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Competition and Consumer Commission

Question:

Discuss about the Competition and Consumer Commission.

Answer:

This case is in relation to the breach of section 18 and 29(I) (m) of the Australian Consumer Law which is a part of Schedule 2 of the Australian Competition and Consumer Act 2010 (Cth)[1]. This case has been selected as it demonstrates what conduct can be regarded as a misleading and false conduct and what penalties may the court impose in relation to such conduct on the wrongdoer. This is also a very recent case.

Background

In this case it had been agreed by the respondent (Bunavit Pty Ltd) and applicant (ACCC) that the respondents had indulged in making a few specific oral statements through their employees to consumers and thus had contravened the provisions of section 18 and 29(I)(m) of the Australian Consumer law. In this case the applicant has made a claim from imposition of pecuniary penalties and injunctive and declaratory relief[2].

A single retail outlet had been operated by the respondents in Bundall, Queensland.  The outlet dealt in the sale of electronic goods along with providing after sales services. It indulged in trading with respect to a franchisee agreement with one of  Harvey Norman Holdings Ltd’s subsidiaries.  In this case the respondents had been ordered to a pay a pecuniary penalty which accounted to $52000 for the purpose of contravening the provisions of section 18 and 29(I)(m) of the ACL. The court held that the respondent had indulged in providing a false and misrepresentative statement to the consumers with respect to consumer guarantee rights under the ACL. False and misleading statements had been made by the members of the respondent related to the exclusion, effect and existence of rights and guarantees when they made the following representations to the consumers:

  • The company does not and would not have any liability of providing remedy for goods supplied by it which turns out to be defective goods
  • The warranties in relation to the goods have to be directly pursued by the consumers to the manufacturer and the outlet would not have any responsibility in relation to such warranties.
  • Further assistance would not be provided by the company in relation to repairs unless partial of full payments for such repairs is made the consumers[3]

Proceedings had been initiated by the ACCC in June 2013. In this case statement of agreed facts had been submitted by the parties. The respondent sold a desktop computer to Mr Bates and a laptop to Ms choyce. Problems in relation to the products had been faced by both consumers. The customers had contacted the outlet and had a conversation with sale representatives in relation to their problems and seeking consumer guarantees of “repair, refund or replacement”. The products had serious problems which restricted the proper use of such products. Repeated denial had been made by the sale representatives that they did not have any obligations of providing consumer guarantees to the consumers.

Contraventions alleged by the ACCC

Allegations had been made by the ACCC that section 18 and 29 of the ACL had been breached by the company. According to the provisions of section 18 of the ACL

A person is it natural or artificial is prohibited in the course of trade or commerce to indulge in a misleading or deceptive act or an act which may likely mislead or deceive a consumer[4].

The application of this section is not limited by anything in part 3-1 of the ACL.

Further it has been provided through the provisions of section 29(I) of the ACL that any person in relation to supply or possible goods supply in trade or commerce must not provide a statement which is misleading or false in relation to the effect, existence or exclusions of a warranty, right, remedy or condition[5] . This also includes a guarantee under Division 1 of Part 3-2.

There may be a elusive difference between a false and misleading conduct or a misleading and deceptive conduct. The court in this case it had been stated by the judge that a breach of section 29 of the Act would also constitute a breach of section 18 of the Act[6]. In relation to all of the three statements made to the consumers as discussed above it has been agreed by the parties to the case that the company had no obligation to provide remedy for the supply of defective goods. However in reality under the ACL the outlet had the obligation provide remedies to the both the consumers in context of this case. Agreements in relation to such facts have been made by the parties. It has also been agreed by the parties that such statements were of a false and misleading nature as the company would have the obligation of providing the remedy in a few specific situations, such obligations were possibly present in relation to the complaint made by Mr Bates.

In this case it had been found by the court that where bread denials of liability are made by the supplier it may lead to a misleading conduct in relation to the rights of the consumers. Even in situation where the conduct does not have the above effect, the consumers may be lead towards concluding that too much trouble will be involved in the persistence will little assurance of satisfaction. In addition considerable difficulties may result out of the above discussed approaches between retailers and consumers in daily dealings. This would further lead to unjustified claims from time to time in relation to repair, replacement or refund. The approach may subject the retailer to unfair liability in unjustified claims.  In this case it had been claimed that every statement made by the respondent was a contravention of s 29(1)(m) of the ACL. Thus a false and misleading statement includes a statement in relation to the effect, existence or exclusions of a warranty, right, remedy or condition. He court found that in relation to the agreed facts all but one statement is to be considered under Parts 5-4 and 3‑2 of the ACL as misleading.

In the case the court found that the respondent company had made ten representation in relation to the supply or possible supply of goods and services which are to be considered as false and misleading and also concern the effect, existence or exclusions of a warranty, right, remedy or condition as a breach of section 29(1)(m) of the ACL. Further it was stated by the court that in breaching the provisions of s 29(1)(m) of the ACL the company also violated the provisions of section  18 of the ACL in relation to a conduct which is misleading or deceptive or is likely to mislead or deceive[7].

The court allowed the claim form declaration made by the ACCC under s 21 of the Federal Court of Australia Act 1976 (Cth). However the court did not grant the injunctive relief to the ACCC. The primary reason for which such interlocutory injunction are provided is to only impose a prevention on conduct which is unlawful in nature and has violated the rights of a person. In relation to this issue the reasoning provided through the case of Australian Competition and Consumer Commission v Artorios Ink Co Pty Ltd (No 2) [2013] FCA 1292 had been used by the court. In this case it had been stated by the court that where the claimed injunction is very wide in nature with reference to the relevant law and impugned past conduct it cannot be enforced due to its vague nature[8]. As the court came to the correct finding that such was not the case with the respondent company it denied the ACCC any Injunction.

In relation to pecuniary penalties the court had the power to do so in section 224(I) of the ACL. The section provides that the where a provision of part 3-I has been contravened a pecuniary penalty may be imposed by the courts as it deems appropriate. The court rightly referred to the case of Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030 where the circumstances to be considered to deciding the penalty was provided[9]. Thus the court considered the size of the company and the nature of the contravention to impose a penalty worth $52000.

One of the primary implications of this case in relation to consumer law is that the court will not base their decision on the agreement which had been reached between the parties in relation to contravention of law. the court in this case found that one of the instances agreed by the party did not constitute a misleading and deceptive conduct.

Another important implication which has been provided through this case is that the a breach of section 29 of the Act would also constitute a breach of section 18 of the Act in spite of any elusive difference between a false and misleading conduct or a misleading and deceptive conduct.

References

Australian Competition and Consumer Commission v AGL Sales Pty Ltd [2013] FCA 1030

Australian Competition and Consumer Commission v Artorios Ink Co Pty Ltd (No 2) [2013] FCA 1292

Australian Competition and Consumer Commission v Bunavit Pty Ltd [2016] FCA 6 at

Australian Consumer Law 2010 (Cth)

Australian Consumer Law 2010 (Cth)

The Australian Competition and Consumer Act 2010 (Cth)

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