In 2019, the competition regulator has announced it will focus on tackling ‘arrogant’ businesses, but will it be effective?
Australian Financial Review (AFR) journalist, James Thomson, writes that Australian Competition and Consumer Commission (ACCC) Chairman, Rod Sims, warned about the ‘arrogance’ of business and said businesses that continue to mislead customers can expect very high fines in 2019.
Leading up to the summer holidays, the ACCC was promised a $35 million boost to protect consumers and to tackle anti-competitive conduct.
Around this same period, a number of companies were singled out for misleading consumers.
Employsure, an employment relations company, is facing civil proceedings from the ACCC for misleading small business customers affiliated with the government agency.
ACM group, an Australian debt collection firm, will have to pay $750,000 in penalties for ‘misleading, coercive and unconscionable pursuit of unpaid debts form two vulnerable customers’.
And early this year, Kleenheat has been ordered to pay a total of $25,200 in penalties for misleading representations they made about gas prices in Western Australia (WA).
At the end of 2018, the ACCC also addressed the fact that four airlines—Qantas, Tiger Air, Jetstar and Virgin—have promised to ‘fix’ their refund policies.
The competition regulator also submitted a joint statement with Jetstar that the airline should pay $1.95 million, whilst making a further contribution to consumer and regulator legal costs.
Embed robust compliance
For businesses concerned about the regulator’s approach, their best defence is an effective compliance program.
At the end of last year, Bronwyn Gallacher from CCL Consultants told the GRC Professional that the financial boost is a clear message to businesses to establish a Competition and Consumer Act Compliance Program to mitigate potential risks.
She added that the establishment of a compliance program is a step in the right direction towards meeting the requirements under the ISO 19600.
Challenges with application of penalties?
Criticism of the penalties has been levelled at the ACCC by the organisation for Economic Co-operation and Development (OECD).
Can the new penalty regime be effectively enforced?
Previously, when the OECD criticised the ACCC for penalties failing to pose a significant deterrent, George Kamencak from CCL Consultants told the GRC Professional that challenges did exist when trying to determine the economic benefit from misconduct, therefore making it difficult to determine 10 per cent of a business’s annual turnover.
Kamencak suggested that if this figure proves difficult to calculate, it might be best to instead revert to the $10 million penalty.