Fines & penalties

Contraventions of the Competition and Consumer Act 2010 (CCA) and the Australian Consumer Law (ACL) will attract fines and pecuniary penalties.

Definitions

Fines are monetary fines (criminal penalty) imposed by courts in criminal proceedings. Criminal standard of proof is required.

Pecuniary penalties are monetary fines imposed and collected by civil courts. The civil standard of proof is applied (namely the balance of probabilities).

A number of factors are taken into account by the Court in determining the appropriate fine or level of penalty.  The calculation of the monetary amount of a penalty is dependent on ‘penalty units’ that are set out in the Crimes Act 1914. From 1 July 2017 the value of the penalty unit for Commonwealth criminal offences increased from $180 to $210.

Restrictive trade practices

Part IV of the CCA prohibits anti-competitive practices such as:

  • cartel conduct
  • exclusionary conduct
  • misuse of market power
  • exclusive dealing
  • resale price maintenance, and
  • anticompetitive mergers.

The maximum penalties for breaches of Part IV for each act or omission will be the greater of:

For corporations:

  • $10 000 000;
  • If Court can determine "reasonably attributable" benefit obtained, 3 times that value; or
  • If Court cannot determine benefit, 10% of annual turnover in preceding 12 months.

For individuals:

  • $500 000.

Secondary boycotts

The penalty provisions under s45D of Part IV are:

  • For corporations $750 000 and for individuals $500 000.

Cartels

The CCA prohibits cartels under civil law and makes it a criminal offence for businesses and individuals to participate in a cartel.

Individuals found guilty of cartel conduct could face criminal or civil penalties, and corporations could face fines or pecuniary penalties for each criminal cartel offence or civil contravention.

See: Cartels

Cartels - individuals

Individuals found guilty of cartel conduct could face criminal or civil penalties, including:

  • up to 10 years in jail and/or fines of up to $420 000 per criminal cartel offence
  • a pecuniary penalty of up to $500 000 per civil contravention.

It is illegal for a corporation to indemnify its officers against legal costs and any financial penalty.

Other forms of relief relating to the cartel offence include injunctions, orders disqualifying a person from managing corporations and community service orders.

Cartels - corporations

For corporations, the maximum fine or pecuniary penalty for each criminal cartel offence or civil contravention (whichever applies) will be the greater of:

  • $10 000 000
  • three times the total value of the benefits obtained by one or more persons and that are reasonably attributable to the offence or contravention where benefits cannot be fully determined, 10 per cent of the annual turnover of the company (including related corporate bodies) in the preceding 12 months.

Australian Consumer Law

Contraventions of the ACL in respect to the following conduct will attract a pecuniary penalty:

  • unconscionable conduct
  • false or misleading conduct
  • pyramid selling
  • failure to respond to, or provide false or misleading information in response to, a substantiation notice
  • various product safety provisions.

The maximum penalty for false or misleading and unconscionable conduct, pyramid selling and breaches of relevant product safety provisions is:

  • $1.1m for corporations
  • $220 000 for individuals.

Lesser civil penalties apply to other contraventions.

Infringement Notices

Where the ACCC has reasonable grounds to believe a person has breached the provisions of the ACL it can issue an Infringement Notice in respect of the following:

  • unconscionable conduct
  • false or misleading conduct
  • pyramid selling
  • certain product safety and product information provisions
  • failure to respond to a substantiation notice
  • false or misleading information in response to a substantiation notice.

The penalty amount in each infringement notice will vary, depending on the alleged contravention, but in most cases is fixed at:

  • $12 600 for a corporation (or $126 000 for a listed corporation) and
  • $2 520 for an individual

for each alleged contravention.

In connection with substantiation notices, the infringement notice penalty amount for failure to comply with a substantiation notice is:

  • $5400 for a corporation and
  • $1080 for an individual.

The infringement notice penalty amount for providing false or misleading information, under a substantiation notice, is $10 500 for a corporation and $2 100 for an individual.

Penalties for Non Compliance

Section 155: Penalties can be granted for non-compliance with a s155 Notice.  Court can impose a fine of up to 20 penalty units or imprisonment for up to 12 months.

Section 87B: Court can make an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person obtained directly or indirectly that can be attributed to the breach.

Franchising and Horticulture Codes

The Franchising Code and Horticulture Code contain financial penalties for breaches of certain provisions:

  • up to $63 000, and
  • infringement notices ($10 500 for body corporate and $2 100 for individual and other entity).

Carbon tax price reduction obligations

Businesses in breach of the carbon tax price reduction obligations or false or misleading provisions may be liable for:

  • court imposed pecuniary penalties of up to $1 358 910 million for a body corporate and $233 100 for individuals per contravention, or
  • infringement notices for $126 000 for a corporation, $12 600 for a body corporate other than a listed corporation and $2520 for an individual per alleged contravention.

See: Carbon tax repeal

Payment surcharges

If we believe that a business has charged a payment surcharge which is excessive, we can issue an infringement notice to the business:

  • 600 penalty units ($126 000) for a listed corporation
  • 60 penalty units ($12 600) for a body corporate
  • 12 penalty units ($2 520) for a person other than a body corporate.

We can also take court action against a business, in which we can seek pecuniary penalties:

  • 6,471 penalty units ($1 358 910) for a body corporate
  • 1,295 penalty units ($271 950) for a person other than a body corporate.

We can also seek redress on behalf of a group of consumers who have been charged an excessive surcharge, as well as seek injunctions and various non-punitive orders (including community service and probations orders).

In addition to ACCC enforcement action, an individual who suffers loss or damage due to a breach of the ban can bring an action seeking damages.

More information

Legislation

ACCC announces priorities and strives for tougher penalties