Transcript
Check against delivery.
Introduction
Thank you.
I would like to begin by acknowledging the Wurundjeri People of the Kulin Nation, the Traditional Custodians of the land we are meeting on today and pay my respects to their elders past, present and emerging.
It is a pleasure to be here today and have the opportunity to speak directly with so many legal practitioners.
Next year marks a significant milestone for the Australian legal community, with our national competition and consumer law turning fifty.
The development of our competition and consumer law has been significantly enriched through the actions of legal practitioners like yourselves.
You play an important role in bringing the Competition and Consumer Act to life, providing a practical application of both its principles as well as the Australian Consumer Law.
When advising your clients, you give meaning to the words of the Act.
You apply the guidance developed by the ACCC and other regulators, helping small businesses in particular understand the ‘rules of the game’.
A key part of these ‘rules of the game’ is how to raise potential non-compliance concerns with the ACCC.
For example, assisting with raising complaints on behalf of your clients who may have been subject to anti-competitive conduct or unfair trading practices. Or supporting your clients as they engage with us.
Some of you may even have clients who are currently engaging with the ACCC in connection with one of our investigations or inquiries.
Understanding what the ACCC does and doesn’t do can be difficult.
Which is why today, I would like to provide some further context on why we take the approach that we do for compliance and enforcement.
ACCC role and Compliance and Enforcement policy
The ACCC’s core objective is to promote competition and facilitate fair trading and protect consumers for the benefit of all Australians.
That is, consumers, businesses and the wider community.
We enforce compliance with the Competition and Consumer Act to ensure competition remains healthy, and businesses and consumers continue to have confidence in Australia’s market economy.
All businesses operating in Australia need to have an awareness and understanding of their obligations under the Competition and Consumer Act.
The penalties for non-compliance can be very substantial.
The ACCC is selective in the matters we investigate and the sectors in which we engage in education and market analysis.
We cannot take on every matter that is brought to our attention.
Instead, we take what is known as a ‘harm-based approach’ when enforcing the law.
That is, we direct our resources to matters that may result in widespread harm to consumers, competition, or small businesses.
We are also mindful that, in addition to confidence in the market, businesses and consumers must also have confidence in the ACCC as an effective regulator. This is something we take very seriously.
In undertaking our functions, we are guided by the key principles of accountability, transparency, confidentiality, timeliness, proportionality and fairness.
These are fundamental principles to the way in which the ACCC operates.
Whilst we have developed a reputation for achieving successful litigated outcomes, this is just one tool we use to promote compliance with Australia’s competition and consumer law.
In deciding which compliance or enforcement tool to use, and in some cases this could be a combination of tools, our first priority is always to achieve the best possible outcome for the community and to manage risk proportionately.
One of the ACCC’s 2023-24 compliance and enforcement priorities is consumer protection, product safety, fair trading and competition concerns in relation to environmental claims and sustainability.
Our approach to this issue is a good illustration of how we use a combination of different tools to achieve compliance. Some of these tools include educating and informing consumers and businesses about their rights and responsibilities; undertaking enforcement action; and working collaboratively with other agencies to achieve compliance.
Each year the ACCC receives over 100,000 reports from consumers and small businesses.
This doesn’t include the growing number of reports we receive about scams.
The ACCC annually consults on, reviews and releases its Compliance and Enforcement Policy.
This policy outlines our compliance and enforcement strategy, priorities and powers.
For our work to have meaning, our priorities must reflect the issues impacting the Australian economy, as well as consumers and businesses in Australia.
Given this, I’m sure it’s no surprise that the ACCC’s current priorities include a focus on cost-of-living pressures, such as the price of essential services including energy and telecommunications; the ever-increasing losses to scams; consumer and fair trading harms from manipulative marketing practices in the digital economy; and the risk posed to markets, business rivals and consumers from anti-competitive conduct.
In reviewing and updating our compliance and enforcement policy each year, we undertake an extensive feedback process and engage with many people and organisations to make sure we understand the most pertinent issues.
We also look at other information, including our complaints data, public discourse and international developments, to help us fill in any gaps.
When deciding whether to pursue a matter, the ACCC will prioritise those which fall within our current priorities as well as those of significant public or national interest or detriment.
While the ACCC is Australia’s competition regulator, we are only one of the agencies that enforces the Australian Consumer Law.
The ACL, which contains the prohibitions against misleading claims, is based on a one law, multiple-regulator model.
The ACCC, together with state and territory consumer protection agencies, share responsibility for enforcing the ACL.
The one law, multiple-regulator model allows different regulators to provide different contributions in a complementary manner.
While there are important variations in approach, at a high level the capacity of state and territory ACL regulators to address localised conduct and in some jurisdictions provide conciliation or dispute resolution functions complements the ACCC’s emphasis on addressing more systemic and national matters.
