The current consumer regime in Australia came into effect on 1st January 2011. The sole aim of this thesis is to compare and contrast the present day consumer regime legislations and the pre-2011 ones. This is to ascertain whether the present day legislations are progressive or retrogressive. The Australian Consumer Law of 2011 (ACL) can be defined as “a national, state and territory law from 1 January 2011 and includes unfair contract terms legislation introduced on 1 July 2010’. Under this legislation, all consumers have the same entitlements and all businesses too have the same responsibilities and compulsions across Australia. ACL can be enforced by any Australian court of law and tribunal created by law for the same purpose, whether state, territory or national based. However, ACL can only be regulated by the following agencies: the Australian Competition and Consumer Commission (ACCC), the Australian Securities and Investments Commission (ASIC) and the each state and territory consumer protection agency.
The ACL is enshrined in section two of the Trade Practice Act of 1947 (TPA). Thus, due to the enactment of ACL, TPA was consequently renamed to Competition and Consumer Act of 2010 (CCA). To make this possible, it was the prerogative of each state and territory to amend their trade laws and introduce mirror laws to facilitate the implementation ACL. ACL was mandated to regulate the regular the consumer contracts. The formulation and enactment of ACL was based on the recommendations of Productivity Commission’s 2007 Review of Australia’s Consumer Policy framework. This implies that ACL was and is a strategy to regulate unfair consumer contracts based on the Commission’s propositions. According to the Productivity Commission, regulating unfair consumer contract could result to inflation of commodity prices. Though, the commission is in agreement that this is a fair price to pay given the long-term benefits of ACL. ACL is also based on successful models that were already in place in other developing countries. This includes the Unfair Terms in Consumer Contracts Regulations 1999 (‘UTCCR’) which was enacted on the directive of the 1993 European Union. Before enactment of ACL, the Unfair Contract Terms of Law (UCTA) now enshrined in Parts two and three of ACL were controlled by part 2B of the Fair Trading Act of 1999 (FTA).
2.0 Government Policy and National Legislation
This section focuses on the goal of ACL according to the Australian Productivity Commission report of 2008. The first goal was the need for the Australian government to be more involved in shaping consumer contracts. This is necessary because it was discovered then that a lot of irregularities existed in consumer-business contracting. Thus, to protect the Australians from exploitation, it was pertinent that that the government amends its consumer contracting regulations. Second, the amendments came at a period whereby global economic recession was at its peak; especially in Europe and America. Thus, in a bid to protect the Australian economy from experiencing the same, the commission recommended greater involvement of the government in standard consumer contracts. Third, due to the complex nature of consumer contracting, CLA was meant to encourage the cooperation of all government agencies, the federal government included in effectively implementing consumer reforms. Thus, ACL empowered both the central and federal governments to impose stiffer sanctions in regulating standard consumer contracts.
It is also possible that the ACL legislations were directed at leveling the playing field by guaranteeing equity in consumer contracting. This is because prior to the enactment, different states and territories had varied consumer contracting requirements. What this meant is that business obligations changed depending on the territorial laws. Therefore ACL successful brought about a single national universally accepted consumer policy framework that treated all Australians equally regardless of their territory of origin. To do this, it was important that the emended consumer policies identify irrelevant and inflated consumer policies that were only specific to a few states or sectors of the economy. Eventually, these retrogressive policies were either totally expunged or harmonized with nationally acceptable ones. This implies that the ACL legislations were directed at confronting and changing the unfair contracting practices that were common countrywide.
ACL was also meant to transfer the regulation of the financial sector from the private to the public sector; especially the credit providers and the financial brokers. To perform this task, ACL consequently created the Australian Securities and Investments Commission (ASIC) as the main regulator in the aforementioned sectors. In addition to all this, the legislations were also meant to streamline the product safety regulations and implementation of the same. Finally, the objective of ACL was to make business owner more committed to honoring consumer contracts. This was achieved through the introduction of punitive measure for breach of contract, mechanisms to seek compensation for the aggrieved part, banning orders and substantive notices.
3.0 The Pre-2011 System
Before the ACL was enforced and implemented in January 2011, each state and territory had their own consumer policy framework. These laws are commonly referred to as generic consumer laws. These refer to the specific laws and regulations intended to protect the consumer from manipulative and unsafe practices by suppliers in different sectors of the economy. In the pre-2011 system, these laws were enshrined in 12 separate laws; two at the national level and the remaining ten at the state and territory level. The two national legislations are the TPA and the ASIC act (Australian Securities and Investments Commission Act 2001). Besides the above mentioned legislations, each state and territory had industry specific consumer regulation policies. To a large extent, the provisions in all these legislations were consistent to one another, though there are slight variations between them. Some of these differences include the different additional categories of false and misleading representations prohibited in state and territory FTAs (Territory Fair Trading Acts) over the years, provisions on the regulation of credit card limit and for dealing with unfair contract terms vary significantly. There has been a slow but steady shift from consistent to significantly inconsistent consumer policy regulation frameworks. Consequently, the pre-2011 system was becoming more costly for both the consumers and the businesses with each passing day.
