Insights from industry experts to mark 50 years of competition and consumer law in Australia

The 24^th of August marked 50 years since royal assent was granted by the Governor-General for federal competition and consumer legislation in Australia, initially through the Trade Practices Act 1974 (TPA) and later through the Competition and Consumer Act 2010 (CCA). To commemorate this milestone, we asked our competition and consumer law experts and esteemed colleagues for their thoughts and reflections on the development of existing competition and consumer law in Australia, and what they hope the next 50 years will hold. Please enjoy these rare personal insights from the best in the field:

At its inception, the TPA was designed to enhance the welfare of all Australians by focusing both on the promotion of competition and fair trading as well as the protection of consumers.

These intertwined mandates reinforce each other and every day in our work I am struck by the strength and clarity of purpose and outcome they imbue. Competitive markets deliver choice, quality and lower prices for consumers and informed consumers enable competition on the merits.

The key role of the ACCC is as an upholder and enforcer of our Act. Critical to our success is the ability to seek penalties that act as true deterrence of contravening conduct. A groundbreaking change to the law was introduced in 2018 when maximum penalties for certain contraventions of the Australian Consumer Law were set at the same level as competition law contraventions. The ACCC had advocated for that change recognising the importance of equality of deterrence to protect consumers.  We similarly welcomed the historic increases in 2022 which applied equally to certain contraventions for competition and consumer protection provisions in the Act.

Standing here today in the 50^th year of our Act I look forward to the introduction of an unfair trading practices prohibition that will more effectively regulate business conduct protecting consumers and small businesses across our economy in an increasingly digital world.

Competition is the underpinning of our market economy; to the extent it is weak our market economy fails. Given this, the effective working of the CCA is vital. The CCA does a good job, but battles against large companies who have a clear self-interest in having weak laws. This self-interest is obvious, but many involved in competition seem to find recognising this contentious.

We need to strengthen our merger laws, as the Government has said it wishes to do, and we need to consider what is going wrong with the substantial lessening of competition (SLC) test given the NSW Ports case as but one example of the difficulties. Promoting competition is like walking up the down escalator; if you stand still you will go backwards. This also applies to competition policy which needs significant focus which hopefully it will now get from the Treasury Competition Task Force.

So much to be done, but good signs are on the horizon…

In the contemporary era, many laws and public institutions are debunked. However, the Australian CCA and its associated institutions including the ACCC stand out as great success stories and as contributors for a better Australia. As to the future, I think that the sound underlying framework of the legislation and the strength and skills of the ACCC and the competition community built up over time lay the foundations for a continuing successful future.

The CCA has been reviewed numerous times in its 50-year history. Some in response to judicial decisions, others (including the current review process), as a response to economic changes, including the growth of platforms and the cost of living. We have gone from one set of technical amendments to another, and reasonably frequently.

Rarely and regrettably, have we stopped to ask fundamental questions about what we want from our competition law. As Jonathan Baker observes, competition law has long been searching for its purpose ever since the consumer welfare standard.

Maurice Stucke argues, the quest of uniting competition policy under a single economic goal has failed.

While recognising the need to respond to market changes, competition law needs to be framed against a much broader set of considerations.

That framing is not only about the objectives of competition law, as important as that is. Rather the framing needs to consider the role of competition law in democratic governance, the crisis of capitalism, the imperatives of the political system, the unprecedented influence of multinationals, economic power in price setting, rising inequality and sustainability, among many, many others.

For the next 50 years, we need to ensure that fundamentally competition law enhances human well-being, in its broadest sense. As Angus Deaton observes, the ideas not just of lawyers and economists, but also philosophers, historians and sociologists are important to achieving that goal.

