Australian Regulatory Compliance Review

ACCC guidelines on cartel prosecutions

The ACCC has published guidelines on how it will investigate alleged cartel arrangements under the anti-cartel laws that will commence on 24 July 2009.

The guidelines also set out how the ACCC will make decisions in relation to referral of matters for possible criminal prosecution.

The ACCC’s position is that serious cartel conduct should be prosecuted criminally whenever possible. For this reason, the ACCC will distinguish serious cartel conduct from that which is less serious in nature, including relatively minor conduct.

Serious cartel arrangements involve conduct of the type that usually causes, or has the potential to cause, large scale or serious economic harm.

The factors it will consider include:

• the value of the affected commerce exceeded or would have exceeded $1 million within a 12-month period (i.e. where the combined value for all cartel participants of the specific line of commerce affected by the cartel would exceed $1 million within a 12-month period)
• in the case of bid rigging, the value of the bid or series of bids exceeded $1 million within a 12 month period.

Revised ACCC immunity policy for cartel conduct

Following the introduction of criminal penalties for cartels, the ACCC has released its revised policy for the application of immunity in relation to cartel conduct.

The immunity policy applies to civil proceedings instituted by the ACCC.

Immunity from criminal prosecution will be determined by the Commonwealth DPP in accordance with the same principles that determine immunity under the ACCC’s immunity policy.

UPDATE: Here's the Trade Practices Amendment Act containing the anti-cartel amendments.

New legislation review

Parliament is on a winter break and will next sit from 11 to 20 August 2009.

It's left us with some significant new Bills to review:

• Australian Consumer Law and Trade Practices Amendments
• National Consumer Credit Reform Package
• Personal Property Securities
• Financial services modernisation: margin loans, trustee companies and debentures
• Director and executive termination payment changes

On 1 July we'll have:

• tax changes
• changes to superannuation contributions concessions
• new unfair dismissal rules under the Fair Work Act

And we're waiting for:

• assent and commencement of the anti-cartel laws;
• a decision on the new rules for employee share schemes.
• further updating on COAG's reform program.

Australian Consumer Law introduced

The Government has introduced the Trade Practices Amendment (Australian Consumer Law) Bill 2009 into Parliament.

If passed, the Bill will amend the Trade Practices Act 1974 by adding the Australian Consumer Law dealing with unfair contract terms as a schedule to the Act.

It also introduces new penalties, enforcement powers and consumer redress options in the Trade Practices Act and amends the consumer protection provisions of the Australian Securities and Investments Act 2001. to make them consistent with the Trade Practices Act and the Australian Consumer Law.

Further provisions will be included in the Australian Consumer Law by means of a second Bill to be introduced in early 2010. All Australian jurisdictions will be required, in accordance with the National Partnership Agreement to Deliver a Seamless National Economy to apply the full Australian Consumer Law by 1 January 2011.

UPDATE 25 June:Treasury has set up an Australian Consumer Law website.

Anti-cartel law passed

The Trade Practices Amendment (Cartel Conduct and Other Measures) Bill 2009 has been passed by Parliament.

The Bill establishes criminal penalties for serious cartel conduct that was already prohibited under existing civil prohibitions of the Trade Practices Act.

The key amendments in this Bill:

• establish criminal penalties for serious cartel conduct, with maximum criminal penalties for individuals, of a 10-year jail term and/or a fine of $220,000 and for corporations, of fines mirroring the existing maximum pecuniary penalties for breaches of the civil penalty provisions (the greater of $10 million, or three times the benefit obtained if this can be determined, or otherwise 10 per cent of annual turnover);
• provide parallel civil provisions for serious cartel conduct;
• provide exemptions from the criminal and parallel civil prohibitions on cartel conduct, including if a cartel provision in a contract is for the purposes of a joint venture, and the joint venture is for the production and/or supply of goods or services;
• enable individuals to be held directly liable for criminal and civil prohibitions in relation to cartel conduct through amendments to the ancillary liability provisions, as well as under mirror offences and civil penalties contained in the Schedule version of Part IV of the Trade Practices Act;

The joint venture exception was clarified to provide exceptions for joint venture parties that intend and reasonably believe that a transaction was a contract within the scope of the joint venture exceptions created by the Bill, but as a matter of law failed to make a contract.

Cartel criminal offences and parallel civil penalty provisions will commence 28 days after assent

Unfair contract terms law details

The Consumer Affairs Minister, Chris Bowen MP, has outlined the details of the unfair contract terms law relating to standard-form contracts.

