Bills Digest No. 28, 2022–23

PDF Version [547KB]

Jaan Murphy
Law and Bills Digest Section
24 October 2022

Key points The Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 (the Bill) aims to: deter anti-competitive behaviour by increasing existing penalties, as recommended by a 2018 Organisation for Economic Co-operation and Development (OECD) report which found that the average and maximum penalties in Australia for anti-competitive conduct are, in practice, substantially lower than those in comparable international jurisdictions such as the United Kingdom, United States and European Union and strengthen and clarify the existing unfair contract terms regimes to reduce the prevalence of unfair contract terms in consumer and small business standard form contracts.

Contents

Purpose of the Bill
Structure of the Bill
Background to the measures
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions: increase to penalties
Key issues and provisions: reforms to unfair contract term protections
Background to origin of current unfair contract term protections
Appendix : increases to penalties under the CCA and ALC

 

Date introduced:  28 September 2022
House:  House of Representatives
Portfolio:  Treasury
Commencement: Schedule 1 commences the day after the Royal Assent. Schedule 2 commences 12 months after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at October 2022.

 

Purpose of the Bill

The purpose of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 (the Bill) is to:

• amend the Competition and Consumer Act 2010 (CCA), including the Australian Consumer Law (ACL), to increase the maximum penalty applicable to certain breaches of competition and consumer law to ensure that the price of misconduct is high enough to deter anti-competitive behaviour and unfair activity, and to ensure consumers retain a robust level of protection
• amend the CCA, including the ACL, and the Australian Securities and Investments Commission Act 2001 (the ASIC Act) to:
• strengthen and clarify the existing unfair contract terms (UCT) regime to reduce the prevalence of unfair contract terms in consumer and small business standard form contracts
• introduce a civil penalty regime prohibiting the use of and reliance on UCTs in standard form contracts
• expand the class of contracts that are covered by the UCT provisions[1] and
• clarify the power of courts to make orders to void, vary or refuse to enforce part, or all, of a contract containing UCTs.

Structure of the Bill

The Bill has two Schedules. Schedule 1 deals with increasing the maximum penalty applicable to certain breaches of competition and consumer law. Schedule 2 deals with the proposed changes to the UCT regime.

Background to the measures

As the Bill deals with several separate measures, a brief background in relation to each measure is provided separately under the relevant Key Issues and Provisions heading.

Committee consideration

The Bill has not been referred to any committee for inquiry and report.

Senate Standing Committee for the Scrutiny of Bills

At the time of writing the Senate Standing Committee for the Scrutiny of Bills had not considered the Bill.

Policy position of non-government parties/independents

The position of non-government parties and independents on the precise measures contained in the Bill could not be determined at the time of writing.

Position of major interest groups

Where the position of major interest groups and stakeholders on precise measures contained in the Bill could be determined it is discussed in the Key Issues and Provisions sections of this Digest.

Financial implications

According to the Explanatory Memorandum the measures would have the following financial impacts on the Commonwealth (all figures in $m):

Table 1:     Financial impact of measures contained in the Bill

Schedule	2022–23	2023–24	2024–25	2025–26	Total
Schedule 1	-	-	7.2	55.4	62.6[2]
Schedule 2	Nil[3]

Source: as per footnotes in table above.

The Explanatory Memorandum also noted that the increase to penalties in Schedule 1 of the Bill ‘is also estimated to have a positive impact on the underlying cash balance of $117.5 million in 2026–27, and an ongoing positive impact’.[4]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[5]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights (PJCHR) expressed concern about the increased penalties proposed by the Bill, stating that whilst increasing the maximum penalty for contravention of civil penalty provisions in competition and consumer law is an ‘important measure to deter serious misconduct and protect consumers against egregious conduct’:

… noting the substantial pecuniary sanctions of up to $2.5 million that would apply to individuals, there is a risk that the penalties may be so severe as to constitute a 'criminal' sanction under international human rights law. If the penalties were considered to be 'criminal', the committee notes that this does not mean the relevant conduct must be classified as a criminal offence or that the civil penalty is illegitimate. Rather, it must be shown that the provisions are consistent with the criminal process guarantees set out in article 14 of the International Covenant on Civil and Political Rights.