It is difficult to overstate the importance of the TPA and more recently the CCA to the last 50 years of economic activity in Australia, and to the protection of Australian consumers. Over the last 50 years, we have seen many significant developments in the law, with significant policy changes, legislative amendments and important Court and Tribunal decisions. I will mention only two. The first is the overhaul of the consumer protection laws in 2010, which gave us the harmonised Australian Consumer Law, strengthening protections for consumers, simplifying compliance for business and improving regulator collaboration. Pecuniary penalties for certain breaches, the consumer guarantees and unfair contract terms regimes and other changes that have followed have further strengthened our consumer protection laws. In many ways the Australian Consumer Law is a misnomer, extending as it does in many aspects of business-to-business dealings, and fundamentally shaping dealings throughout the economy. The second is the increased severity of penalties. Maximum pecuniary penalties have increased very substantially in recent years, and even the largest firms would think twice about the risk of a penalty of 30% of turnover. Criminalisation of cartel conduct, and particularly the prospect of jail sentences, has also undoubtedly influenced attitudes to compliance.

So, what do the next 50 years hold? Merger reform is coming, and proposals for unfair trading and general safety provisions remain on the table. It is still early days for criminal prosecutions for cartel conduct. We have only seen one contested hearing, which resulted in a not guilty verdict, and there are undoubtedly challenges ahead for proving cartel conduct contraventions to the criminal standard. The complexity of cartel contraventions is a significant challenge for jury directions and deliberations. Elsewhere, how will our laws adapt to the challenges of regulating digital platforms with virtually unlimited resources? It remains to be seen whether we will have sector-specific regulation, as the ACCC has called for, or whether our existing laws are robust and flexible enough to deal with the challenges of regulating digital platforms without unduly stifling innovation or market forces. Given the likely importance of digital economies in the coming years, getting the balance right will be vital. Similarly, the emergence of AI and the energy transition will no doubt produce policy challenges and test whether the Act remains fit for purpose as our economy faces fundamental changes. Finally, while we have happily waved goodbye to s 44ZZRD, s 45AD isn’t much of an improvement. Would a renumbered Act be too much to hope for?

Some of my “favourite things” about the CCA:

• The statutory independence of the Commission and the Tribunal has provided protection against political interference. Politicians are unable to respond to the pressure of lobbyists for favours.
• The adoption of a dual adjudication system – one that relies on judicial enforcement of prohibited practices giving rise to substantial financial penalties, and private rights of actions whereby the victims of such prohibited practices can recover damages; sitting alongside an administrative enforcement regime that allows some proposed conduct that is likely to give rise to a net public benefit to be authorised. Such business conduct involving public policy choices does not lend itself to the judicial function.
• The decision to include consumer protection in the Act back in 1974 despite the tremendous responsibility and increased workload it imposed on the Commission.
• The inclusion of a general prohibition on misleading conduct. Not just a powerful weapon to protect consumers, but a powerful weapon to protect businesses, as well as providing work for battalions of lawyers over the past 50 years.

I am of the firm view that Competition and Consumer Law are both fundamentally important for the economic growth and efficiency of our economy and the welfare of Australians. Since 1974, Competition and Consumer Law in Australia has continued to evolve and adapt to the constant changes and challenges faced in both areas. There is no doubt in my mind that Australians have benefited substantially from the continual refinement and development of law and strong education and enforcement from the ACCC.

I was asked specifically if there is one thing I would like to see happen in the future of the CCA. The answer is simple. A simplification of the operative provisions in the CCA without the loss of their integrity and coverage. I am not the first person in the industry to hope for this. Many talented people before me have hoped and advocated for the same. I am supremely confident that many of the provisions in Pt IV of the CCA could be re-worded and shortened, making it easier to read, along with a substantial reduction of provisions in Sch 2 (Australian Consumer Law), which now sits at 305 sections. I do believe that this number can be reduced to 100 sections.

I support regulatory intervention but only where strictly necessary and substantiated by clear evidence. I remain hopeful that Australia’s competition and consumer laws will enable the ACCC to achieve the right balance between protecting consumers and promoting competition, particularly during the current cost-of-living-crisis and as we navigate the frenetic emergence of AI and other technologies. Australia’s economy presents unique challenges and I am eager to see the ACCC rectify some of the structural & behavioural issues that exist in our most highly concentrated markets, emboldened by the recent proposed merger reforms, its strengthened ability to target creeping acquisitions and through earlier and greater visibility of more M&A transactions.