The following are some of the differences that existed between the various Australian consumer legislations that resulted to the inconsistencies with the consumer regulation framework. For starters, there exist significant differences in the definition of a consumer under the different legislations. For instance, the legislations categorized consumers in terms of purpose of commodity acquired (personal, domestic or business use) and the value of acquired commodities. The mandatory product standards varied from state to state and territory to territory. Also, the legal terms of reference for both the TPA and the ASIC had significant inconsistencies and thus variations in the interpretation of these consumer regulation laws. Finally these different legislations empower the consumer regulators to adopt diverse regulatory strategies within their areas of jurisdiction.
Enforcement of the consumer policy framework was a collaborative effort among the national, state and territorial regulators. Though, the state regulator had more clout compared to other regulators. The ACCC was the national regulator with the mandate to enforce consumer regulations countrywide across all territories. Thus, the ACCC had jurisdiction over corporates and individual countrywide to the limit stipulated by the constitution. The main area of concern of the ACCC was limited to the infringement of consumer law. The ASIC on the other hand, another national regulator, was mandated with monitoring and promoting market integrity as stipulated by the ASIC Act. This was because the TPA’s requirements did not cover regulation of the Australian financial market. At the state and territory level, each respective state and territory had a respective regulator. For instance, New South Wales had the Office of Fair Trading; Victoria had the Consumer Affairs Victoria; Northern Territory had the Office of Consumer and Business Affairs; Tasmania had the Office of Consumer Affairs and Fair Trading to mention but a few. The mentioned regulators and many more not mentioned had the jurisdiction of enforcing consumer regulation policies in their respective areas of operations as stipulated by the Commonwealth law.
In July of 2008, the Council of Australian Governments (COAG) made some amendment to the legislation framework specifically the product safety legislations in a bid to have a single regulation framework nationally. The purpose of the reforms was to simplify and harmonize product safety standards in Australia. It was unanimously agreed that Australia was in dire need of a single national product safety regulations that were to be implemented by the ACCC. This implies that any new product regulations standard must be assented to by all Australian governments. Though, the ACCC was empowered to liaise with state and territory regulators in enforcing the reforms. However, the ACCC had the central role of prosecutor against those who breached these reforms. Other notable reforms made in the pre-2011 system include the Consumer and Competition Act of 2010 (CCA). The CCA was an amendment to the TPA. There is still raging debate in Australia whether the CCA was meant to encourage or discourage competition. This is because of the notion that the CCA is more favorable to other groups than others.
The purpose of the CCA was to promote efficiency and competition in business, reduce commodity prices, and protect Australians against exploitative commercial practices. CCA meant to achieve by enhancing the wellbeing of Australians by championing for fair trading policies and protecting consumer interests. CCA has several clauses that are of interest to the Australian consumer. They include the cartel clause, anti-competitive agreements, exclusionary provisions, exclusive dealing, and misuse of market power amongst others. In brief, CCA stipulates the following. First, CCA prohibits any kind of business practices that are likely to significantly negatively affect competition. Though, the act allows for joint bargaining as stipulated by the Trade Practices Legislation Amendment Act (TPLA) of 2006. However, CCA prohibits incorporation of businesses if the proposed merger has effects of lessening competition in the market. Second, CCA prohibits any form of cartel conduct. This includes but not limited to price fixation, market fragmentation, manipulation of demand and supply principles and finally bid rigging. Cartel offenders attract jail time as well a financial sanctions in terms of punitive fines.
Another provision of CCA is that a dominant market player is banned from misusing their dominance state. Thus under this clause, predacious pricing directed at frustrating other players in the industry is banned. In this case, a dominant market player is banned from supplying products below the stipulated market price to frustrate other players in the industry. This clause is based on the provisions of the TPLA. Also, CCA prohibits exclusive dealings of any form. Exclusive dealings are categorized either as conditional or refusing to supply commodities as a result of conditional supply. Conditional supply is defined by the act as the ability to supply goods exclusively while limiting the ability of competitors to acquire the same market share. Though, if the involved parties inform the ACCC prior to the sealing the deal, the exclusive dealing can be allowed but of course under the discretion of the ACCC. The ACCC can however ignore the notification if it determines that the exclusive dealing negatively affects competition.
