The Federal Government is currently considering major reforms across Australian consumer and competition laws that will strengthen consumer and small business protections but create more complex compliance obligations for businesses across all industry sectors.
Here is our summary of the proposed changes.
Widening the Scope of Unfair Contract Terms
The Federal Government is seeking to remove ambiguity in the Australian Consumer Law by expanding the protections to businesses (with up to 100 employees and annual turnovers of less than $10 million) and introducing penalty provisions. As these changes will impact business-to-business transactions and increase the risks associated with using unfair contract terms, 2021 will be the perfect time to review and renew existing standard form agreements.
Definition of Consumer
Consumer guarantees currently apply to goods purchased for personal, domestic, or household use, or other products and services that cost less than $40,000. However, from 1 July 2021 this threshold will more than double to $100,000, providing additional protection for larger product and service transactions. This change will extend the consumer guarantees to an increased number of business-to-business transactions, taking the consumer guarantees into new territory with the potential to impact on large scale goods and services procurement.
Collective Bargaining is Coming
Small businesses can expect a class exemption for collective bargaining to commence in early 2021, allowing them to collectively negotiate with their suppliers. While this will potentially result in reduced costs for small businesses, it has the potential to present serious competition law questions for suppliers of small business networks and franchise systems. This will be particularly so given the intentional and substantial shift in bargaining power in favour of small business.
Franchising Code of Conduct
Following the inquiry into fairness in franchising, the Federal Government is moving forward with changes to the mandatory Franchising Code of Conduct (‘Code’). The proposed changes, including the creation of a new ‘Key Fact Sheet’, additional disclosure obligations, increased cooling off periods, changes to franchisee exits, and new conciliation and arbitration provisions, will be combined with an increase in the maximum penalty for breaching the Code. These changes, slated to enter into force on 1 July 2021, will substantially increase the compliance obligations of franchisors in the short to medium term.
Expanding Data Rights
The Consumer Data Right (‘CDR’) is continuing its path to full implementation across the banking sector while the ACCC is also working to finalise its rollout across the energy sector. The CDR presents consumers with new opportunities to utilise data to better inform themselves of their circumstances while businesses will have the scope to use consumer data to offer new and innovative products. The full potential of the CDR will continue to become clearer during 2021 with reviews and changes to the CDR framework being currently undertaken.
The changes to the Competition and Consumer law sector will impact businesses beyond those that are customer facing or in retail. Contact us now to see how these changes will impact your business and how we can help you be fully prepared.
This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.