The committee notes the related legislative scheme applies a civil standard of proof and in certain circumstances allows a person to be subject to civil and criminal proceedings for substantially the same conduct. In light of this, the committee considers that, depending on the severity of the pecuniary penalty applied and whether a person is also subject to criminal proceedings, there may be a risk that the increased civil penalty provisions are not consistent with the criminal process guarantees.[6]

As a result of the above concerns, the PJCHR recommended that ‘consideration should be given to applying a higher standard of proof in the related civil penalty proceedings’.[7]

Key issues and provisions: increase to penalties

Schedule 1 will amend the ASIC Act, CCA and ACL (which is set out in Schedule 2 to the CCA) to increase the maximum penalty applicable to certain breaches of competition and consumer law.

Background to the increased maximum penalties for anti-competitive conduct

In 2018, the Organisation for Economic Co-operation and Development (OECD) report Pecuniary Penalties for Competition Law Infringements in Australia found that the average and maximum competition penalties in Australia are, in practice, substantially lower than those in comparable international jurisdictions such as the United Kingdom, United States and European Union. In that regard the OECD noted:

… the amount of pecuniary penalties imposed for competition law infringements in Australia is significantly lower, in both absolute and relative terms, than the amounts imposed in other OECD jurisdictions, particularly as regards large companies or conduct that lasted for a long period of time. This is despite pecuniary penalties in Australia and all reviewed jurisdictions: (i) ostensibly pursuing the same objective, deterrence; (ii) being set by reference to similar criteria – i.e. the corporation’s turnover or the illicit commercial gains obtained through the anticompetitive conduct; and (iii) relying on a broadly similar list of mitigating and aggravating factors when determining the final amount of a pecuniary penalty … This disparity in the amount of pecuniary penalties imposed in Australia and elsewhere has the potential to limit the effective deterrence of sanctions against competition law infringements in Australia.[8] [emphasis added]

The Government’s ‘Better Competition’ election platform promised to ‘tackl[e] anti-competitive behaviour’ by increasing penalties and establish a new ‘Super Complaint’ function at the Australian Competition and Consumer Commission (ACCC).[9]

On 18 August 2022, the Commonwealth Government released Exposure Draft legislation dealing with the first of those commitments: proposing to increase the maximum financial penalties for breaches of competition and consumer law. Schedule 1 of the Bill does not differ in substance or operation from the Exposure Draft.

Historical context to proposed amendments

Less than five years ago, penalties for contraventions of the consumer law were increased.[10] If the changes proposed by the Bill are enacted, the maximum penalty for contraventions of various ACL and CCA provisions will have increased by a factor of almost 50 times over a 5-year period (from a maximum penalty of $1.1 million pre-September 2018 to a proposed maximum penalty of $50 million).

However, as mentioned above, the OCED has noted the relatively low maximum penalties applicable under Australia’s regime. For example:

• In European countries, companies breaching competition laws can be penalised up to 10% of global turnover for the entire corporate group in the prior year.
• In the United States (US), individuals can be penalised up to the greater of USD 1 million, or twice the gross pecuniary gains the offenders derived from the crime; and companies can be penalised up to:
• USD100 million per offence; or
• twice the pecuniary gains derived from the criminal conduct, or twice the pecuniary loss caused to the victims of the crime per offence and
• In the United Kingdom (UK), companies can be penalised up to 10% of total world-wide turnover during the last business year, whilst individuals can be penalised up to GBP 5,000 by a Magistrate’s Court, with no limit to a penalty imposed by a Crown Court.[11]

Increased penalties

 The increases proposed by the Bill would operate so that the maximum penalty for companies for a relevant contravention of the CCA or ACL would be raised to the greater of:

• $50 million; or
• three times the value of the benefit obtained; or
• 30% of the company’s adjusted turnover during the breach turnover period for the offence.

