A recent case in the Federal Court underlines the importance of
properly responding to investigations which are undertaken by the
Australian Competition & Consumer Commission
(ACCC). The case is ACCC v Narnia Investments Pty
Ltd  FCS 395.
In this case, the ACCC was investigating potential
unconscionable and misleading conduct by a franchisee in relation
to the entry into a contract with a customer and the customer's
right to a refund. In the course of its investigations, the ACCC
sought from the franchisee details of its customer complaint
handling procedures. This information was sought pursuant to the
ACCC's statutory powers of investigation under section 155 of
the Trade Practices Act (the Act). However, in its
response to the ACCC, the franchisee provided false information to
the ACCC. At a subsequent formal oral examination, the
franchisee's director admitted that false information had been
Accordingly, the ACCC brought proceedings against the franchisee
and its director prosecuting them for breach of section 155 of the
Act. The franchisee and the director pleaded guilty to the charges.
The maximum penalties applicable to these offences were an $11,000
fine for the franchisee and either a $2,200 fine or imprisonment
for 12 months for the director. The Court ultimately imposed
penalties of $5,600 on the franchisee and $1,400 on its director.
The Court also ordered that the franchisee and its director pay the
ACCC's legal costs of the proceeding.
The case is a salutory lesson to all businesses in the franchise
industry that the ACCC takes very seriously proper compliance with
its investigatory functions. All businesses ought to have a clear
policy in place which ensures that any contact received from the
ACCC (whether in written or oral form) is directed to the
appropriate person within your organisation who is responsible for
trade practices compliance.
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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In some cases these fees or surcharges are higher than what a bank charges to these merchants for use of the system.
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