INTRODUCTION Fair trading consumer protection and competition trade

INTRODUCTION Fair trading, consumer protection and competition (trade practices) legislation Power to make these laws • What do these terms mean? • How are they relevant to the information age? • What are the main laws (Statutes/Acts) - Trade Practices Act 1974 (Commonwealth) - Fair Trading Acts (States and Territories) • Why have Commonwealth AND State Acts? • Telecommunications specific legislation •

Fair Trading Acts n Fair trading legislation in all States and Territories have a common purpose to make uniform laws that strengthen consumer protection laws and mirror the consumer protection provisions of the TPA. n Fair Trading legislation empowers the Governor in Council to make regulations generally for the purpose of the Act. n Ministers and Commissioners also have specific powers under the Acts (e. g in NSW and WA, Ministers have powers with regard to Codes of Practice; Commissioners in approving Codes of Practice, product safety declarations etc. )

Why have Federal and State Acts? n State Acts are directed at ‘persons’ not ‘corporations’ n Cross-vesting legislation: Jurisdiction of Courts (Cross Vesting Act) 1987 and mirror legislation in each State/Territory. n State Commissioners have better resources, more political pressure to act to protect the interest of consumers (at times), and the role of ‘consumer protection’ is more appropriate to a State Commissioner than a Federal office, especially when there are local issues. n State legislation promotes declaration of Codes of Practice as a form of self regulation.

Background to the Trade Practices Act n TPA covers an area of law in which legal and economic principles intersect n Object of the Act is in section 2 n TPA relates to ‘conduct’ by corporations whose business activities cross State boundaries and commercial activities of the Commonwealth (section 2 A) and States and Territories (section 2 B). n Extended application of the TPA to conduct/corp outside Australia (to other jurisdictions including cyberspace) n Private actions in the Federal Court and State/Territory Supreme Courts for Part IVA, V, IVB and VA. Remedies are damages, injunctions (not for mergers), orders. n ACCC actions in Federal Court seeking monetary penalties, injunctions and other orders (e. g corrective advertising). Class Actions (s 87[1 B]). n Time limits apply – for Parts IV, IVA, IVB, and V 6 years after the cause of action has accrued. For Part VA and Part V (Div 2 A) three years. As injunctions are discretionary no time limit applies

Part IVA – Unconscionable Conduct n TPA prohibits ‘unconscionable conduct’ in commercial dealings (ss 51 AA and 51 AC) and consumer transactions (s 51 AB). Section 51 AA is the catch all. Section 51 AC is limited to transactions up to $3 million. n ‘Unconscionable conduct’ not defined in the Act. Section 51 AC lists factors which may be taken into account. n Penalties amended in 2001 to include probation and community service orders, corrective ads etc. n Definition/concept of ‘unconscionable’ n Weighing up the conduct – ‘special disability’ of one party resulting in an absence of equality that is exploited by the other party in a manner which is unconscionable. - Lux vacuum cleaner salesperson (door to door); - One. Tel and Primus slamming case (door to door); - Pre-paid mobile phone cards (products and distributorships/franchises) - Contractual terms and conditions (the inability of the consumer to understand the documentation signed AND contractual non-disclosure).

Part IV – Anti competitive conduct n Price Fixing s 45 A n Market sharing s 45 n Exclusionary Provisions ss 45 and 4 D n Anti competitive agreements s 45 with SLC n Exclusive dealing s 47 n Third Line Forcing s 47(6) n Resale Price Maintenance ss 48, 96 100 n Misuse of Market Power s 46

Part IV – Anti competitive conduct n Mergers and Acquisitions ss 50, 50 A Factors to take into account in evaluating the effect or likely effect of a particular acquisition: Ø Ø Ø Ø Ø The actual or potential level of import competition in the market; The height of barriers to entry to the market; The level of concentration in the market; The degree of countervailing power in the market; The likelihood the acquisition would result in increased in prices or profit margins; The extent to which substitutes are available in the market; The dynamic characteristics of the market (growth, innovation, product differentiation); The likelihood the acquisition would result in the removal of a vigorous competitor; and The nature and extent of vertical integration of the market.

Media mergers and s 50 n Traditional approach to media mergers: television, radio and newspaper separate mkts n Media markets could be defined by content: classified advertising, employment advertising n Impact of convergence and technological developments on media market dynamics and merger definition

When is anti competitive conduct likely to arise: n n n in dealings with competitors; in dealings with suppliers and purchasers; when a company has a substantial of economic power in a market. Maximum penalties for breaches are $10 million for companies and $500, 000 for individuals. Other actions which may follow a breach are injunctions, payments of damages, divesture of assets illegally acquired, cancellation and variation of contract, orders to complete a contract, and the provision of repairs or spare parts

Part V – Consumer Protection n Misleading or deceptive conduct ss 51 A, 52 65 A (including misleading/false representations, harassment & coercion, scams, pyramid schemes etc. ) n Product safety and product information ss 65 B 65 T (labelling, standards, bans and recalls) n Country of origin claims ss 65 AA 65 AN (logos and ‘product of’ tests); n Conditions and warranties in consumer transactions ss 66 74 (including rights against manufacturers or importers (ss 74 A-74 L) and professional services by engineers). Penalties of $1. 1 million for corporations and $220, 000 for individuals. Also injunctions, damages, orders, etc.

Part V Division 1: Unfair Practices n n n General prohibition against misleading or deceptive conduct or conduct likely to mislead or deceive (including representations made in advertising, contractual promises, telemarketing, customers services, etc. ) S 51 A – representations about the happening of future events without reasonable grounds; S 53 – false or misleading information; S 53 C – not specifying the full cash price (e. g Mobile phone and contract price) S 54 – falsely offering prizes or other free items

Part V Division 1: Unfair Practices n n n n S 55, 55 A – misleading the public as to the nature or characteristics of goods and services, the suitability for their purpose or quantity of services S 56 - bait advertising S 57 – referral selling (rebate/commission/benefit for suggesting other customers) S 58 – accepting payment without intending to supply S 60 - harassment or coercion S 64, 65 – unsolicited goods or services Publisher of misleading advertising exempt (s 65 A) as a ‘prescribed information provider’.

Examples of Part V Conduct Mirror Opera House website n Misleading Telco Claims n Danoz’s Abtronic n Internet Name Protection Pty Ltd n Domain Names Australia Pty Ltd n

Part VA Liability of Manufacturers and importers for defective goods n Ss 75 AA 75 AS – Gives individuals additional rights (to those existing before 9 July 1992) and imposes new obligations on manufacturers (includes importers). n A person who is injured or whose property is damaged by a defective product will have a right to compensation against the manufacturer of the product (e. g faulty modems and equipment in self-install packs)

Part VC – Offences n n n Effective 15 December 2001; Part VC establishes a separate criminal consumer protection regime within the TPA applying to criminal unfair practices and product safety provisions. Defences such as mistake and relying on information of a third party etc, Part VI – Enforcement and Remedies n Ss 75 B-87 CA – includes provisions catching persons aiding, abetting, counselling or procuring an offence. Also those ‘knowingly concerned’.

Part XIC and XIB TPA n Telecommunications specific sections of the TPA introduced in 1997 along with a new Telecommunications Act. n Specific access provisions for telecommunications networks separate from Part IIIA essential facilities access regime in TPA n Competition notice regime to deal with anticompetitive conduct in telecommunications markets

Emerging regulatory issues in telecommunications Telstra’s High Court challenge of ACCC regulation n 3 G Mobile coverage n Mobile termination costs n Broadband services n

Questions/Discussion