For individuals, the proposed maximum penalty would be raised to $2.5 million.[12]

The adjusted turnover of a body corporate is defined as the sum of the value of all the supplies that the body corporate (and any related body corporate) has made or is likely to have made during the breach turnover period, with some exceptions (such as supplies made between related body corporates).[13]

The breach turnover period is defined so that it will generally begin at the start of the month in which the contravention, act or omission occurred, or began occurring, and end at the end of the month in which the body corporate ceased the contravention, act or omission.[14] However, as noted in the Explanatory Memorandum the definition operates so that the minimum breach turnover period will generally be the duration of the breach, but 12 months is the minimum period over which the penalty is calculated.[15] The Explanatory Memorandum further notes:

The 2018 OECD report on Pecuniary Penalties for Competition Law Infringements in Australia found that Australia does not generally take into account the length of a contravention in competition law, as opposed to penalties in comparable jurisdictions, which often increase with time. The introduction of the breach turnover period would link the quantum of a penalty imposed … to the economic impact of the sanctioned body corporate’s conduct or to the damage caused by its conduct over the relevant period of time.[16]

Increases for penalties for anti-competitive conduct in the telecommunication industry

The exception to the above are the penalties related to breaches of Part XIB of the CCA, which contains specific prohibitions against anti-competitive conduct in the telecommunications industry. The Explanatory Memorandum notes:

The telecommunications market has a number of unique characteristics that increase the risk of anti-competitive conduct compared to other industries … The existing penalties for [engaging in anti-competitive conduct] may not provide an effective deterrent because it is open to larger providers in the telecommunications industry to weigh the potential benefit in the market of breaching the competition rule against the possible size of the financial penalty, and to knowingly take action in breach of the competition rule. The amendments impose larger maximum penalties for breach of the competition rule to provide a stronger deterrent against anti-competitive conduct.[17]

Reflecting the above, the Bill imposes separate increases to the penalties applicable to anti-competitive conduct in the telecommunications by increasing the penalty to the greatest of:

• if the contravention continued for 21 days or fewer—the sum of $50 million and $1 million for each day that the contravention continued
• if the contravention continued for more than 21 days—the sum of $71 million and $3 million for each day in excess of 21 that the contravention continued
• if the court can determine the value of the benefit that the body corporate, and any body corporate related to the body corporate, have obtained directly or indirectly and that is reasonably attributable to the contravention—three times the value of that benefit; and
• if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the contravention.[18]

For individuals, the proposed maximum penalty would be raised to $2.5 million.[19]

The tables in the Appendix to this digest compare what is proposed by Schedule 1 of the Bill, and what currently exists in the CCA and ACL in relation to the specific offences captured by the Bill.

Views of stakeholders

At the time of writing this Bills Digest, submissions to the Exposure Draft legislation about increasing the maximum penalties for breaches of competition and consumer law had not been made publicly available. That being the case, little in the way of stakeholder reactions or commentary on the measures in Schedule 1 of the Bill could be located.

However, the Australian Small Business and Family Enterprise Ombudsman indicated its support for the Bill. It has been reported that whilst consumer advocacy group CHOICE also supports the Bill, it argues that the Bill ‘doesn’t go far enough’ and ‘all protections in the Australian Consumer Law should have penalties attached’.

Key issues and provisions: reforms to unfair contract term protections

Schedule 2 will amend the UCT regime in the CCA, ACL and ASIC Act with the aim of reducing the prevalence of unfair contract terms in consumer and small business standard form contracts.

In substance, Schedule 2 is in equivalent terms to Schedule 4 of the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022 (the Previous Bill) which lapsed at the end of the 46th Parliament, with the exception of the quantum of relevant penalties.

