in a nutshell
of 2022 Ministry of Finance Amendment Act (Promoting Competition, Improving Prices) Act (“activity“) received the consent of the King on 9 November and is now in force. As we previously reported in our detailed alert on bills (here):
- Bans the offer, use, and reliance on unfair contract terms (UCTs) in standard-form consumer and small business contracts and introduces, for the first time, civil penalties for violations of UCT terms.
- The maximum penalties accorded to businesses for breach of the civil penalties provisions of Part IV, IVBA, X and XICA of the Competition and Consumer Act 2010 (CCA) and under the Australian Consumer Law (ACL), whichever is greater of: pull toward you.
- A$50 million;
- If the court can determine the value of the profits made — three times the value of the profits
- If the court cannot determine the value of the profits earned — 30% of the company’s adjusted turnover during the offense turnover period of the violation, act or omission.
- Individual fine cap increased to A$2.5 million
- Increases the maximum civil penalty for violations of competition rules by telecommunications providers to AUD 71 million plus AUD 3 million each day if the most serious violation persists.
Actions implemented from 10 November 2022 will immediately apply the increased penalty regime. He has a 12-month grace period before his UCT provision commences on November 10, 2023.
The maximum penalties for CCA and ACL violations have been significantly increased, effective immediately, and put your business at tremendous risk. The need for robust policies, systems and training to ensure legal compliance has never been more important.
The application of penalty clauses to UCT after 12 months fundamentally changes the risks to business and makes it impossible to include “boundary” unfair terms in standard form contracts. Businesses should identify all commercial partners that may fall under the expanded definition of “small business” and thoroughly research all standard form small business and consumer contracts for potential unfair terms. , the new regime that should prepare for next year by making the necessary changes to avoid violations of the laws and regulations.
After the launch of the new UCT regime, we expect both the ACCC and ASIC to closely scrutinize standard form contracts and not hesitate to take enforcement proceedings where appropriate.
If you need advice or assistance navigating the proposed changes, please contact our team of experts, including steps you can take to reduce the likelihood of a significant increase in penalties.
