Large penalties should be given for companies who violate consumer laws to discourage them from engaging in misleading or unfair conduct, the consumer watchdog stated.
The Australian Competition and Consumer Commission (ACCC) said in their experience, companies sometimes behave badly at least occasionally, putting their short-term profit before the needs of their customers who they profess to serve by engaging in misleading or unfair conduct, anti-competitive conduct or cartel activities.
“What is needed to provide greater deterrence are penalties so large that companies, their boards and shareholders must take our competition and consumer laws more seriously,” said ACCC chair Rod Sims.
According to Sims, a bill to increase penalties for companies breaching Australian Consumer Law is already before the Parliament when it resumes next month.
“We hope the parliament will agree that higher penalties are badly and urgently needed to improve the behaviour of companies and protect consumers,” he said.
Sims said before the West Australian Australian-Israeli Chamber of Commerce in Perth, the ACCC will continue to give a voice to consumers and push companies to live up to their responsibilities.
“Our enforcement team here in Perth, for example, has taken a lead role in important areas in the last few years, including franchising matters and unfair contract terms impacting small business, as well as taking part in a number of high profile investigations,” Sims said.
Sims mentioned cases that were spearheaded by the WA team, including the Heinz case earlier this year where the Federal Court found that the food manufacturer had made misleading claims that its Little Kids Shredz products were beneficial for young children when they contained approximately two-thirds sugar.
The ACCC also took the company that created the pain product Nurofen to court over misleading representations on the packaging of each of its four Nurofen specific pain products which represented that each was specifically formulated to treat a particular type of pain, when in fact each product contained the same active ingredient.
“The Federal Court ordered penalties of $6 million for Nurofen,” Sims said. “But, we argue, for many large companies penalties of that magnitude are not enough to deter bad behaviour.”
Sims said they are also looking into exploring the implications of platforms like Google and Facebook, whose business model is based on immense data-gathering powers, on the country’s privacy, society and democracy.
“Our inquiry will look at four key questions to work out how best to respond to the huge disruption posed by the emergence of these powerful platforms: Do digital platforms have market power and how is that being exercised, and does this damage competition?
“Are digital platforms sufficiently transparent in the collection and use of consumer data?
“Are they complying with the Australian Consumer Law? Do digital platforms have an unfair competitive advantage due to the unequal treatment of regulation?
“Have digital platforms substantially changed media and advertising markets in Australia to the detriment of news, journalism and therefore Australia?,” he said.
Sims said it is clear for them that they should look at the digital platforms through both a competition and consumer lens.
“Our experience as a competition and consumer regulator, and as a communication and general infrastructure regulator, and with the powers we have under this inquiry, means we have the right tools to complete this huge and fascinating task,” he said.
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