Making reports to the ACCC
In addition to the reports we receive from individuals and businesses each year, we also receive many reports from industry and consumer groups.
These direct reports are extremely informative and, in many cases, have led to important enforcement cases.
Reports of misconduct from the public is an important way in which we learn about the business practices and individual traders that are causing the most harm to Australians.
Reports from legal practitioners on behalf of their clients have proven to be a rich source of information and intelligence for the ACCC.
Many of our cases over the years were a direct result of legal practitioners, like yourselves, raising matters with us on behalf of their clients.
Similarly, issues brought to us by small businesses are an important help.
As industry participants, small businesses are often aware of misconduct carried out by other businesses in their sector.
A good example of this is credence claims.
In many sectors, information asymmetry can lead to consumers being misled by false and misleading representations.
Some examples of this are ‘free range’ eggs, environmental claims and country of origin claims.
With these types of claims, consumers must put their trust in the representations made by the supplier and often have no, or limited, avenues to verify the information provided.
Small business competitors, by contrast, understand supply chains, input costs, customer demand and the available technology.
This means they are often well placed to identify claims about a product or service that are not true.
When advising your clients, we encourage you to bring issues to the ACCC’s attention where you think there may have been a breach of the laws we enforce.
The information you provide, helps us to build our intelligence and make strategic decisions about where best to use our resources.
Compliance work
The ACCC engages with small business in a variety of ways.
We know that small businesses face time and resource pressures and so are conscious of the need for clear and useful education materials to help people understand their responsibilities as well as their rights under the law.
Our upcoming guidance on green claims, which I will discuss shortly, is an example of this work.
To understand the challenges, issues and problems facing Australia’s 2.5 million small businesses, it is vital for us to hear from and speak with these businesses.
To do this, we analyse the intelligence gathered from small businesses reporting misconduct, we work with state regulators and the small business commissioners’ offices, as well as proactively engage with small business representatives and advisers.
The ACCC has, for many years, held regular meetings with a consultative committee of trusted advisers, representatives and academics specialising in small business and franchising issues.
This forum provides an opportunity for our teams to hear about the issues that small to medium enterprises experience.
Ensuring that small businesses are protected by the competition and consumer laws as well as the small business industry codes of conduct has been an enforcement priority for the ACCC for a number of years.
As Australia’s national consumer law regulator, we are also conscious of how certain business practices, whether unfair terms in contracts or misleading or deceptive conduct, can give businesses an unfair advantage in the market.
The ACCC also has a direct responsibility to promote competition and ensure markets are free from anti-competitive restraints or coordination.
While we recognise that small businesses are crucial for ensuring healthy competition in our economy, the ACCC does not turn a blind eye to anti-competitive conduct by small businesses.
Our competition law recognises that there are some forms of conduct that are so detrimental to competition, they should be prohibited irrespective of the size of the party involved.
Cartel conduct is the most clearcut example of this, and it is strictly prohibited.
Cartel conduct comprises price fixing, market sharing, bid rigging and controlling output.
The ACCC continues to pursue both criminal prosecutions and civil actions to stop and punish cartels when we find them against the businesses and individuals engaging in the conduct.
Last year, for the first time individuals, were sentenced for criminal cartel offences in Australia.
Four individuals were sentenced to suspended prison terms after pleading guilty to fixing the Australian dollar / Vietnamese Dong exchange rate and related transaction fees. The former export manager of a pharmaceutical ingredients manufacturer was also sentenced to two years and eight months’ imprisonment to be served as an intensive corrections order, including 400 hours of community service. He was also disqualified from managing corporations for five years and fined $50,000.
We are awaiting sentencing of the chief executives of two major Sydney waste services companies after they pleaded guilty to criminal cartel offences relating to price fixing for demolition waste services in Sydney.
More recently, we brought a case against a professional services firm, being a small architectural firm and a former executive for attempting to bid rig in relation to a government tender for a project at Charles Darwin University, resulting in civil penalties against both the firm and the former managing director of the firm.
These cases involve clear cartel conduct, but there are sometimes situations where cartel conduct is harder to identify.
We have recently seen an example where a market sharing arrangement formed part of a deed of settlement of proceedings.
I wanted to bring this to your attention, to ask you to pay careful attention when you are advising clients in connection with any agreements with competitors, even in the settlement of litigation, to ensure consideration is given to any potential anti-competitive arrangements.
Environmental and sustainability priority
I‘d now like to discuss the ACCC’s work in addressing our environmental and sustainability priority.
As consumers become increasingly concerned about the environment and sustainability, this is being reflected in their purchasing decisions.