Background to origin of current unfair contract term protections

In 2008, the Productivity Commission (PC) undertook a review of Australia’s Consumer Policy Framework which included amongst other things, the use of unfair contract terms (UCTs) and their effect on consumers.[20] The first form of Commonwealth UCT protections were enacted in July 2010.[21] Currently:

• ACL provisions address UCTs in relation to goods, services and the sale or grant of an interest in land[22] and
• the equivalent ASIC Act UCTs provisions address UCTs for financial products and services.[23]

Since the introduction of UCT Commonwealth legislation in 2010 further developments have occurred in this policy space, including extending the UCT regime to certain standard form small business contracts.[24] The Explanatory Memorandum provides further details as to previous developments related to the UCT regime on pages 26 and 27.

Standard form contracts

Standard form contracts are commonly used by businesses as they save time and are cost-effective. However, consumers and small businesses often lack the resources and bargaining power to effectively negotiate terms in standard form contracts.

This is where the UCT regimes step in. The current UCT regime applies to unfair terms in a standard form consumer or small business contracts, as explained below.

Productivity Commission Review

As noted above, in 2008, the PC reviewed the use of UCTs and their effect on consumers.[25] According to the Productivity Commission:

Unfair contract terms are those that disadvantage one party but that are not reasonably necessary to protect the legitimate interests of the other. Examples of such ‘unfair’ terms include reserving the right to vary the contract at any time for any reason, or removing liability for interruptions in supply, which may have the effect of inefficiently shifting risk from suppliers to consumers …

The biggest concerns arise for standard-form contracts—typically used in the supply of a broad range of services including air travel, telecommunications, energy, consumer credit, car hire, holiday packages, home improvements and software sales. Such non-negotiated contracts have advantages for consumers—in particular, in competitive markets, lower business costs will be passed on to consumers as lower prices. But, by their nature, these contract terms are offered on a ‘take-it-or-leave-it’ basis, are often complex and apparently mostly not read. The concern is that businesses sometimes use unfair terms against consumers and the public interest generally.[26]

Subsequently, the Government enacted the ACL to establish the UCT regime.[27] The ASIC Act contains UCT provisions which are in broadly equivalent terms except that they apply to financial products or to a contract for the supply, or possible supply, of services that are financial services.[28] Initially the UCT regime applied only to business-to-consumer contracts. Later amendments extended the UCT regime to certain small business contracts.[29]

The UCT regime was further extended by the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020, Schedule 1 to which commenced on 5 April 2021.[30] This extended the UCT protections under the ASIC Act to insurance contracts and in doing so, addressed Recommendation 4.7 – application of UCT provisions to insurance contracts – of the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. ^[31]

How the unfair contract terms regime operates

A term of a consumer or small business contract[32] is void if the term is unfair[33] and the contract is a standard form contract.[34]

What is an unfair contract term?

The existing UCT protections operate only if a term of the contract is unfair. Currently a contract term is unfair where:

• it would cause a significant imbalance in the parties’ rights and obligations arising under the contract
• is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term and
• would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.[35]

In deciding whether a contract is unfair a court must take into account the transparency of the term—that is, whether it is expressed in reasonably plain language, is legible, is presented clearly and is readily available to any party affected by the term.[36] The ASIC Act UCT regime was recently considered by the Federal Court in Australian Securities and Investments Commission v Bank of Queensland Limited [2021] FCA 957. The case provides useful guidance on some types of contract terms that are likely to be considered unfair under both the ASIC Act and ACL UCT regimes. Examples of unfair contract terms captured by the ASIC Act UCT regime include:

• unilateral variation terms
• automatic renewal terms
• unreasonable termination and payment terms
• excessive exit fees; and
• unilateral price increases.[37]

These types of provisions are commonly used in commercial contracts. The exceptions to the unfair contract term provisions are excluded terms, that is, terms that:

• define the main subject matter of the contract
• set the upfront price payable under the contract or
• are required, or expressly permitted, by a law of the Commonwealth, a state or a territory.[38]

The upfront price payable is the amount that is provided for the supply or sale under the contract. It is disclosed at, or before, the contract is entered into. It does not include any other consideration that is contingent on the occurrence or non-occurrence of a particular event.[39]

What is a standard form contract?

The existing UCT protections operate only if both the contract term is unfair and the contract is a standard form contract.

