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Volume XII, Number 337

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The Government Ramps up Penalties for Competition and Consumer Law Breaches - Au$50 Million or 30% Turnover for Companies and Au$2.5 Million for Individuals

In July, we outlined the new Government's Competition and Consumer Law policy initiatives (click here).

The Government has now moved forward with one of these initiatives, publishing for consultation a draft bill and related explanatory materials (click here), seeking very substantial increases to the maximum penalties for breaches of the Competition and Consumer Act 2010 (CCA), including the Australian Consumer Law.

The proposed maximum penalties, for each breach are:

For Corporations, the Greater of:

  • AU$50 million (current law is AU$10 million); or

  • 30% of adjusted Australian turnover (current law is 10% of annual turnover in the preceding 12 months - adjusted turnover will reflect turnover during the breach period and will be a minimum of 12 months); or

  • Three times the value of the benefit gained from the breach (this remains unchanged).

For Individuals:

  • AU$2.5 million (current law is AU$500,000). The criminal sanctions of up to 10 years' jail for cartel conduct continue to apply.

The Government has also now clarified that these new maximum penalties will apply to breaches of both competition laws and consumer laws.

These new maximum penalties represent a five-fold increase from the current penalties.

All About Deterrence

As outlined the Explanatory Material for the draft bill, the purpose of the changes is to ensure that “the price of misconduct is high enough to deter unfair activity” and “ensure consumers retain a robust level of protection.”

The changes also seek to bring Australia's competition law penalties more in line with international jurisdictions, including the EU where companies can be fined 10% of global turnover and a number of multi-billion dollar penalties have been handed down in recent years.

What Does This Mean For Business?

The current highest penalty for a competition law breach is AU$46 million (for cartel conduct by Yazaki) and for consumer law breaches, the highest penalties are AU$153 million for a consumer law breach (for misleading and unconscionable conduct by AIPE) and AU$125 million (for misleading conduct by Volkswagen). We expect to see significantly higher penalties under the proposed changes.

This is a timely reminder for businesses to ensure that:

  • Rigorous competition and consumer compliance processes are in place;

  • Staff are well trained to at least "issue-spot" potential competition and consumer law risks and are empowered to seek advice and escalate any concerns; and 

  • Directors, senior management and all staff are aware that competition and consumer law breaches can attract personal liability (in addition to penalties and negative PR for the business).

Interested parties have until 25 August 2022 to comment on this consultation.

Tom Farinelli also contributed to this article. 

Copyright 2022 K & L GatesNational Law Review, Volume XII, Number 235
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About this Author

Ayman Guirguis, KL Gates, Australian Competition Lawyer, Consumer Commission attorney
Partner

Mr. Guirguis advises clients on all aspects of antitrust/competition law as well as consumer law.

He has a wealth of experience advising clients on merger clearance, joint ventures and on supply chain arrangements between suppliers and customers.

Mr. Guirguis regularly advises on, and responds to, regulatory investigations by the Australian Competition & Consumer Commission (ACCC) alleging cartel conduct (price fixing, market sharing or bid rigging), including making immunity and leniency applications, competitor...

61-2-9513-2308
Jessica Mandla, KL Gates Law Firm, Law Graduate
Graduate

Jessica Mandla is a Law Graduate at KL Gates Law Firm.

612-9513-2486
Mei Gong Lawyer Sydney Antitrust, Competition & Trade Regulation
Lawyer

Ms. Gong advises clients on all aspects of competition law and consumer law.

Ms. Gong adopts a proactive, focused and client oriented approach to her work. She is passionate about achieving optimal and timely commercial outcomes for clients and assisting them with navigating regulatory barriers, and in particular, matters involving the Australian Competition and Consumer Commission (ACCC).

Ms. Gong has experience advising clients on:

  • merger clearance

  • cartel investigations

  • authorisations

  • consumer guarantees...

+61-2-9513-2580
James Gray Antitrust, Competition, and Trade Attorney K&L Gates Sydney Australia
Lawyer

James is a lawyer in the Antitrust, Competition, and Trade Regulation group in the Sydney office.

James joined K&L Gates in 2021 and rotated through the Policy and Regulatory, Real Estate (Property) and Corporate (Commercial Technology & Sourcing) teams during his graduate year.   

James focuses on advising clients on all aspects of competition and consumer law in Australia. He has experience on a broad range of competition and consumer law matters, including: merger clearance, criminal cartel contraventions and...

61-2-9513-2428
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