INTRODUCTION
Fair trading, consumer protection and competition
(trade practices) legislation
Power to make these laws
• What do these terms mean?
• How are they relevant to the information age?
• What are the main laws (Statutes/Acts)
- Trade Practices Act 1974 (Commonwealth)
- Fair Trading Acts (States and Territories)
• Why have Commonwealth AND State Acts?
• Telecommunications specific legislation
•
Fair Trading Acts
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Fair trading legislation in all States and Territories have a
common purpose to make uniform laws that strengthen
consumer protection laws and mirror the consumer protection
provisions of the TPA.
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Fair Trading legislation empowers the Governor in Council to
make regulations generally for the purpose of the Act.
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Ministers and Commissioners also have specific powers under
the Acts (e.g in NSW and WA, Ministers have powers with
regard to Codes of Practice; Commissioners in approving Codes
of Practice, product safety declarations etc.)
Why have Federal and State Acts?
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State Acts are directed at ‘persons’ not ‘corporations’
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Cross-vesting legislation: Jurisdiction of Courts (Cross Vesting Act) 1987
and mirror legislation in each State/Territory.
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State Commissioners have better resources, more political pressure to act to
protect the interest of consumers (at times), and the role of ‘consumer
protection’ is more appropriate to a State Commissioner than a Federal office,
especially when there are local issues.
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State legislation promotes declaration of Codes of Practice as a form of self
regulation.
Background to the Trade Practices Act
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TPA covers an area of law in which legal and economic principles intersect
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Object of the Act is in section 2
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TPA relates to ‘conduct’ by corporations whose business activities cross State
boundaries and commercial activities of the Commonwealth (section 2A) and
States and Territories (section 2B).
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Extended application of the TPA to conduct/corp outside Australia (to other
jurisdictions including cyberspace)
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Private actions in the Federal Court and State/Territory Supreme Courts for Part
IVA, V, IVB and VA. Remedies are damages, injunctions (not for mergers), orders.
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ACCC actions in Federal Court seeking monetary penalties, injunctions and other
orders (e.g corrective advertising). Class Actions (s87[1B]).
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Time limits apply – for Parts IV, IVA, IVB, and V
6 years after the cause of action has accrued. For Part VA and Part V (Div2A)
three years. As injunctions are discretionary no time limit applies
Part IVA – Unconscionable Conduct
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TPA prohibits ‘unconscionable conduct’ in commercial dealings (ss51AA and 51AC)
and consumer transactions (s51AB). Section 51AA is the catch all. Section 51AC is
limited to transactions up to $3million.
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‘Unconscionable conduct’ not defined in the Act. Section 51AC lists factors which
may be taken into account.
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Penalties amended in 2001 to include probation and community service orders,
corrective ads etc.
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Definition/concept of ‘unconscionable’
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Weighing up the conduct – ‘special disability’ of one party resulting in an absence of
equality that is exploited by the other party in a manner which is unconscionable.
- Lux vacuum cleaner salesperson (door to door);
- One.Tel and Primus slamming case (door to door);
- Pre-paid mobile phone cards (products and distributorships/franchises)
- Contractual terms and conditions (the inability of the consumer to understand the
documentation signed AND contractual non-disclosure).
Part IV – Anti-competitive conduct
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Price Fixing s45A
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Market sharing s45
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Exclusionary Provisions ss45 and 4D
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Anti-competitive agreements s45 with SLC
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Exclusive dealing s47
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Third Line Forcing s47(6)
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Resale Price Maintenance ss48, 96-100
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Misuse of Market Power s46
Part IV – Anti-competitive conduct
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Mergers and Acquisitions ss50, 50A
Factors to take into account in evaluating the effect or likely effect of a
particular acquisition:
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The actual or potential level of import competition in the market;
The height of barriers to entry to the market;
The level of concentration in the market;
The degree of countervailing power in the market;
The likelihood the acquisition would result in increased in prices or profit
margins;
The extent to which substitutes are available in the market;
The dynamic characteristics of the market (growth, innovation, product
differentiation);
The likelihood the acquisition would result in the removal of a vigorous
competitor; and
The nature and extent of vertical integration of the market.
Media mergers and s50
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Traditional approach to media mergers:
television, radio and newspaper separate mkts
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Media markets could be defined by content:
classified advertising, employment advertising
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Impact of convergence and technological
developments on media market dynamics and
merger definition
When is anti-competitive conduct
likely to arise:
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in dealings with competitors;
in dealings with suppliers and purchasers;
when a company has a substantial of economic power in a
market.
Maximum penalties for breaches are $10 million for companies
and $500,000 for individuals. Other actions which may follow a
breach are injunctions, payments of damages, divesture of assets
illegally acquired, cancellation and variation of contract, orders
to complete a contract, and the provision of repairs or spare
parts
Part V – Consumer Protection
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Misleading or deceptive conduct ss51A, 52 -65A (including misleading/false
representations, harassment & coercion, scams, pyramid schemes etc.)
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Product safety and product information ss65B-65T (labelling, standards, bans and
recalls)
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Country of origin claims ss65AA-65AN (logos and ‘product of ’ tests);
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Conditions and warranties in consumer transactions ss66-74 (including rights
against manufacturers or importers (ss74A-74L) and professional services by
engineers).
Penalties of $1.1 million for corporations and $220,000 for individuals. Also
injunctions, damages, orders, etc.
Part V Division 1: Unfair Practices
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General prohibition against misleading or deceptive
conduct or conduct likely to mislead or deceive
(including representations made in advertising,
contractual promises, telemarketing, customers services,
etc.)
S51A – representations about the happening of future
events without reasonable grounds;
S53 – false or misleading information;
S53C – not specifying the full cash price (e.g Mobile
phone and contract price)
S54 – falsely offering prizes or other free items
Part V Division 1: Unfair Practices
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S55, 55A – misleading the public as to the nature or
characteristics of goods and services, the suitability for
their purpose or quantity of services
S56 - bait advertising
S57 – referral selling (rebate/commission/benefit for
suggesting other customers)
S58 – accepting payment without intending to supply
S60 - harassment or coercion
S64, 65 – unsolicited goods or services
Publisher of misleading advertising exempt (s65A) as a
‘prescribed information provider’.
Examples of Part V Conduct
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Mirror Opera House website
Misleading Telco Claims
Danoz’s Abtronic
Internet Name Protection Pty Ltd
Domain Names Australia Pty Ltd
Part VA Liability of Manufacturers
and importers for defective goods
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Ss75AA-75AS – Gives individuals additional rights (to
those existing before 9 July 1992) and imposes new
obligations on manufacturers (includes importers).
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A person who is injured or whose property is damaged
by a defective product will have a right to compensation
against the manufacturer of the product (e.g faulty
modems and equipment in self-install packs)
Part VC – Offences
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Effective 15 December 2001;
Part VC establishes a separate criminal consumer protection
regime within the TPA applying to criminal unfair practices and
product safety provisions.
Defences such as mistake and relying on information of a third
party etc,
Part VI – Enforcement and Remedies
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Ss75B-87CA – includes provisions catching persons aiding,
abetting, counselling or procuring an offence. Also those
‘knowingly concerned’.
Part XIC and XIB TPA
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Telecommunications specific sections of the TPA
introduced in 1997 along with a new
Telecommunications Act.
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Specific access provisions for telecommunications
networks separate from Part IIIA essential facilities
access regime in TPA
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Competition notice regime to deal with anticompetitive conduct in telecommunications markets
Emerging regulatory issues in
telecommunications
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Telstra’s High Court challenge of ACCC
regulation
3G Mobile coverage
Mobile termination costs
Broadband services
Questions/Discussion