If a party to a proceeding alleges that a contract is a standard form contract, it is presumed to be a standard form contract unless another party to the proceeding proves otherwise.[40]

The common understanding of a standard form contract is a ‘contract that is not individually negotiated by the parties but contains the same terms for all transactions of that type’.[41] Whilst the relevant Acts do not define what a standard form contract is, they provide a number of matters which a court may take into account in determining whether a contract is a standard form contract.[42] Those include:

• whether one of the parties has all or most of the bargaining power relating to the transaction
• whether the contract was prepared by one party before any discussion relating to the transaction occurred between the parties
• whether another party was, in effect, required either to accept or reject the terms of the contract (other than the excluded terms) in the form in which they were presented (on a ‘take it or leave it’ basis)
• whether another party was given an effective opportunity to negotiate the terms of the contract (other than the excluded terms)
• whether the terms of the contract (other than the excluded terms) take into account the specific characteristics of another party or the particular transaction (as opposed to a ‘one size fits all’ approach) and
• any other matter prescribed by the Regulations (none are currently prescribed).[43]

These factors share a common theme: one party imposes the terms of the contract on the other party, with no genuine negotiation taking place.

Summary of proposed changes

The Bill will:

• expand the coverage of small businesses by the UCT regimes by increasing the small business definition thresholds and removing contract value threshold for contracts under the ACL and raising the value threshold for contracts regulated by the ASIC Act
• clarify and strengthen the UCT provisions generally by:
• ensuring that repeat usage of a contract must be taken into account by a court when determining whether a contract is a standard form contract
• clarifying that a contract may still be a standard form contract despite there being an opportunity for a party to negotiate changes that are minor or insubstantial in effect or select a term from a range of options determined by another party
• ensuring remedies for non-party consumers are also applicable to non-party small businesses and
• exempting certain categories of contracts from the UCT regime including certain life insurance contracts and operating rules of licensed clearing and settlement facilities
• strengthen the remedies and enforcement of the regime by:
• prohibiting the proposal of, use of, application of, or reliance on, UCTs in a standard form consumer or small business contract
• creating new civil penalty provisions for breaches of the prohibitions
• clarifying the powers of a court to make orders to void, vary or refuse to enforce part, or all, of a contract (or collateral arrangement)
• making clear a court’s power to make orders that apply to any existing consumer or small business standard form contract (whether or not that contract is put before the court) that contains an UCT that is the same or substantially similar to a term the court has declared to be an UCT and
• making clear a court’s power to issue injunctions against a respondent with respect to existing or future consumer or small business standard form contracts entered into by a respondent, containing a term that is the same or is substantially the same as a term the court has declared to be an UCT.

Expanding types of small businesses protected by the UCT regimes

Currently the UCT protections in the ACL and ASIC Act apply where one party to a contract is a business that:

• employs fewer than 20 persons and
• the upfront price payable under the contract does not:
• exceed $300,000 or
• where the contract has a duration of more than 12 month, does not exceed $1 million.[44]

The Bill would amend the ACL and ASIC Act in different ways, resulting in new and different thresholds under each law.

Changes to small business coverage under the Australian Consumer Law UCT regime

The Bill would amend the ACL by removing the upfront contract value threshold and replacing it with two new thresholds. This means that the UCT protections in the ACL would apply where one party to a contact is a business that:

• employs fewer than 100 persons or
• had a turnover for the last income year of less than $10 million.[45]

Changes to small business coverage under the ASIC Act UCT regime

In contrast to the changes to the ACL coverage of small businesses, the UCT protections in relation to small businesses and financial contracts under the ASIC Act would apply where the upfront price payable under the contract does not exceed $5,000,000 and one party to the contract is a business that:

• employs fewer than 100 persons and/or
• has a turnover for the last income year of less than $10 million.[46]

The effect of these changes will be to expand the number of small businesses captured by the ACL and ASIC Act UCT regimes.

