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ACCC 2023-24 Compliance and Enforcement Priorities – Unfair Contract Terms and rising costs of living

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The ACCC’s compliance and enforcement priorities for the 2023-24 year were unveiled by the ACCC Chair, Gina Cass-Gottlieb, at the annual Committee for Economic Development of Australia Conference on 7 March 2023.

The ACCC’s priorities reflect current and emerging economic issues including the rising cost of living, anti-consumer conduct in the digital economy, the price of essential services and losses arising from scams.

The primary focus of 2023-24 are as follows:

Environmental and Sustainability claims

Greenwashing is when a business makes false claims about their positive environmental, sustainability and ethical practices to appeal to consumers.

The ACCC recognised that households are becoming more conscious of environmental and sustainability issues and rely on businesses to be truthful when making such claims.

To prevent greenwashing, the ACCC will be monitoring whether such claims are based on scientific research and data.

Businesses can read the ACCC’s March 2023 greenwashing report which outlines the conduct that will be targeted.

Franchisors should take care when making statements and claims in their marketing literature about their environmental, sustainability and ethical products and practices and ensure they have evidence to support the statements and claims made.

Essential Services

With the rising cost of living, the ACCC will be ensuring that essential service providers are competing on price and not restricting supply. The regulator will continue to litigate against anti-competitive conduct, and highlighted its success against Telstra, Optus and TPG when these businesses made false representations about NBN speeds.

Digital economy 

There will be a focus on protecting consumers when using the internet or using digital platforms.

Conduct that was condemned includes:

  • difficulty in unsubscribing to subscription services;
  • use of consumer data and personal information in digital marketing;
  • social media influencers and businesses failing to disclose paid promotions or affiliations.

Unfair Contract Terms

The ACCC acknowledged that businesses have not been complying with unfair contract term laws as there were insufficient deterrents and penalties in place.

Significant changes to unfair contract terms will commence in November 2023, which will impose penalties on consumer and small business contracts (see our previous articles on this topic here).

The definition of ‘Small Business’ will be widened to include businesses that employ fewer than 100 people or those that have a turnover of less than $10 million per annum. The unfair contract laws are particularly relevant to franchising with franchise agreements likely to be standard form contracts.  The laws are intended to protect franchisees from unfair contract terms in Franchise Agreements, given the imbalance of power between the contracting parties.

The ACCC expects businesses to have updated their contracts prior to the November deadline.

As party of the annual review of their franchise documents franchisors should undertake a review of their franchise agreement to identify potentially unfair terms and either amend or remove them to reduce the risk of the term being void and, further and importantly to avoid pecuniary penalties which for a corporation are the greater of:

  • $10 million; or
  • three times the value of the benefit obtained; or
  • where the value of the benefit cannot be determined, 10% of annual turnover of the body corporate in the 12 months prior to the act or omission.

In addition to the above, the regulator’s other focus areas will include:

  • financial services, specifically the method in which banking institutions set interest rates on savings and term deposit products;
  • exclusive arrangements between businesses with large market shares and suppliers;
  • enforcement of Industry Codes including the Franchising, Dairy and Horticulture sectors.

Supply chain arrangements between franchisors and suppliers of franchise networks should also be reviewed and consideration given to whether they raise competition concerns such as exclusive dealing or cartel conduct.

The ACCC also identified its enduring priorities to include cartel conduct, anti-competitive and protection of vulnerable groups such as First Nations consumers.

The ACCC intends to deter anti-competitive conduct by imposing higher penalties.

The full script of Ms. Cass-Gottlieb’s speech is available on the ACCC’s website.

In light of the release of the ACCC’s compliance and enforcement priorities for the 2023-24 year business priorities for all businesses, including franchisor’s should include:

  • a review of standard form contracts to identify and amend or remove potentially unfair contract terms;
  • a review of all statements and representations, especially in marketing collateral for false or misleading environmental and sustainability claims that could constitute greenwashing.

Our Commercial & Franchising team can assist with the review and re-drafting of your standard business contracts and supply agreements and provide guidance on complying with consumer and competition law that affect your business.

If you have any queries or concerns in relation to the above, please contact a member of our Corporate Advisory and Franchising Team on +61 3 8540 0200 or as follows:

Raynia Theodore on (03) 8540 0242 or raynia.theodore@mst.com.au

Esther Gutnick on (03) 8540 0267 or esther.gutnick@mst.com.au