Australia to increase its maximum competition & consumer law penalties

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Maximum penalties for competition and consumer law breaches by companies and individuals are set to increase in Australia following the passing of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. This will place Australia's penalties more in line with other jurisdictions, making it even more important for companies to ensure that their competition compliance systems in Australia are up to date and that Australia is factored into their global risk assessments. 

The new maximum penalties

On 27 October 2022, the Australian Senate passed the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 (the "Bill"). The Bill gives effect to the new Labor Government's election promise to increase the maximum penalties for breaches of the Competition & Consumer Act 2010 ("CCA") by both companies and individuals. The Bill also makes unfair contract terms in consumer and small business contracts illegal.

The new maximum penalties for contraventions of the CCA will be:

1. For companies: the greater of:

  • $50 million (up from $10 million);
  • 3 x the value of the benefit obtained, if that can be determined;
  • If the value of the benefit cannot be determined, 30% of adjusted turnover during the breach period (ie over the period the breach occurred, with a minimum of 12 months) (up from 10% of annual turnover in the 12 months prior to the breach.

2. For individuals: $2.5 million (up from $500,000).

The new maximum penalties will come into force one day after receiving Royal Assent, which typically occurs in the weeks after a bill has been passed. The changes to the unfair contract terms provisions will come into effect 12 months after Royal Assent to allow businesses time to update their contracts.

What this means for you

The new maximum penalties apply both to contraventions of the competition provision in the CCA and to the consumer law provisions. Australian penalties have traditionally been viewed as low compared to other jurisdictions and the changes bring the penalties more in line with those overseas. 

While the Courts will continue to take into account a range of factors when determining penalties designed to deter anticompetitive conduct, there has been a trend towards higher penalties in recent years and we do expect to see higher penalties as a result of the increased maximums. 

The increased maximum penalties may well change the risk appetite for businesses in respect of competition and consumer issues in Australia and are a good reminder of the importance of ensuring adequate and defendable competition law compliance procedures are in place, as well as to monitor contracts for unfair terms. In particular, the five fold increase in penalties for individuals (including directors and executives who are 'knowingly concerned' in the conduct of a company) is something that individuals should be aware of.

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2022 White & Case LLP

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