As part of the Australian Consumer Law amendments to the
Trade Practices Act (TPA) passed earlier
in the year, the Australian Competition and Consumer Commission
(ACCC) has been given the power to issue
substantiation notices that require a corporation to deliver up
information and/or documents that substantiate claims or
representations that have been made about products or services
within 21 days (or later if an extension can be negotiated). The
notices are intended to be used as a preliminary investigation tool
to assist the ACCC in working out whether further inquiries are
necessary into possible breaches of the TPA.
Prior to the amendments to the TPA, the ACCC could only issue
section 155 notices in relation to a matter that constituted or may
constitute a contravention of the TPA. Now the ACCC can issue a
notice if a person has simply made a claim or representation
a supply or possible supply, of goods or services
a sale or grant, or possible sale or grant, of an interest in
Further, now the ACCC need to specify the information sought
with any level of particularity and can make broad requests
information and documents that "could be capable of
substantiating or supporting the claim or representation"
if the claim or representation relates to the supply or
possible supply of goods or services, information and documents
that "could be capable of substantiating" the quantities
and period in which the corporation is able to make a supply of the
goods or services
any information and documents the ACCC is satisfied are
relevant to substantiating or supporting the claim or
representation in question or the quantities or period in which the
corporation is able to make a supply.
Some examples of the types of claims that could possibly be the
subject of a substantiation notice are:
"was/now", "markdown" and comparative
claims about financial benefits, business opportunities and
origin and health claims about products
claims about environmental impacts e.g. "green products,
product safety claims.
Obviously care must be taken in answering a substantiation
notice as providing false or misleading information is a
contravention of the TPA which entitles the ACCC to issue an
infringement notices or take court action, exposing corporations to
pecuniary penalties of up to $16,500 and individuals to $3,300.
Further, the ACCC can also issue public warning notices if
someone does not respond to a substantiation notice if it is
satisfied that at least one person is likely to suffer detriment as
a result of the conduct and it is in the public interest.
If the ACCC's investigations result in breaches of the TPA
being uncovered, civil penalty proceedings may be taken, or court
enforceable undertakings sought which can require corporations
publishing corrective advertising in newspapers, industry magazines
and websites, informing past customers about the conduct and
setting up trade practices compliance programs.
Naturally, all businesses should take care in ensuring that any
claims made about products or services are accurate to avoid any
question being raised by the ACCC. We also recommend that if claims
are made about products or services, that clients keep all
substantiating materials in a readily accessible location so that
substantiation notices are easily responded to, in light of the 21
day time period. Should your business receive a substantiation
notice we recommend that you immediately seek legal advice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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