This is the latest in a series detailing developments in competition and consumer law in Australia, including the activities of Australia's competition and consumer regulator, the Australian Competition and Consumer Commission (ACCC), published judgments, recently issued proceedings and any relevant changes in the law.
This article covers events which occurred between August and November 2021. The previous update is available here.
Judgement
Full Federal Court overturns Employsure decision
The Full Federal Court has upheld an appeal by the ACCC of the Federal Court's decision that workplace relations advisor Employsure had not breached the Australian Consumer Law in relation to its Google advertisements. We covered the original decision in our October 2020 update. The case concerned the following advertisement (and other similar advertisements) from Employsure:
Relevantly for the appeal decision, the ACCC alleged that this advertisement misrepresented that Employsure was affiliated with a government agency. Justice Griffiths originally found that the advertisement was not misleading, because a reasonable business owner would understand that it was not affiliated with the government (partly because it did not include a .gov URL). The Full Court unanimously upheld the ACCC's appeal and found that the advertisement was misleading, on the basis that it included government agency names in the largest fonts and omitted any reference to Employsure itself. The matter was remitted to Justice Griffiths to determine the question of relief. His Honour declined to grant injunctive relief on the basis that the infringing conduct was not deliberate, had ceased, and was unlikely to recur, but Employsure was ordered to pay a pecuniary penalty of $1 million. The ACCC media releases can be viewed here and here.
Phoenix Institute found to have engaged in unconscionable conduct
The Federal Court has found that the Phoenix Institute, a former training college, made false or misleading representations and engaged in a system of unconscionable conduct in relation to its online diploma courses. The Phoenix Institute marketed its courses to students in 2015 under the VET FEE-HELP loan program, securing $106 million in Commonwealth loans. The Court found that the Phoenix Institute misled vulnerable consumers into thinking that the courses were free, when in fact each course cost at least $18,000. This led many students to take on large loans for courses that they were unlikely to ever complete. Justice Perry found that this constituted a system of unconscionable conduct, particularly when combined with other factors such as the Phoenix Institute failing to properly assess prospective students' suitability for courses and paying large commissions to sales agents who were not properly trained or monitored. This is the fifth action the ACCC has taken in relation to the VET FEE-HELP program. The ACCC media release can be viewed here.
Decathlon ordered to pay $1.5 million penalty for failing to label goods
The Federal Court has ordered that sporting goods retailer Decathlon pay penalties of $1.5 million for selling basketball rings and portable swimming pools which did not include the required safety labelling, consumer warnings, or installation and use instructions required by mandatory Australian safety standards. Decathlon admitted the contraventions but submitted that the $3.5 million penalty sought by the ACCC was "excessive and inappropriate", and instead submitted that a penalty of $800,000 should be awarded. Having regard to the size of Decathlon and the seriousness of the conduct in question, Justice Nicholas ultimately landed between the parties and ordered that $1.5 million was the appropriate penalty. The ACCC media release can be viewed here.
Agrison ordered to pay $220,000 penalty for warranty misrepresentations
The Federal Court has ordered that agricultural equipment supplier Agrison pay a penalty of $220,000 for making false or misleading representations to customers regarding warranties for its tractors. Agrison admitted that it falsely represented that its tractors came with a five year nationwide warranty including a replacement for all defective parts at no cost, when in fact not all tractor parts were covered and the full cost of replacement parts was not covered. Agrison also admitted that it misled consumers by representing that it had a national service network for repairs when it did not. Agrison and the ACCC made joint submissions that a $220,000 penalty was appropriate, which were accepted by Justice Murphy. The ACCC media release can be viewed here.
Volkswagen denied special leave to appeal penalty
The High Court has dismissed Volkswagen's application for special leave to appeal the $125 million penalty it was ordered to pay for making false representations in relation to its compliance with Australia's diesel emissions standards. The ACCC media release can be viewed here.
Mazda found to have misled consumers about consumer guarantee rights
The Federal Court has found that Mazda engaged in misleading or deceptive conduct and made false or misleading representations to consumers who had requested a refund or replacement vehicle after experiencing serious and recurring faults with their cars. In some cases, Mazda told consumers that their only available remedy was repair, or offered only to refund a portion of the vehicle's purchase price or replace the vehicle at significant cost to the consumer, even though the Australian Consumer Law entitled customers to a refund or replacement vehicle at no cost. The Court dismissed the ACCC's allegations that Mazda had engaged in unconscionable conduct, saying that, despite Mazda having given consumers the "run around", its conduct fell short of unconscionable. Remedies, including penalties will be decided at a later date. The ACCC media release can be viewed here.