In fact, research conducted by the Consumer Policy Research Centre (CPRC) in 2022 suggests that 45% of Australians always or often consider sustainability as part of their purchasing decision-making.
There is a significant shift occurring in how many products are produced, marketed, and delivered to consumers with a focus on promotion of sustainable production and distribution.
We know that advertising is a powerful tool when it comes to influencing consumers’ perceptions and purchasing decisions.
This is particularly the case when it comes to green claims.
While consumers want to be more environmentally conscious with their buying, they often find it difficult to make more sustainable choices and are unable to easily compare the environmental impact of products.
Most of us don’t have the time to extensively research the environmental benefits of everyday products, particularly when we’re at the supermarket.
The ACCC conducted an internet sweep late last year, reviewing environmental and sustainability claims made by businesses in Australia.
We released the findings for this sweep earlier this year.
The sweep identified a range of industries or businesses which commonly use environmental and sustainability claims and assessed whether these claims were potentially misleading or deceptive.
As consumers demand more ethical and sustainable practices from businesses – and are often prepared to pay more for them – we are seeing claims like “environmentally friendly”, “sustainable production” and “compostable” becoming more prominent on our supermarket shelves.
Whilst some might regard such terms as ‘mere puffery’, they do carry meaning for consumers.
The misuse of these terms could reasonably mislead consumers and cause harm to those businesses that are doing the right thing when it comes to sustainability.
We recognise that there are many businesses meeting this consumer demand genuinely, by changing their businesses practices and operations in response to climate change and as such can legitimately market their environmental credentials.
However, there remains a significant number of businesses that are taking advantage of consumers and gaining a competitive advantage by engaging in ‘greenwashing’.
The ACCC already has a number of ‘greenwashing’ investigations underway.
To complement our enforcement work, the ACCC is conducting a range of education activities with businesses, including updating economy-wide guidance material, in addition to targeted guidance for specific sectors.
We have developed draft business guidance for environmental and sustainability claims, which will be released soon for consultation.
Guidance, in conjunction with enforcement action, can play an important role in changing broader business behaviour and preventing issues that have the potential to mislead consumers.
Eight key principles
I would like to step through eight key principles with you today.
The first principle is making accurate and truthful claims.
In other words, don’t exaggerate the environmental benefits of your product or service and make sure that any comparisons made are transparent and fair.
Secondly, businesses should have evidence to back up their claims. That is with research, data or other evidence.
If you don’t have the evidence to back up your claims, you are likely to mislead consumers and contravene the ACL.
Businesses must not hide important information
For example, if you only highlight the positive aspects of your product or service while omitting information about the negative aspects, you can give consumers the impression that your business, product, or service has a lower environmental impact than it really does.
Explain any conditions or qualifications on your claims
If the environmental claim is only true under certain conditions, then you must clearly explain this to consumers.
These claims can be misleading if the conditions or required steps are not clearly stated or are unlikely to be realised.
Avoid broad and unqualified claims, such as ‘sustainable’; ‘environmentally friendly’; or ‘eco-friendly’
These sweeping terms can mean different things to different consumers. Without further qualification or clarification, consumers can easily be misled.
Use clear and easy to understand language
It is important to remember that an ordinary consumer generally does not have specialist knowledge, instead they understand words to have their ordinary meaning.
Visual elements should not give the wrong impression
Images and visual elements should be used with care. The use of environmental images may be capable of making a sweeping claim of an environmental benefit that may be misleading.
And finally, be direct and open about your sustainability transition
If you can transition to more sustainable business operations and want to tell consumers about it, be honest. The ACCC recognises that transition takes time.
Whilst there is a need for guidance in this space – at the most basic level, complying with the Competition and Consumer Act in relation to environmental claims is simple.
If you make a claim about the environmental or sustainability benefits of your product or service – make sure it’s right. And if you are unsure or can’t substantiate these claims, then don’t make the claim.
For most businesses today, the use of environmental or sustainability claims is a conscious choice, not a legal requirement.
The claims are intended to convey a particular message to consumers in order to evoke a particular response.
Conclusion
While the ACCC cannot pursue all matters that come to our attention, we are an evidence-based agency and will exercise discretion to direct resources to matters that provide the greatest overall benefit for consumers and competition.
As legal practitioners, your knowledge and on the ground experience is of significant value to the ACCC.
You are at the forefront of what’s impacting your clients.
You know how markets are working, where there may be misconduct that should be addressed and what’s coming up next over the horizon.
I would encourage you all to actively be involved in the process of alerting the ACCC to matters of non-compliance or potential anti-competitive conduct.
I cannot overstate how valuable this can be to help the ACCC prioritise our resources and identify issues of significant detriment in order to effectively promote competition and fair trading, and protect consumers.
Thank you.