Changes to how employees are counted under both UCT regimes

The Bill clarifies how the number of employees is to be counted under both the ACL and ASIC Act by providing that:

• part-time employees are counted as an appropriate fraction of a full-time equivalent employee (rather than the current ‘head count only’ approach) and
• casual employees are not to be counted unless they are employed by the business on a regular and systematic basis.[47]

Changes to UCT provisions

The Bill makes a number of changes to the UCT provisions in the ACL and ASIC Act with the aim of clarifying and strengthening the UCT regimes generally.

Changes to determining if a contract is a standard form contract

Currently, when determining whether a contract is a standard form contract, a court must take into account the various matters noted earlier in this Digest. The Bill provides that when determining if a contract is a standard form contract a court must take into account whether one of the parties has used the same or a similar contract before.[48]

The Bill specifically provides that a contract can be determined to be a standard form contract despite there being an opportunity for a party:

• to negotiate changes that are minor or insubstantial in effect
• to select a term from a range of options determined by another party
• to another contract or proposed contract to negotiate terms of the other contract or proposed contract.[49]

The Explanatory Memorandum notes that the last dot point:

… clarifies that even if a subset of consumers or small businesses are able to negotiate the terms of a contract that is issued to a broader group of consumers or small businesses, the contract may still be a standard form contract.[50]

Expanding remedies for non-parties to a contract

Currently the UCT regimes allow a court to make orders that would redress, in whole or in part, loss or damage to non-party consumers arising out of a term in a contract which has been declared to be an unfair term or a prohibited term.[51] A non-party consumer is currently defined as a person who is not, or has not been, a party to an enforcement proceeding in relation to the conduct.[52]

As that definition currently includes the word ‘consumer’, it appears arguable that only applies to consumers, but not to businesses, despite the UCT regimes being applicable to both.[53]

The Bill replaces the definition of non-party consumer with the concept of ‘non-party’.[54] The effect of this change is to put beyond doubt that the remedies for a breach of the UCT provisions are available to all non-parties, regardless of whether they are consumers or small businesses.

Exempting certain categories of contracts from the UCT regime

Currently both UCT regimes exclude:

• contract terms that are required or expressly permitted by a law of the Commonwealth, a state or territory[55]
• constitutions of companies, managed investment schemes or similar bodies[56] and
• small business contracts to which a prescribed law of the Commonwealth, a state or a territory applies.[57]

In addition to the above, the ACL UCT regime excludes other forms of contracts such as marine salvage contracts and certain sea carriage contracts[58] and the ASIC Act UCT regime excludes other forms of contracts such as:

• medical indemnity insurance contracts[59] and
• certain terms of insurance contracts.[60]

The Bill expands the types of contacts excluded by the UCT regimes.

Contracts with mandated minimum standards

The Explanatory Memorandum notes that the existing UCT regimes do not explicitly exempt terms that are read into a contract by the operation of a law of the Commonwealth, a state or a territory, and notes:

In some cases, a law only requires or reads terms into a contract on a contingent basis; that is, it only requires certain contract terms be included in a contract if other types of terms have already been included in that contract.[61]

The Bill provides that all such terms are exempt of the UCT regimes.[62] The Explanatory Memorandum provides the following example to illustrate the operation of the proposed changes:

Ajay’s Phone Company (Ajay Co.) is seeking to rent a retail property from Sharon’s Building Management Co (Sharon Co.) located inside building A. As part of the lease agreement, Sharon Co. has included a term allowing them to terminate the lease if they want to demolish or renovate the building the relevant retail property is located in.

Under the relevant State law, where a term is included in a contract for a termination of a retail lease on the grounds of the proposed demolition or renovation of the building in which the retail property is located, the lease is taken to include other terms setting out how a person must notify or compensate a tenant as a result of the termination.

