Competition & Consumer Law Developments For 2015: What Your Clients Will Need To Know

Transcription

1 Competition & Consumer Law Developments For 2015: What Your Clients Will Need To Know ACCC Deputy Chair Dr Michael Schaper IPA National Congress Hunter Valley, NSW Saturday 29 th November 2014 The ACCC Overview Likely issues in 2015: 1. Franchising 2. Scams 3. Unfair contract terms 4. Harper review Further information

2 Competition & Consumer Act 2010 Lawful Competition Consumer Protection & Product Safety Regulated Infrastructure Making Markets Work 1. The ACCC: What We Do National regulator: oversees laws on consumer protection, fair competition, product safety, infrastructure access Competition & Consumer Act 2010 (previously known as Trade Practices Act 1974) Also regulates some specific industries (energy, telecommunications), industry codes (franchising, horticulture) and price monitoring (airports, postage, stevedoring) An independent statutory agency within the Treasury portfolio 7 Commissioners (statutory appointments), 700 staff, offices in each state and territory Enforcement agency does not set policy Most enforcement action decided through the courts Does not provide private rulings: need your own independent advice

3 Why is the Competition & Consumer Act relevant to Accountants? Many accountants run small firms Accountants are trusted advisors for small businesses Applies to all businesses - including professionals Competition and Consumer Act Governs most dayto-day business-tobusiness, businessto-consumer transactions

4 Complaints and Enquiries 2. Franchising Code of Conduct ACCC regulates franchise relationships through the Franchising Code, a mandatory code under the Competition and Consumer Act. Binding on all industry participants, including overseas franchisors that have franchisees or master franchisees in Australia Both the Code and the Act provide a range of protections for current and prospective franchisees in their dealings with franchisors. Currently 1,200 franchise systems and 73,000 franchisees trading in Australia.

5 Key Elements of the Franchising Code of Conduct Commencement phase: - Disclosure document (14 days in advance) - Franchise agreement - Cooling-off period (one week after signing) - Requirement to obtain independent advice Operative phase of the franchise agreement: - Dispute resolution mechanisms - Material changes to the system - Expenditure of marketing funds/levies Termination phase: - Grounds on which franchisor can terminate a current agreement - Process for transfer of franchise - Arrangements when existing franchise agreement expires Franchising Code Proposed Amendments Duty to act in good faith Enhanced enforcement tools for ACCC to deal with serious breaches of the Code: can seek civil pecuniary penalties of up to $51,000 from the court infringement notices $8,500 Improved disclosure and transparency of marketing funds and online sales arrangements More information regarding the risks and rewards of franchising at an early stage Due to take effect on 1 January 2015 the ACCC will develop detailed guidance for both franchisors and franchisees to prepare them for these changes.

6 Audit Power ACCC can compel a trader to provide any information or documents it is required to keep, generate or publish ACCC has served audit notices on 62 franchisors since 2011 Recent audits within fast-food and fitness sectors were largely compliant Upcoming changes to Code may increase scope of the audit power Proposed Changes to the Code Civil pecuniary penalties The need for greater deterrence Infringement notices Quickly responding to breaches Based on the exposure draft of the new Code released in April 2014

7 Civil Pecuniary (Court-imposed) Penalties Penalties will apply to conduct after 1 January 2015 Up to $51,000 per breach of the Code Amouont is determined by the Federal Court ACCC must convince a court to rule in our favour on the basis of evidence put forward How An Infringement Notice Works When can the ACCC issue a notice? Where it has reasonable grounds to believe a person has contravened a relevant provision After consideration by a meeting of the full Commission Within 12 months of the alleged contravention How much is the penalty? Proposed $8,500 for a company and $1,700 for an individual for Franchise Code breaches What is the payment deadline? Period for payment of an infringement notice penalty is 28 days What if the notice is not paid? A person may choose not to pay an infringement notice penalty ACCC may take court action What if the notice is paid? ACCC may not take court action in relation to the alleged contravention Payment is not taken as an admission of liability or a contravention of the Act Payment of notice is made public via media release and public register

8 Australian Consumer Law Infringement Notice Example In August 2014, Compare The Market Pty Ltd paid an infringement notice of $10,200 in relation to advertising claims about its health insurance comparison service. We now compare more health funds than any other website in Australia and Compare more health funds than anywhere else. Compare The Market Pamphlet (2014) But there were other websites that compared the policies of more health insurance funds, including the site operated by the Private Health Insurance Ombudsman. The ACCC had reasonable grounds to believe a breach of section 29(1)(g) of the ACL (misrepresentations) had occurred. ACCC / Griffith University Franchise Pre-Entry Program

9 Franchising Webinar Are you a franchisor, or a current or prospective franchisee? Do you provide professional advice to franchisors or franchisees? If so, then register for this free webinar to find out about the new Franchising Code of Conduct, which may take effect on 1 January 2015 The New Franchising Code: What You Need to Know and Do Tuesday 9 December pm 1.00pm AEDT To register go to Implications For Accountants and Your Franchising Clients Franchise contracts may have to be altered/amended by some franchisors check carefully If your clients gets an infringement notice, deal with it promptly Franchisees at end of term will have new rights Franchisees in an existing system will have improved access to information about marketing funds Franchisees will be able to find out if they will receive any online sales revenue New dispute resolution procedures 6 November 2014 Conference 19

10 3. Scams in 2013

11 Tricked into paying for unwanted or unordered advertising, stationery or other services A subscription form disguised as an invoice or a late notice, processed without a second thought Steps to Avoid Scams 1 2 Have clear procedures for verifying, paying and managing accounts and invoices. Limit the number of people authorised to place orders or pay invoices. Make sure the firm billing you is the one you normally deal with. Look for subtle changes in the details. 7 Never provide personal information and banking details to anybody you don t know and trust. Install reputable computer protection software and a firewall and keep them up to date. Train your staff to help them identify scam conduct before it s too late. Sign-up to alerts at SCAMwatch.gov.au or follow

12 6 November 2014 Conference Unfair Contract Terms Small businesses may soon be able to gain some protection from unfair contracts Current law protects consumers from unfair terms in circumstances where they have little or no opportunity to negotiate with the business Standard form consumer contracts cannot contain terms that: cause a significant imbalance in consumer s rights as compared to the business s rights; are not reasonably necessary to protect the business s interests; and cause any detriment to the consumer Note: legislation still being developed Remedy: Unfair term is void (treated as though it never existed). Contract will continue to bind the affected parties to the extent that the contract is capable of operating without the unfair terms.

13 4. Harper Review: A New Environment For Some Businesses in Future? Detailed examination of competition law and policies. More than 50 recommendations in draft (Sept 2014) report: More help to allow SMEs connect with alternative dispute resolution schemes Deregulate retail trading hours, pharmacy location, taxis Improved collective bargaining Easier exemption ( authorisation ) processes No re-introduction of price discrimination laws Public submissions were due in by 17th November. Final report due out in March Other Helpful Contacts Many contractual disputes are outside the ACCC s ambit, franchisees and small businesses can consider the use of alternate dispute resolution. Office of the Franchising Mediation Adviser National Small Business Commissioner New South Wales Small Business Commissioner South Australian Small Business Commissioner Victorian Small Business Commissioner Western Australian Small Business Commissioner

14 Need More Small Business Info? Small business helpline Website updates Small Business Info Network To sign up, your contact details to Franchising Info Network To sign up, your contact details to Publications Small Business in Focus Small Business & the CCA: Your Rights & Responsibilities The Franchisee Manual

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