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LAW504 Business and Corporations Law For Rights and Obligations

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Write a report on consumer protection and competition of market law in Australia? 

Answer:

Introduction:

In Australia, national law was introduced by government for the purpose of providing regulations and guidance for all businesses to deal with their competitors, suppliers and customers, and it is named as Competition and Consumer Act 2010 (CCA) which was formerly known as Trade Practices Act 1974. This law is introduced for the purpose of ensuring fairness and openness from the businesses while dealing with their competitors and customers.  However, ACL states the provisions related to consumer protection which is defined in the schedule of CCA. Generally, ACL deals with the behavior of businesses while interacting with the consumers, but it also defines the consumer rights and also some specific guarantee rights (ACCC, 2017; ACL, 2017). In this report, we discuss various topics related to CCA, and this report is concluded with brief conclusion.

Enforcement and applicability of legislation:

It must be noted that provisions of CCA related to competition law is enforced by ACCC, and in case business organization fails to comply with the law stated under the ACL or CCA, then it is considered as Breach of law. In maximum situations provisions of CCA or ACL applied on business organizations when they operating in a business such buying or selling of goods and services. For application of the provisions stated under this, actual structure of organization doesn’t matter, and both profit and non-profit organizations are considered as business. It must be noted that if organizations conducting any transactions related to goods and services in exchange of payment then it will be considered as business, and provisions of CCA and ACL are applied on it (ACL, 2017).  

Provisions related to ACL and CCA:

Rights and obligations of Business:

Both CCA and ACL impose number of obligations on business, but it also provide some rights to the business, and in this report some rights and obligations of businesses are discussed below in brief:

It is the duty of business organization that any advertisement or statements published by them must be truthful and accurate, and it also includes impressions made by business by saying or displaying something. However, business cannot mislead the message by relying on small prints or disclaimers.


Law imposed number of obligations on business related to direct marketing such as they cannot contact to their customers on certain day and timings, and provide 10 day cooling-off period.

It is the duty of business not to demand any payment related to goods and services not requested by customers.

It is the duty of business not to engage in any conduct that is of unconscionable nature as compared to those standards of conscience stated by acceptable by community values.

It is the duty of business that they must not harass or coerce their customers.

Business must not collude with their competitors (OECD, 2017).

Numbers of guarantees are created by law for the purpose of trade in commerce, and it is the duty of business to honor these guarantees (ACL, 2017).

Fairness in transactions while dealing with customers is the more important thing for business, and it is necessary that business organizations take special care while dealing with those customers who are disadvantaged or vulnerable. Number of obligations and responsibilities are introduced by ACL for the purpose of ensuring consumer protection. Regulators of ACL have various expectations from businesses such as they comply with the legal obligations while dealing with their disable consumers. In case business takes advantage of their disable costumers then ACL took strict actions against the businesses.

False and misleading advertising:

It is necessary that statements and claims made by business organizations must be accurate and truthful, and it also includes advertisements and statements in media or statements made by sale person on behalf of business. However, it is completely illegal for business to make statements which are not right and making false impressions on their consumers. Therefore, it is necessary that a statement made by business related to their products and services is accurate in nature, and if statements are not accurate and mislead the consumers then penalties and fines are imposed by ACL on business.  Penalties and fines are imposed even though such statements are not intentional.

However, while informing the consumers related to any product or services it is necessary to determine whether statement made by business is making correct impression in the mind of consumers or not. This can be understood through case study stated below:

In 2016, fine of $20400 was paid by the retailer of adjustable beds because while advertising his beds he makes statement that beds had been awarded of the certificate from Therapeutic Goods Administration, but in actual no such certificate was issued by the authority. Brochures issued by person also stated that motors in the bed were manufactured in Germany but in actual it was manufactured in China. This case was the clear case of false and misleading advertisement because business influences the consumers with wrong information (ACCC, 2017; ACCC, 2017).

