Government | Regulation

Competition and consumer watchdog to target consumer guarantees, unfair contracts

Misuse of market power, unfair business-to-business contracts and consumer guarantees are the main 2018 priorities for the nation’s top competition watchdog.

Australian Competition and Consumer Commission Chairman Rod Sims took the CEDA stage in Sydney for the seventh consecutive year to launch the commission’s 2018 Compliance and Enforcement Policy. 

This year, he said, the ACCC will focus on consumer issues in broadband services and energy, competition in the financial services and commercial construction sectors, systemic consumer guarantee issues, and conduct that may contravene the new misuse of market power and concerted practices provisions. 

In his address Mr Sims stressed reflected on 2017 and laid out the commissions challenges and priorities for the year ahead. He stressed that competition is vital to the economy. 

“We’ve got an economy with very modest wages growth with a lot of cost of living pressures and that’s being felt really enormously by a lot of people,” he said. 

“Competition can help reduce prices and competition can help boost productivity and therefore wages. So, I think with all the issues we’ve got on, competition has a central role”.

Describing 2017 as a major year for competition and law reform, Mr Sims highlighted the passage of the Competition and Consumer Amendment (Competition Policy Review) and the Competition and Consumer Misuse (Misuse of Market Power) Bills, which brought the Harper Review to a “very successful” conclusion as a stand out of. 

“This set us up very well in a time of unprecedented technological challenge and change”, he said. 

“We really needed those laws. And that was largely lost in the debate about those laws”.

He highlighted the profound change in consumer law penalties as a turning point. Under legislation introduced to parliament, consumer law and competition law breaches will have similar penalties. 

“We’ve never seen any reason why there is a difference between the size of penalties for competition and consumer matters”, Mr Sims said. 

“We see a lot of detriment from companies misleading consumers. We think a message needs to be sent and we think the higher penalties will do that. So, it’s a really significant change”. 

Those companies who continue to mislead consumers about consumer guarantee rights will face a crackdown under the commission’s 2018 priorities. 

“Consumer guarantees are going to be a priority again. This has been a priority now for four or five years”, Mr Sims said. 

“We really think it’s two steps forward and one step back. We continue to see large companies misleading consumers in relation to their consumer guarantee rights. It is getting fairly annoying. 

“My own view is the higher penalties, once they’re through parliament, will really send the message because once it’s no longer a one or two-million-dollar penalty but a penalty 10 or 20 time that, that might get the message across about consumer guarantee rights.” 

The commission would also, Mr Sims noted, focus on energy, digital platforms and the use of personal data.  
The ACCC has been made the key regulator on the use of personal data following an announcement made by the Treasurer on 9 February 2018 for the Government to commit to a dual-regulator model in response to the Productivity Commission’s inquiry into data availability. 

“It’s a hugely important pro-competition and pro-consumer initiative”, Mr Sims said. 

“It’s about giving consumers access to their data including the ability, to provide it to third parties to see if they can get a better deal.

“The aim is to make your data seem like an asset to you rather than a liability. It’s something we really want people to use to good affect and get the best deals out there and to promote competition and benefit themselves”. 

Also in 2018, the commission will commence a “fundamentally important” 18-month inquiry into digital platforms, examining the impact of search engines and social media and other internet aggregators on competition in the media and advertising markets. It will focus on news and journalistic content and the implications for that sector. 

“Concerns about digital platforms have recently become prominent,” Mr Sims said. 

“I think this inquiry we’re doing is very likely the first of its kind to explore the implications of these digital platforms broadly in both a competition and a consumer way. And a key issue will be how much consumers know about the amount and the use of the data about them that is collected and sold by the digital platforms”.
A further priority would be to address energy affordability. 

“We do have an energy affordability crisis. It really has upended one of Australia’s core competitive advantages,” he said. 

“Cheap energy was a major competitive advantage… (it is) now a competitive disadvantage that causes consumers a lot of harm. 

“Through our electricity study and our gas study our focus is solely on affordability and particularly in the case of electricity we’re going to have recommendations to the Treasurer at the end of June on how to get the prices down”.