Australia: The Price of Contravening the Australian Consumer Law: An overview of ACCC litigation in 2012 and what to expect in 2013
Competition and Market Regulation Update (Australia)

In 2012, the Australian Competition and Consumer Commission's (ACCC) attention was strongly focused on enforcing the Australian Consumer Law¹ (ACL).

In 2012, the ACCC regularly sought and obtained orders for pecuniary penalties. The ACCC also successfully sought its first disqualification order for consumer law breaches, and the first orders under the ACL provisions aimed at "door-to-door" (including telephone) selling.

In 2012, the ACCC was involved in 17 Federal Court and three Full Federal Court appeal decisions that resulted in pecuniary penalties being ordered. The ACCC is increasingly pushing for higher penalties for breaches of the ACL, particularly against large corporations and repeat offenders. The largest overall penalties obtained by the ACCC in a single case in 2012 were $3.61 million² for a corporation and $450,000³ for an individual. Five corporations incurred penalties over $1 million in 2012: Singtel Optus ($3.61 million), TPG Internet ($2 million), EDirect ($2.5 million), Apple ($2.5 million) and Energy Watch ($2 million).

The table below shows the nature of the contravening conduct that the 2012 decisions⁴ addressed. The majority of the decisions involved misleading or deceptive conduct, and false or misleading representations.

Of the three cases that were determined by the Full Federal Court, one involved the review of a 2012 Federal Court decision and two involved the review of 2011 Federal Court decisions:

• In Singtel Optus⁵ the appeal was allowed, resulting in the penalty being decreased to $3.61 million from $5.26 million.
• In TPG⁶ the appeal was allowed in part and the number of ontraventions found were reduced. Initially, $2 million in penalties were ordered. On appeal the overall penalty is to be reduced as the Full Court considered that the overall penalty imposed was outside the appropriate range of penalties for the established contraventions. The final quantum of the revised overall penalty is yet to be determined as the parties were given the opportunity to confer about penalty and attempt to reach agreement.
• In Global One⁷ the penalty of $375,000 that the Federal Court ordered was upheld.

* Where one case involved contraventions across multiple sections of the TPA and/or ACL, all contraventions are included.

SOME "FIRSTS"

Last year saw a few "firsts" regarding enforcement of provisions and orders made:

• The Federal Court made the first ever disqualification under section 86E of the TPA (now s248(1) of the ACL) in the case of ACCC v Halkalia Pty Ltd (No 2)⁸ where an individual was disqualified from managing a corporation for 15 years.
• In ACCC v Neighbourhood Energy Pty Ltd⁹ the Federal Court ordered penalties by consent in the first case it had decided regarding contraventions of ss 74 and 75 of the ACL's "door-to-door" selling provisions.

ACCC v Halkalia Pty Ltd (No 2)

Mr Laurence Hann, the director of Halkalia Pty Ltd, was disqualified from managing corporations for a period of 15 years and penalised $450,000. Mr Hann did not oppose this order. Injunctions were also granted which prevent Mr Hann from carrying on certain businesses or supplying certain goods or services.

Mr Hann was found to have published a number of advertisements stating that a projected earnings amount was likely to be earned by an investor when in actual fact there was no reasonable basis for making that representation. This conduct was held to constitute misleading or deceptive conduct and making false or misleading representations concerning profitability of a business activity, in breach of sections 52 and 59(2) of the TPA. In deciding penalty, the court took into account that Mr Hann had previously committed a number of breaches of the Fair Trading Act 1999 (Vic) and had deliberately engaged in wrongful conduct in this case.

ACCC v Neighbourhood Energy Pty Ltd

Neighbourhood Energy and its dealer, AGC, failed to disclose their purpose and identity as soon as practicable and to cease negotiations upon request. A "do not knock" sign on a property was agreed to constitute a request to leave the property.
Neighbourhood Energy also engaged in misleading and deceptive conduct for statements made by its sales representatives. Agreed pecuniary penalties of $850,000 were ordered for Neighbourhood Energy and $150,000 for AGC.

INDUSTRIES OF INTEREST

In 2012, ACCC actions focussed on the following industries:

• Manufacturing where claims were made about matters for which consumers would pay a premium eg products being "free range"
• Mobile and internet services.

Manufacturing

Three of the decisions in 2012 involved contraventions of the ACL for representations as to the "free range" characteristic of goods that were not in fact "free range". The ACCC took action in these cases either for misleading and deceptive conduct or conduct liable to mislead as to the characteristics or nature or history of a good.

Communications and technology

A number of cases involved the communications and technology area: Singtel Optus (broadband), TPG Internet (internet service), Global One Mobile Entertainment (mobile telephone services), EDirect (mobile network services) and Apple (iPad wifi network). These cases primarily involved misleading representations about hidden costs in services and misleading statements about coverage of services.

WHAT TO EXPECT IN 2013

In terms of consumer matters, 2013 is likely to bring more of the ACCC:

• Acting against conduct that impedes emerging competition in online trading
• Acting on consumer issues in supermarkets and fuel
• Protecting vulnerable consumers
• Raising awareness of the ACL consumer guarantees regime.¹⁰

The push for higher penalties is likely to continue in 2013 both in consumer and competition matters. In late 2012, the Chairman of the ACCC, Rod Sims stated that:

• Digital and online markets will continue to be a key priority for the ACCC in 2013¹¹
• In the food and grocery sector, the ACCC will be looking at accuracy of food labelling regarding the country of origin, and will be taking new steps to provide consumers with more advice regarding country of origin labelling claims and olive oil labelling¹²
• In the past there has been a big focus on consumer law, the campaigns of which will continue, however the ACCC's focus in 2013 will be on competition cases.¹³

Footnotes

¹ Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA).
² Singtel Optus Pty Ltd v ACCC [2012] FCAFC 20. A penalty of $5.26 million was initially imposed, although this was reduced to $3.61 million on appeal.
³ ACCC v Halkalia Pty Ltd (No 2) [2012] FCA 535.
⁴ The cases of ACCC v Pepe's Ducks and ACCC v Exclusive Media & Publishing Pty Ltd & Ors are excluded from this table because the judgments are not yet available. The table therefore includes 15 decisions.
⁵ Singtel Optus Pty Ltd v Australian Competition and Consumer Commission [2012] FCAFC 20.
⁶ TPG Internet Pty Ltd v ACCC [2012] FCAFC 190.
⁷ Global One Mobile Entertainment Pty Ltd v ACCC [2012] FCAFC 134.
⁸ ACCC v Halkalia Pty Ltd (No 2) [2012] FCA 535.
⁹ ACCC v Neighbourhood Energy Pty Ltd [2012] FCA 1357.
¹⁰ See ACCC "Compliance and enforcement policy" dated 20 February 2012.
¹¹ Speech given to the AICC on 13 September 2012; http://www.accc.gov.au/content/index.phtml/itemId/107 8927/fromItemId/8973.
¹² Speech given to the Australian Food and Grocery Council Industry Leaders Forum on 11 October 2012; http://www.accc.gov.au/content/index.phtml/itemId/108 4119/fromItemId/8973.
¹³ Patrick Durkin, "ACCC ramps up enforcement", Australian Financial Review, 4 December 2012.

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