National consumer law reforms passed by Commonwealth Parliament: New national product safety regime

Overview

As discussed in a recent newsletter, Australian consumer laws took a step closer to national uniformity when the Commonwealth Parliament passed the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (Cth).  This week’s newsletter focuses on the new product safety provisions that are likely to apply from 1 January 2011. Those proposed provisions are contained in the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (ACL Bill), which was recently introduced into the Commonwealth Parliament.  Suppliers should note that the legislation, if passed, will introduce substantially enhanced enforcement powers for the ACCC and, importantly, the legislation will apply to consumer goods and also to “product related services”.

National consumer law

The ACL Bill contains provisions dealing with product recalls of both consumer goods and “product related services”.  The new provisions will create a single national set of product safety standards that will apply in all Australian jurisdictions, and which will be generic in nature applying to all consumer goods and product related services.  It is important to note that Commonwealth, State and Territory industry-specific consumer laws will continue to apply in addition to the new standards contained in the ACL Bill.

Administrative powers

In summary, the ACL Bill makes administrative powers available to the responsible Commonwealth, State and Territory Ministers, where appropriate, to remove consumer goods or product related services from the Australian market.  Those administrative powers may only be exercised where a Minister believes that a consumer good or product related service (as the case may be) poses a risk of injury to any person, either through their normal use or a reasonably foreseeable misuse.

Those administrative powers include the power to:

• make standards for particular consumer goods or product related services;
• ban the supply of particular consumer goods or product related services;
• require a supplier to recall particular consumer goods; and
• issue warning notices to the public about consumer goods or product related services.

In this article, we briefly discuss the making of standards for, and the imposition of a ban on, the supply of particular consumer goods or product related services.

“Consumer goods” and “product related services”

The ACL Bill empowers the Commonwealth Minister to make a safety standard for consumer goods and/or product related services and, if made, the standard must be published on the internet.

A “consumer good” is defined in the ACL Bill as a good that is intended, or is of a kind likely, to be used for personal, domestic or household purposes.  The definition includes a good that is the subject of a recall and which has become a fixture since being supplied.

The ACL Bill defines “product related services” as services relating to the installation, maintenance, repair, cleaning, assembly or delivery of “consumer goods” of a particular kind.  It is important to note that a service will not be a “product related service” unless the actual service is related, connected or associated in some way with the supply of a “consumer good”.  It is also important to note that the definition of “product related service” is not exhaustive but is an inclusive one.  This means that the ACL Bill will cover other types of services where they relate to the supply of consumer goods of a particular kind.

Content of standards

The Commonwealth Minister may only make safety standards that consist of requirements relating to the matters set out in the ACL Bill.

In relation to consumer goods, safety standards may specify matters relating to:

• the performance, composition, contents, methods of manufacture, processing, design, construction, finishing or packaging of particular consumer goods;
• the testing of particular consumer goods during or after its manufacture or processing; and/or
• the form and content of markings, warnings or instructions to accompany particular consumer goods.

In relation to product related services, safety standards may specify matters relating to:

• the manner in which particular product related services are supplied;
• the skills or qualifications of those who supply particular product related services;
• the materials to be used when supplying particular product related services;
• the testing of particular product related services; and/or
• the form and content of warnings, instructions or other information relating to particular product related services.

If the Commonwealth Minister makes a safety standard for goods or product related services, the ACL Bill provides that a person must not, in trade or commerce, supply or offer to supply the goods or services if they do not comply with the safety standard.  The ACL Bill also provides that, in relation to consumer goods, a person must not possess, manufacture or be in control of the goods for the purpose of supplying the goods.

Interim and permanent bans

The ACL Bill enables Commonwealth, State and Territory governments to ban the supply of consumer goods and product related services where they pose a risk of injury to any person.  Two types of bans can be made:

• interim bans lasting for 60 days – which can be made by any responsible Minister; and
• permanent bans – which can only be made by the Commonwealth Minister.

In relation to consumer goods of a particular kind, an interim ban can be made by a responsible Minister if it appears that:

• goods of that kind will or may cause injury to any person; and/or
• a reasonably foreseeable use (including a misuse) of the goods will or may cause injury to any person.

An interim ban can also be made by a responsible Minister on the supply of product related services of a particular kind if it appears to the Minister that:

• particular consumer goods will or may cause injury to any person as a result of the services being supplied; and/or
• a reasonably foreseeable use (including misuse) or particular consumer goods will or may cause injury to any person as result of the services being supplied.

The ACL Bill enables the Commonwealth Minister to impose a permanent ban on the supply of particular kinds of consumer goods in the following circumstances:

• where there is an interim ban in force;
• where it appears goods of that kind will or may cause injury to any person; or
• where it appears that a reasonable foreseeable use (including a misuse) of goods of that kind will or may cause injury to any person.

The ACL Bill enables the Commonwealth Minister to impose a permanent ban on the supply of particular kinds of product related services in the following circumstances:

• where there is an interim ban in force;
• where it appears that, as a result of supplying services, particular consumer goods will or may cause injury to any person; or
• where it appears that, as a result of supplying services, a reasonably foreseeable use (including a misuse) of particular consumer goods will or may cause injury to any person.

“Reasonably foreseeable use”

Significantly, in relation to consumer goods of a particular kind, an interim or permanent ban can be made by a responsible Minister if it appears that:

• goods of that kind will or may cause injury to any person; and/or
• a reasonably foreseeable use (including a misuse) of the goods will or may cause injury to any person.

It is important to note that the ACL Bill incorporates the concept of  “reasonably foreseeable use (including a misuse)” into an expanded threshold test for imposing safety bans.  The ACL Bill provides that a reasonably foreseeable use of a good includes using the good for its primary, normal or intended purpose, using the good for its unintended purpose, or misusing the good.  Significantly, this new provision will have the effect of placing the onus on suppliers to consider circumstances where a product may be used improperly, or in an unintended or misused way, and therefore pose a risk of injury.

Updating of policies and procedures

The intervening period between now and the proposed commencement date of the ACL Bill will provide a window in which a business can review its product recall policies and procedures to ensure compliance by 1 January 2011.

Authors: Paul Dawson & Susan Reece Jones