New Proceeding
ACCC commences proceedings against Mercedes-Benz regarding Takata airbags
The ACCC has commenced proceedings in the Federal Court against Mercedes-Benz, alleging that the automotive company failed to comply with its obligations under the recall of defective Takata airbags. The recall notice required Mercedes-Benz to communicate with consumers regarding the recall in a manner that emphasised the risk of serious injury or death from the defective airbags and the importance of having the airbags replaced as soon as possible. The ACCC alleges that Mercedes-Benz failed to do so and minimised the risks associated with the defective airbags, including by telling consumers that the recall was a precaution and was being undertaken for "customer peace of mind". The ACCC media release can be viewed here.
ACCC successfully seeks urgent injunction to prevent acquisition of Adora Fertility
The ACCC has successfully sought an urgent injunction to halt the proposed completion of Virtus Health's acquisition of Adora Fertility. The injunction restrains Virtus Health from completing the acquisition until the ACCC's proceedings are finalised or further Court order. The interlocutory injunction was sought by the ACCC in circumstances where, despite the ACCC having commenced a public review of the transaction, the parties proposed to complete the acquisition even though the review had not been completed. The ACCC is concerned that the acquisition will increase or change Virtus Health's market share in several Australian capital cities and that a reduction in competition is likely to result in increased IVF prices. The ACCC media releases can be viewed here and here.
ACCC commences proceedings against roof tiling businesses for alleged cartel conduct
The ACCC has commenced proceedings in the Federal Court against two Sydney roof tiling businesses, First Class Slate Roofing and RAD Roofing Specialists, and each business' sole directors, for alleged cartel conduct. The ACCC alleges that the businesses colluded to rig bids in exchange for cash payments in relation to two construction projects. The ACCC media release can be viewed here.
ACCC commences proceedings against Techtronic for alleged resale price maintenance
The ACCC has commenced proceedings in the Federal Court against Techtronic Industries Australia for alleged resale price maintenance. The ACCC alleges that Techtronic restricted the sale of Milwaukee products below a specified minimum price in almost 100 agreements with independent dealers and buying groups. Where dealers sought to sell products below that specified minimum price, Techtronic issued reminders, warnings and breach notices to the dealers and in two cases, withheld supply. The ACCC's media release can be viewed here.
Legislative and Other Developments
Several companies agree to pay penalties
Several Australian companies have agreed to pay penalties following infringement notices from the ACCC, as set out below:
- Alex Gow Funerals has paid a penalty of $13,320 as a result of it allegedly falsely representing in invoices to customers that a $400 'Estate Fee' was payable for its services, when it was actually only a late payment fee. The ACCC also alleged that certain provisions of the terms of contract between Alex Gow Funerals and its consumers were unfair (including excessive interest fees for late payment and broad indemnities which were not necessary to protect Alex Gow Funerals' legitimate interest in recovering costs), prompting Alex Gow Funerals to amend those terms. The funeral services sector is a current enforcement and compliance priority for the ACCC. The ACCC media release can be viewed here.
- Bare Cremation has also paid a penalty of $13,320 for allegedly making a false or misleading representation about the price of its cremation services. The prices for certain services were listed as being available "from" a minimum price, but the ACCC alleged that the minimum price was only available in one of the seventeen regions the company operated in, ie. it was not available to the majority of consumers. The ACCC media release can be viewed here.
- The Dairy Farmers Milk Co-operative has paid a penalty of $11,100 as a consequence of failing to publish its standard form milk supply agreements on its website by the deadline specified in the Dairy Code. The agreements have since been published. The ACCC media release can be viewed here.
- Nero Tapware, a bathroom brand, has admitted to likely engaging in resale price maintenance, when it withheld supply of its products from a small independent building supplies retailer after the retailer failed to raise its advertised prices. Nero told the retailer that its prices were too low and that it should not advertise them at a price lower than 15% off the RRP. Nero stopped supplying the retailer when it refused to raise its prices. The conduct was limited to a single retailer, and Nero has provided a court enforceable undertaking to the ACCC. The ACCC media release can be viewed here.
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