There is a sense of change in the air as we mark the 50-year anniversary of competition law in Australia. The ACCC continues to advocate for reform to Australia’s competition laws on the basis that the current legislation is not effective enough at encouraging competitive, innovative and dynamic markets, despite the legislation having already undergone a series of amendments (such as the misuse of market power and cartel provisions).  The need for further change poses the question of whether competition law to date has truly been effectual, with effective duopolies operating in major industries such as grocery and aviation.

Citing market concentration and anti-competitive conduct, the ACCC now has these industries in its sights.  I’d like to see a real, impactful change to address these perceived issues – and we might be part of the way there, with the most significant changes to merger laws in 50 years on track to commence on 1 January 2026.

Since the TPA was enacted fifty years ago, Australia's consumer protection laws have continued to develop for the better. However, in my view, the protections available under the ACL are still too complicated and difficult for the average consumer to understand , and as a result, the rights and obligations contained in the law are frequently lost, misunderstood, or deliberately watered down. Malpractice thrives in grey areas. Our markets are dominated by large corporations who wield far greater economic and bargaining power than individuals, and as such, their regulation must be commensurate. For example, despite tentative efforts by the ACCC and lots of noise, greenwashing is still rampant. Legislators, regulators and the courts need to make the big moves necessary to shut down this practice. In view of the emerging microplastics crisis, I would also like to see mandatory labelling of forever chemicals and plastics on all consumer goods.

In recognition of this milestone, it is worth reflecting on a key change as well as casting an eye towards the future.

A key moment that stands out to me is the 2022 introduction of higher penalties for certain competition and consumer law offences. The changes saw an increase from a maximum penalty of $10M to $50M as one of the possible calculations. The legislators hoped that this would minimise breaches being viewed as an acceptable cost of doing business. It will be interesting to observe whether this ambition eventuates.

Now looking towards the future, I am curious as to how competition law around digital platforms will be shaped. As at the end of July 2024, the ACCC has released eight interim reports in its inquiry into the intensity of competition in the markets for the supply of digital platform services, market trends and developments. Government response to the inquiry has been gradual, however, in late 2023 it announced that it will support “in principle” additional competition measures including a new power to make mandatory codes of conduct for designated digital platforms, and principles aimed at barriers to entry and expansion, consumer switching, and anti-competitive tying. If change does happen, I will be curious to see how far government will act to curtail the dominance of large digital platforms in the modern world.

The main change that has happened incrementally over the past 50 years since the introduction of the TPA, in my view, is that consumer protection law compliance has become a key corporate governance issue and a priority for inhouse legal teams in businesses of all sizes and across a wide range of industries. This can be attributed to several factors. The introduction and then significant expansion in both scope and quantum of civil pecuniary penalties for breaches of the Australian Consumer Law has seen maximum penalties increase almost 50-fold  from $1.1M per contravention to now at least $50M of 30% of turnover. While these maximums are of course only notional, courts have shown themselves fully prepared to rigorously enforce these provisions, handing out a succession of record-breaking penalties and even going so far as to reject penalties agreed between the ACCC and respondents as manifestly inadequate.  Private civil proceedings and the increased prevalence of class actions for ACL breaches have also served to focus corporate attention on the consequences of non-compliance with the ACL.  The extension of the ACCC’s investigation, information-gathering powers, and enforcement powers have seen it emerge as a robust and active regulator. The recent introduction of the designated complaints function is another interesting development.

Finally, there has been a trend of continual expansion of consumer protection regulation into new realms and beyond purely consumer transactions to many business-to-business transactions, with a particular emphasis on franchising and other conduct affecting small businesses. The unfair contract terms regime is a prime example of this. Initially introduced in 2010, its ambit was gradually extended over time to extend to business transactions, and more recently to attract penalties. The consumer guarantees have followed the same pattern, evolving from application only to consumer transactions to those between businesses of all sizes. The ACCC and lobby groups are currently advocating for legislative changes to impose pecuniary penalties for breach of the consumer guarantees. It’s both inevitable and exciting that this expansion of the purview of the ACL to keep pace with changes in society and prevailing business practices will only continue. The introduction of a prohibition on unfair trading practices, a general product safety provision and implementation of other recommendations stemming from the Digital Platforms Inquiry are just some of the reforms on the horizon.

This article was compiled by Senior Legal Editor Meg McDermott.

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