The term allowing Sharon Co. to terminate the lease agreement is exempt from the unfair contract terms protections because it results in one or more other terms being included in the contract by operation of a law of a State. The terms about notice and compensation are exempt from the unfair contract terms provisions as they have been included in the contract, or are taken to be so included, because of a law of a State.[63]

The Explanatory Memorandum notes that the effect of the amendments will be that the UCT regimes do not cover terms that other laws require parties to include in their contracts while still ensuring appropriate protections for consumers and small businesses from unfair contract terms. It will also enable state and territory governments to ensure that they are able to implement legislation that reflects the specific requirements of their jurisdiction.[64]

New specific categories of contract excluded from the UCT regimes

The Bill will exclude from the UCT regimes:

• the operating rules (including listing rules) of licensed financial markets and clearing and settlement facilities (which are contracts that govern the core operational functioning of such entities, such as ASX Limited)[65]
• contracts that consist of, or relate to compliance with, listing rules of the licensed financial market between the operator of the licensed financial market and listed entities, responsible entities for registered schemes and operators of foreign passports funds[66]
• contracts made under or in accordance with the operating rules, and extends to written procedures that are incorporated into or made or approved in accordance with, the operating rules[67] and
• contracts that establish, contain, or incorporate rules governing the operation of a payment or settlement system approved under the Payment Systems and Netting Act 1998, as well as contracts made in the course of, or for the purposes of, operating such a system.[68]

The Explanatory Memorandum notes that operating rules are contracts that govern the core operational functioning of licensed markets and clearing and settlement facilities as well as the admission standards for listed securities, with such rules being integral to the operation of Australia’s financial markets by, for example, providing for the finality and irrevocability of transactions.[69] As such the:

Application of the unfair contract terms provisions to these contracts could potentially interfere with, or create uncertainty around, particular terms of operating rules that are necessary to the maintenance of market stability and integrity.[70]

In addition, the Explanatory Memorandum notes that the payment or settlement systems currently approved under the Payment Systems and Netting Act are the Reserve Bank Information and Transfer System, the Austraclear System and the Clearing House Electronic Sub-register System, all of which are critical to facilitating the orderly settlement of payment obligations in Australia and operate on a largely contractual basis.[71] As such, the application of the unfair contract terms provisions to these arrangements could potentially interfere with, or otherwise create uncertainty around, certain terms such as those which provide for the finality and irrevocability of the settlement of transactions.[72]

Exclusion of certain life insurance contracts

Currently the ASIC Act UCT regime does not apply to a transparent term of an Insurance Contracts Act insurance contract (that is, one that is expressed in reasonably plain language, is legible, is presented clearly and is readily available to any party affected by the term[73]) that:

• is disclosed at or before the time the contract is entered into and
• sets an amount of excess or deductible under the contract.[74]

The Bill aims to exclude from the UCT regime certain life insurance contracts generally and guaranteed renewable life insurance contracts specifically. Guaranteed renewable life insurance contracts are contracts whereby the insurer agrees to continue to provide cover on the terms of the original contact so long as the policy holder continues to pay premiums.

The Explanatory Memorandum notes many of these contracts are ‘legacy contracts’: contracts that have lasted in excess of ten or twenty years and have the same terms as when they were originally entered into.[75]

The Explanatory Memorandum notes that since 5 April 2021 (when the UCT protections were extended to insurance contracts in response to the Hayne Royal Commission) it has been:

unclear as to whether the existing unfair contract terms provisions have applied in relation to certain long-standing life insurance contracts. Guaranteed renewable life insurance contracts were not intended to be covered by the unfair contract terms provisions and the insurance industry has proceeded on this presumption, however this has not been clarified under the existing law. The potential for the unfair contract terms provisions to apply to these guaranteed renewable life insurance contracts creates uncertainty in the life insurance industry for both consumers and business. This may result in contracts being voided as a result of terms entered into many years before and that may have been fair at the time the contract was signed.[76] (emphasis added)

The Government argues that applying the UCT regime to long-standing life insurance contracts may result in worse outcomes for the consumer:

a consumer who has been paying life insurance premiums for decades may not be insurable on the same terms, or at all, if their health and/or occupational circumstances have deteriorated since they first took out the cover. Therefore, these contracts have been excluded from Schedule 2 to the Bill to remove this potential negative impact on consumers.[77]

Types of life insurance policies excluded from the UCT regime

The Bill deals with life insurance contracts generally, as well as specifically and separately dealing with guaranteed renewable life insurance contracts.

