The Treasury Laws Amendment (More Competition, Better Prices) Act 2022 became law on November 10, 2022.
The Act reflects a key election promise of the Albanese Government to make unfair contract terms illegal and increase the maximum penalties for a breach of competition and consumer laws.
What do these changes mean?
With this legislation becoming law, the maximum penalties applicable to certain breaches of the Competition and Consumer Act 2010 (Cth) and/or the Australian Consumer Law have increased markedly to:
For body corporates – the greater of:$50 million (a fivefold increase from the previous maximum of $10 million);three times the value of the benefit obtained; or
if the court cannot determine the total value of those benefits, 30% of adjusted turnover during the ‘breach turnover period’ (increasing from 10% of annual turnover in the 12 months prior to the conduct).
For individuals – $2.5 million (up from $500,000).
The new penalties will apply to any conduct occurring from November 10, 2022, meaning that businesses including insurers are now exposed to significantly greater financial consequences if they fail to comply with Australian Consumer Law and or the Competition and Consumer Act 2010 (Cth).
Other Changes on the way
With a 12-month grace period, the prohibition against proposing, applying or relying on unfair contract terms in standard form consumer or small business contracts will come into force this time next year. This gives businesses 12 months to review all their contracts and practices for any potentially unfair terms and take remedial action to make sure they comply with the new provisions.
Another thing to keep in mind is that contracts that previously fell outside the regime may be required to comply with the new rules. These new rules apply to businesses with less than 100 employees or an annual turnover of up to $10 million, and there will no longer be a monetary ceiling for the value of contracts that fall within the ambit of Australian Consumer Law.
