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Reforms to the Australian Unfair Contract Terms Regime and consumer law penalties passed by Parliament

Published

Nov 11 2022

Written By

jonathan tay Module
Jonathan Tay

Senior Associate
Australia

I am a senior associate in the Dispute Resolution team in Sydney. <BR/><BR/>I provide succinct, solutions orientated advice to help our clients solve complex problems, mitigate future risks and develop strategies to simplify their decision-making process.

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We recently published an article summarising the proposed changes to the Australian Unfair Contract Terms regime and maximum penalties for breaches of Australia's Competition and Consumer Act 2010 (Cth) (CCA).

On 27 October 2022, the Australian Parliament passed the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 (Cth) (the Bill) without amendment.

The Bill received Royal Assent on 9 November 2022.

What happens next?

Competition and consumer law

The proposed increase in maximum penalties for breaches of the CCA apply to a wide range of the CCA prohibitions and came into effect the day after Royal Assent (i.e. 10 November 2022).

The new maximum penalties significantly increase the financial risk of breaching CCA prohibitions, as follows:

  Current maximum penalty  New maximum penalty 
Corporations 

 The greatest of:

  • $10 million;
  • 3 times the benefit from the breach; or
  • 10% of annual turnover in the 12 months before the breach, whichever is the greatest.

The greatest of:

  • $50 million;
  • 3 times the benefit from the breach; or
  • 30% of adjusted turnover during the breach (minimum 12 months), whichever is the greatest
Individuals
  $500,000  $2.5 million

 

Unfair contract terms

As discussed in our previous article, the Bill also introduces a new penalties regime for using and relying on unfair contract terms and extends the coverage of the unfair contract terms regime in Australia. These changes will come into effect 12 months after Royal Assent (i.e. 9 November 2023).

This 12-month period will be a critical time for B2C businesses that trade in Australia (regardless of their place of incorporation) to review their standard form contracts. In view of the new changes, there is a real risk that we are likely to see ASIC and the ACCC commence enforcement action once the regime is in effect to deter any future non-compliance.

Please reach out to your usual Bird & Bird contacts if you require advice on compliance with the CCA or the unfair contract terms regime.