This implies that enforcement of the CCA is the sole responsibility of the ACCC. Though, under special circumstances, any individual (or corporation) can initiate any remedy measures. However any punitive sanctions on the hand must only be meted by the ACCC. Also, it is the prerogative of the ACCC to initiate strategies to mitigate unfair competition in any sector of the economy. In the enforcement of CCA, ACCC also plays a semi-judicial role. This implies that the ACCC monopolizes the role of interpreting the CCA. The CCA also created Australian Competition Tribunal; whose main role is to hear appeals of CCA cases brought before the ACCC. These appeals are specific to authorization and notification cases onlyy.
4.0 The ACL Era
As mentioned before, the ACL became effective from the 1st day of January the year 2011. The enactment of this legislation follows the recommendation of the Productivity Commission of the year 2008. The thesis shall look at the brief history of ACL. The ACL was assented into law on the 1st day of July 2010 as an amendment to the TPA currently referred to as the CCA. The reforms were directed at the unfair contract terms and it introduced new civil sanctions and redress mechanisms for both the ACCC and the ASIC. ACL has been effective since the year 2011. The legislation established the following provisions that had significant impacts on the consumer regulation framework. First, the act introduced a single set of interpretations and provisions for interpretation that were national accepted including amendments to some of the TPA regulations and stipulations. However, some of these new introductions were inconsistent with the former stipulations of the TPA. Second, ACL introduced a new national governing unjust standard consumer contracts. Third, the legislation effectively replaced legislative inferred conditions and warranties and existing state laws on all forms of direct marketing. In addition, ACL simplified national lay-by agreements. Finally, ACL ushered in a more effective product safety era and thus consequently new nationally accepted standards for all products.
Just like other consumer polices, the enforcement of the ACL is solely the responsibility of the ACCC. The only difference from the previous cases is the fact this legislation further empowered the ACCC. Under the ACL, the ACC has the following additional powers. The ACCC has the power to issue substantiation notices. In this case the ACCC mandates it for businesses to validate the allegations lodged against their products. Secondly, the ACCC has the power to issue infringement notices to minor contraveners of the ACL. These infringement notices are in the form of “on-the-spot” fines. The ACCC can also disbar individual from holding managerial positions in corporations on the grounds of violating the requirements of the ACL. Finally, the ACL empowers the ACCC to seek redress on behalf of aggrieved consumers who are not part of the implementation process due to contravention of consumer regulation policies. The ACL regulates the relationship between the consumers and the businesses with far reaching consequences to business owners who contravene its provisions.
As earlier mentioned, ACL was sanctioned by the recommendations of the Productivity commission. However, the back bone of the legislations was the provisions already stipulated in the TPA. Thus, to a larger extent it can be argued that the ACL is just an advanced form of the TPA. This has formed the basis for the criticism the legislation. Other grounds for criticism of ACL lie in the fact that implementation of the legislation resulted to an inflation of prices of various products. Apart from this, the introduction of the unfair contracts clause in the legislation that was effective countrywide was another cause of a lot of contention from the business community and the political class. Another contentious issue in the policy making process was the fact that, the public us enlightened about consumer laws’ requirement though they did not expect the business community to adhere by them. This is because these clauses were borrowed directly from the Victorian FTA. Also, apart from the punitive sanctions already stipulated by the TPA, ACL introduced civil pecuniary sanctions, infringement warnings, public warning and substantiation notices, and consumer redress orders.
Finally, the implementation of the law has been under the direction of the COAG. The implementation was done in two phases. Basically the first phase involved the formulation of the ACL as part an amendment to the TPA. The second phase involved implementation, monitoring and evaluation processes. Amendments can only be made to the ACL based on the provision of the Intergovernmental Agreement. Besides, for the reforms to be effected, at least the Commonwealth plus four jurisdictions must consent to the reforms. Three of the jurisdictions must states. Amendments can then be completed on the condition that the ACCC has conducted impact evaluation, determined that the proposed changes are relevant and that the reforms are consistent with other consumer protection legislations. ACL stipulates that all Australian regulatory agencies must exhibit high levels of commitment and work collaboratively in administering the legislation. Though, the nature of collaboration has been under the governance of the Memorandum of Understanding between amongst the various regulatory agencies.
It is clear that the ACL was formulated specifically to protect the consumers against the various excesses that the business community is prone of. The implementation of the legislation effectively simplified the consumer protection framework in Australia. Despite this, formation of this legislation on the basis of the TPA already formed precedence to challenges in the future. However, these challenges shall be effectively neutralized because the whole process of formulation of the policy indicated goodwill and commitment by the entire Commonwealth. The central tenet of the legislation was reforms and thus there is no doubt that ACL shall be amended whenever need arises. Finally there have been complaints that implementing the legislations shall come at an extra cost to the consumer due to the projected inflation of prices. This is a necessary evil because the gains already made by the act are worthwhile and there is still more in store. In addition to this, the implementation of ACL has been projected to save the consumers between $1.5billion and 4.5billion U.S dollar annually.
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