The ACCC has gained a formidable reputation for being one of the most aggressive and effective competition and consumer law regulators in the world. It’s not hard to see why.
With over $130 million in penalties imposed on Google, Samsung, Trivago, and Peters Ice Cream in less than six months for breaches of the Competition and Consumer Act 2010 (Cth) (CCA), the ACCC has made 2022 a year to remember.
Now the Government is proposing to increase the maximum penalties available for breaching key provisions of the CCA – by up to five times the current amount. If the new laws are passed, companies will be looking at a maximum penalty per breach of the greater of $50 million and 30% of their adjusted turnover in the relevant period. Individuals who breach the law will face a maximum penalty of $2.5 million. The proposal comes less than four years after consumer law penalties were increased in 2018, from $1.1 million per breach of a key provision to the greater of $10 million or 10% annual revenue.1
ACCC versus…what wins has the ACCC had in 2022?
August 2022: ACCC v Google
On 12 August 2022, Google was ordered to pay a penalty of $60 million and to update its existing consumer law compliance program. The Federal Court had previously found Google breached the Australian Consumer Law by making false and misleading representations to consumers between January 2017 and December 2018 about the collection and use of their personal location data on Android phones. The penalty marks the first major public enforcement outcome arising out of the ACCC’s Digital Platforms Inquiry.
June 2022: ACCC v Samsung
In June 2022, Samsung was ordered to pay a penalty of $14 million for making false and misleading claims about the water resistance of its Galaxy phones. Samsung had run an online and in-store marketing campaign between March 2016 and October 2018, claiming that its Galaxy phones could be used in pool and sea water. In fact, however, there was a serious risk that the functionality of the phones would be severely impaired if they were exposed to water. When consumers contacted Samsung to complain about the malfunctioning phones, Samsung tried to deny that it was required to provide an appropriate remedy under Australia’s consumer guarantee regime.
April 2022: ACCC v Trivago
In April 2022, the Federal Court ordered Trivago, part of the Expedia Group, to pay penalties of $44.7 million for making misleading claims about hotel room rates on its website and in television advertising. Cutting through the algorithmic smoke and mirrors, the ACCC argued (and Trivago admitted) that Trivago had used its aggregator website to guide consumers towards those hotel booking sites which provided Trivago with the highest kickbacks, rather than those which reflected the genuinely cheapest available option for consumers. Trivago’s widely advertised claims were that it would help consumers to find “the best price” in hotel room rates.
March 2022: ACCC v Peters Ice Cream
In March 2022, the ACCC secured a $12 million penalty in Federal Court proceedings against Peters Ice Cream. The Federal Court held (and Peters Ice Cream admitted) that Peters Ice Cream had engaged in anti-competitive exclusive dealing in relation to its distribution of ice cream products in petrol stations and convenience stores. The size of the penalty is particularly significant given that exclusive dealing has not typically been a “big ticket item” in the ACCC’s enforcement arsenal. All that may be about to change, however, according to ACCC Chair, Gina Cass-Gottlieb: “The ACCC is targeting exclusive arrangements by firms with market power that impact competition as one of our compliance and enforcement priorities for 2022/23.”
The ACCC also has proceedings on foot against Airbnb, Booktopia, Honda, and Meta (the parent company of Facebook), all in respect of alleged misleading and deceptive conduct, with a penalty hearing also in relation Uber. On top of that, the ACCC has recently launched proceedings against Mastercard for alleged misuse of its market power.
Bigger penalties on the horizon
To add to the ACCC’s enforcement arsenal, on 18 August 2022, the Government released draft legislation proposing to increase the maximum penalties available for breaching key competition and consumer protection provisions of the CCA. These increases are proposed to apply to breaches in respect of cartel conduct, making anti-competitive agreements, engaging in exclusive dealing, engaging in resale price maintenance, and making false and misleading claims, to list a few.
A summary of the current and proposed maximum penalties is set out below.
|Company||The greater of:|
• $10 million
• 3 x the value of the benefit
• 10% annual turnover in the preceding 12 months
|The greater of:|
• $50 million
• 3 x the value of the benefit
• 30% adjusted turnover in the breach turnover period
There are two key concepts in the draft legislation, being “adjusted turnover” and “breach turnover period”:
- Adjusted turnover: This includes all supplies made by the contravening body corporate and its related bodies corporate during the relevant period, but excludes supplies made within the corporate group or which are not made “in connection with” an enterprise carried on by the contravening body corporate. Some additional exemptions may also apply depending on how the supplies are classified under tax laws.
- Breach turnover period: This period refers to the longer of: (i) the 12 months leading up to the end of the breach; and (ii) the period between the start and end of the breach. If passed, this will mean that a breach which has continued for ten years could attract a maximum penalty of 30% of the company’s turnover over that entire ten year period, and not merely over the 12 months leading up to the end of the breach. This reflects a major shift from the current position.
What does this mean for businesses in 2022-23?
All businesses in Australia should have a healthy fear of the ACCC when it comes to dealing with their customers, suppliers, and competitors.
Now is the time to pull out your organisation’s competition and consumer law compliance program and make sure that it is up-to-date and tailored specifically to Australia’s legal and regulatory framework. A number of major players, most recently Google, have fallen short of the mark by relying on a global compliance program which failed to take adequate account of local laws. Indeed, in a much earlier decision, the Federal Court noted scathingly that “one difficulty” with the defendant’s compliance program was “its lack of any specific reference to the Australian Consumer Law”.
For tips on how to stay on the right side of the ACCC, please contact Addisons Competition, Consumer & Antitrust team.