Guarantees and warrantees:

ACL and CCA provides number of consumer guarantees, and on the basis of these guarantees it is necessary for suppliers and manufacturers to provide basic set of guarantees to consumers as well when they purchase such goods or services. These guarantees state hose situations under which remedy is provided by businesses to the consumers in case their goods and services does not meet certain standards. Guarantees related to consumer applies even though warranty given by supplier or manufacturer related to goods and services is expired, and it is not possible for business to state any term in the contract which allow them to limit consumer guarantee. In other words, if any statement limits the guarantees provided to consumer and misleads them is illegal. 

This can be understood through case study, in 2013 order was passed by Federal Court for the purpose of imposing penalty of $3 million on Hewlett-Packard, a manufacturer and retailer of computer hardware for making statement which misleads the consumers related to their consumer guarantee rights. Such representation states that consumer remedies are completely depends on the discretion of business, and it is necessary for consumers to repair their products multiple times before seeking replacement of the product. These representations made by business clearly mislead the consumers related to their consumer guarantee rights and such practices are prevented by ACL (ACCC, 2017). 

Penalties imposed by ACL and CCA: 

If any provision of ACL or CCA has been breached by the business, then there are number of consequences are there in the form of significant penalties, and these penalties include: 

  • Financial penalties: penalties for beaching the provisions of CCA and ACL are different such as if business breach the provisions of CCA then maximum penalty for corporations is $10 million or 3times of value of benefit obtained by business or 10% of annual turnover of the company in last 12 months. If business breaches the provisions of ACL then maximum penalty for company is $1.1 million for each contravention.
  • Imprisonment: in case of cartel conduct by Business, CCA applies criminal provisions, and 10 year is the maximum period which court can sentence to those who breach the provisions related to criminal cartel.
  • Community service orders: Court can also order that business take a service of benefit to the community which relates to any conduct offending in nature.
  • Adverse Public orders: However, Court can state that business publish any correct advertisement which relates with the offending conduct.
  • Disqualification of officers from managing the corporations: in an appropriate case, Court can state that conduct of individual contravenes the provisions of ACL and CCA because of which individual is disqualified for particular time from managing the corporations (ACCC, 2017).

Conclusion:

After considering all the facts stated above, it is clear that business must follow the provisions stated by government for the purpose of ensuring fair and correct business practices. For this purpose, government introduced national law in Australia which provides guidance to all businesses to deal with their competitors, suppliers and customers, and this guidance are stated under Competition and Consumer Act 2010 (CCA). It must be noted that ACL also define provisions for ensuring the consumer protection, and these provision of ACL are defined under the Schedule of CCA. It is necessary for business to follow these provisions and in case business breach the regulations stated by ACL and CCA then various penalties are there which can be imposed by Court, and for some specific matters individuals can also face imprisonment.  

References:

ACCC. Legislation. Available at: https://www.accc.gov.au/about-us/australian-competition-consumer-commission/legislation#the-competition-and-consumer-act-2010. Accessed on 24th May 2017. 

ACL. A guide to competition and consumer law. Available at: https://www.accc.gov.au/system/files/1102_ACL%20Industry_guide_FA_one_column_web.pdf. Accessed on 24th May 2017. 

OECD. Competition Policy in Australia. Available at: https://www.oecd.org/gov/regulatory-policy/44529918.pdf. Accessed on 24th May 2017. 

ACL. The Australian Consumer Law. Available at: https://consumerlaw.gov.au/. Accessed on 24th May 2017. 

ACL. The Australian Consumer Law, A framework overview. Available at: https://consumerlaw.gov.au/files/2015/06/ACL_framework_overview.pdf. Accessed on 24th May 2017. 

ACCC. False or misleading claims. Available at: https://www.accc.gov.au/consumers/misleading-claims-advertising/false-or-misleading-claims. Accessed on 24th May 2017. 

ACCC. False or misleading statements. Available at: https://www.accc.gov.au/business/advertising-promoting-your-business/false-or-misleading-statements. Accessed on 24th May 2017. 

ACCC. Consumer rights and guaratees. Available at: https://www.accc.gov.au/consumers/consumer-rights-guarantees. Accessed on 24th May 2017. 

ACCC. Fines and penalties. Available at: https://www.accc.gov.au/business/business-rights-protections/fines-penalties. Accessed on 24th May 2017.

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