The 12 month grace period for the new unfair contract terms regime (UCT regime) introduced by the Treasury Laws Amendments (More Competition, Better Prices) Act 2022 (More Competition, Better Prices Act) ends on 9 November 2023. This means that businesses with standard form consumer or small business contracts should assess their current contract terms to determine if they are at risk of breaching the UCT regime.
The amendment significantly increases penalties for engaging in anti-competitive conduct (for example, cartels, misuse of market power, and exclusive dealing) under Part IV of the Competition and Consumer Act 2010 and the ACL, and amends the UCTregime contained within the ACL to afford more protections to consumers and small businesses.
The More Competition, Better Prices Act has two key functions as it relates to consumer protections in Australia. Firstly, the amendment increases the pecuniary penalty framework that businesses captured by the ACL are subject to when they breach the act.
Parties which breach the Act are now subject to maximum penalties of:
Once the amendment comes into effect, the consequence of using or relying on unfair contract terms will significantly change. Currently, if a term was found to be unfair, the term would be void. However, from 9 November 2023, including or relying on an unfair term is prohibited, and parties found to be using such terms may be subject to the newly-increased penalty framework set out above.
The amended UCT regime also expands the scope of contracts which are bound by it as a ‘small business contract’ will now include contracts where at least one party to the contract either employs less than 100 people (up from 20 people) or has an annual turnover of less than $10 million. As a result, more businesses will be protected by the UCT regime.
*Information is accurate up to 27 November 2023