The national unfair contract terms provisions include the following key features:

• it will be implemented as part of the Australian Consumer Law and as part of the Australian Securities and Investments Commission Act, in respect of financial services;
• it will relate only to standard-form contracts;
• a term is 'unfair' when it causes a significant imbalance in the parties' rights and obligations arising under the contract and it is not reasonably necessary to protect the legitimate interests of the supplier;
• a court must have regard to any detriment or substantial likelihood of detriment, the transparency of the term and the contract as a whole in determining whether a term is ‘unfair’;
• certain terms will not be able to be challenged under these provisions which relate to:
  • the main subject matter of the standard-form contract;
  • the upfront price payable under the standard-form contract;
  • terms required, or expressly permitted, by a law of the Commonwealth or a State or Territory';
• a non-exhaustive, indicative menu of types of terms that may considered to be unfair; and
• a power to prohibit terms in a standard-form contract that are considered to be unfair in all circumstances.

The refinements to the unfair contract terms provisions include:

• an exclusion of a standard-form contract where the upfront price payable for the services (including financial services), good or land supplied under the contract exceeds $2 million;
• an exclusion of standard-form contracts that are shipping contracts, and are the constitutions of companies, managed investment schemes or other kinds of bodies.

The new unfair contract terms law will apply to all:

• new standard-form contracts entered into on or after the commencement date; and
• contracts that are renewed or varied on or after the commencement date, to the extent of the renewal or variation in respect of conduct taking place after the date of renewal or variation.

The Government intends that the new law should commence on 1 January 2010.

Debt collection practices in Australia

The ACCC has released an issues paper jointly produced by the ACCC and the Australian Securities and Investments Commission, Debt collection practices in Australia.

This paper summarises major issues identified by the ACCC and ASIC during information-gathering activities undertaken in 2008:

• Harassment and coercion
• Disputes about the debt
• Debt assignment and/or selling
• Incorrect credit default listing
• Difficulties negotiating repayment arrangements
• Representations on consequences of non-payment
• Jurisdiction in which proceedings are instituted
• Enforcement responses
• Compliance programs
• Complaints handling—internal dispute resolution
• Complaints handling—external dispute resolution
• Financial hardship

Feedback on this paper has been invited by 30 June 2009

ASIC is responsible for ensuring activities of creditors/collectors engaged in recovering outstanding debts arising from the provision of financial services are compliant with the ASIC Act. The ACCC is responsible for ensuring compliant collection activity for debts arising from the supply of non-financial products and services under the Trade
Practices Act. State and territory offices of fair trading also regulate the activities of creditors/collectors under fair trading acts and other legislation.

Regulation of debt collection activities may be affected by proposed changes to consumer protection legislation (Australian Consumer Law and the National Consumer Credit Code).

Australian Consumer Law: unfair contract terms consultation

The Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, the Hon Chris Bowen MP, has released for public consultation a consultation paper entitled The Australian Consumer Law: Consultation on draft provisions on unfair contract terms.

The consultation paper:

• attaches the exposure draft of the unfair contract terms provisions in the Australian Consumer Law, and in relation to financial services;
• provides background to the draft provisions; and
• provides an explanation of the draft provisions, and clarifies related issues, for interested parties.

Interested parties are invited to comment on the draft provisions by Friday, 22 May 2009

Ministerial Council on Consumer Affairs meeting 8 May 2009

The Ministerial Council on Consumer Affairs (MCCA) met in Hobart on 8 May 2009 to develop an Intergovernmental Agreement on the new national consumer policy framework by 30 June 2009 that will lead to putting the new Australian Consumer Law in place by the end of 2010. Joint Communique

The meeting also discussed:

• A National Product Safety System
• Travel Compensation Fund
• Home Builders Warranty Insurance

As part of the move towards a single national consumer product safety system, a new Product Safety Recalls website – www.recalls.gov.au. was launched.

Clarity in pricing commences on 25 May

A new Section 53C of the Trade Practices Act will commence on 25 May 2009.

The amendments require that where a business makes a price representation to a consumer and that amount is less than what the consumer will actually have to pay to acquire the goods or services, the business must also prominently state a total price as a single figure.

The Act does not prohibit component pricing, provided that a single figure price is also displayed.

A breach of the section may result in either a civil penalty or criminal penalties.

ACCC Guidelines on component pricing