically prohibited by the ACL. Businesses, in their advertisements, must not make false claims as to the quality, style, model or history of goods or services, whether the goods are new, performance characteristics, benefits and uses of goods and services, availability of repair facilities or spare parts, place of origin of the goods, buyer’s need for the goods or services and any exclusions on the goods or services.
Representations as to price are regulated by the ACCA and the ACCC. A business may be held to be in breach of the ACCA where it:
makes false or misleading price comparisons
falsely represents an advertised price as the total price of the goods or services
advertises goods or services at a specific price when it knows, or should have known that there are insufficient goods or services available for a reasonable period of time.
The Advertising Standards Bureau (ASB) administers a national system of advertising self-regulation through the ASB and the Advertising Claims Board. The ASB determines complaints regarding the use of language, discriminatory portrayal of people, violence, sex, nudity, health and safety, children’s welfare and marketing food and beverages to children.
Statutory warranties
Statutory warranties apply to certain goods and services as set out in the ACL and State Fair Trading laws. These implied warranties cannot be contracted out of, or refused, changed or limited by a retailer or supplier. Warranties include:
undisputed ownership of goods
services carried out with due care and skill
goods and services being fit for their purpose and of merchantable quality.
Retailers and suppliers may also offer additional express warranties such as:
money-back guarantee
store refund policy
store exchange policy
exclusions of liability for statutory warranties.
Liability for breach of statutory warranties cannot be excluded and may only be limited to the extent permitted under the ACL. Provisions purporting to exclude statutory warranties may constitute misleading and deceptive conduct under the ACL which attracts both civil and criminal penalties.
Product Liability
Aside from negligence, breach of contract or warranty, the ACCA provides another means of recourse when a defective product causes injury or property damage and allows the affected person to claim compensation from the manufacturer or importer.
Under the ACCA, goods are defective if they do not have the degree of safety that a consumer is generally entitled to expect. Losses that are recoverable (for a period of up to 3 years from the date of the loss or of becoming aware of the identity of the manufacturer) include: when a product causes injury or death to a person; consequent loss suffered by a related person; and for damage to goods or land.
A manufacturer can, however, defend liability if it can be shown that the defect occurred after the supply of the product, was caused by mandatory standards or was not discovered due to the state of scientific or technical knowledge at the time of manufacture. Further defences exist if the product was a component part in a finished good.
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To view our previous news for Chinese investors and various articles in relation with the topic ‘Doing business in Australia’, please click the button on the upper-right hand corner on our WeChat platform, and choose ‘view history’. The contents include:
Business set up in Australia, business structures,company administration, etc.
Background information of Australia, including Australian government, legal system, and business structures, etc.
Laws and regulations in various common areas, including protection of technology and intellectual property, anti-trust and consumer law, contract law, business migration, real property, public takeovers, and electronic commerce etc.