In relation to life insurance contacts in general, the Bill provides that the UCT provisions as amended by the Bill do not apply, and are taken never to have applied, to certain life policies within the meaning of the Life Insurance Act 1995 which have been replaced, linked or unlinked.[78] In this context, linking and unlinking existing policies covers situations in which a policy holder changes the structure of their policy by connecting it with or separating it from another policy.[79]

This means that a life insurance contract is excluded from the UCT regime where it was entered into before 5 April 2021 and subsequent to 5 April 2021, is replaced for the following reasons:

• the replacement policy reinstates the previous policy and is issued at the request of the owner of the previous policy after the previous policy lapses[80]
• the replacement policy is a reissue of the previous policy to correct an administrative error in the previous policy (for example, where a person’s name is misspelled)[81]
• the replacement policy is issued, at the request of the owner of the previous policy for one or more of the following reasons:
• to change the ownership of the policy
• to extend or vary the cover provided under the policy in accordance with a term of the previous policy
• to change the terms relating to premiums paid under the policy or
• to link or unlink certain existing policies.[82]

The Bill also separately, specifically and retrospectively excludes guaranteed renewable life insurance contracts from the UCT regime where the contract was:

• made before 5 April 2021 and
• is renewed, or was renewed, on or after 5 April 2021.[83]

Commencement

The amendments to the UCT regimes (other than those related to life insurance contracts) will apply to new standard form contracts made at or after the commencement of Schedule 2 to the Bill: the day after the end of the period of 12 months beginning on the day the Bill receives Royal Assent.[84]

If an existing contract is renewed or varied at, or after, the commencement of Schedule 2 to the Bill, the Schedule applies to the contract as renewed or varied on and from the day on which the renewal or variation takes effect.[85]

The Explanatory Memorandum notes that the 12–month delay between Royal Assent and commencement is designed to give businesses time to review and adjust their contracts and practices if required to prepare for the new UCT provisions.[86]

The amendments in relation to life insurance contracts generally and guaranteed renewable life insurance contracts apply in the manner described above despite section 325 as inserted by Schedule 1 to the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020 (which set out the application of the amendments providing that the UCT regime covered insurance contracts).[87] However, those amendments do not apply to the extent that their operation would result in an acquisition of property (within the meaning of paragraph 51(xxxi) of the Constitution) from a person otherwise than on just terms.[88]

Changes to enforcement and penalties for breaches of the UCT regimes

Currently under the ACL and ASIC Act UCT regimes where a person proposes, applies, relies or purports to apply or rely on an UCT, various court orders and remedies can be made, but no pecuniary penalties apply for such conduct per se.[89]

Under the Bill, both UCT regimes will be amended to specifically prohibit:

• the inclusion or reliance on an UCT in a standard form contract[90]
• applying or relying on (or purporting to apply or rely on) an UCT in a standard form contract[91] and
• proposing an UCT in a standard form contract which they have entered into.[92]

Where one of the above prohibitions is breached, the Bill provides that that a court can order various pecuniary penalties, which vary between the ACL and ASIC Act UCT regimes as set out below.

Penalties under the Australian Consumer Law

Section 224 of the ACL contains the current penalties that can be issued for various breaches of the ACL. However, this currently does not include breaches of the ACL UCT regime.

Item 11 to 13 will include the UCT regime into the section 224, thereby ensuring that penalties apply for breaches of the prohibitions. Further, item 12 of Schedule 2 applies penalties consistent with the increased penalties introduced by Schedule 1. This means that the maximum penalty for breaching the ACL UCT prohibitions will be:

• for a natural person: $2.5 million and
• for a body corporate, the greatest of:
• $50 million
• if the court can determine the value of the benefit obtained—three times the value of that benefit and
• if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.[93]

Importantly, the Bill provides that each individual unfair term contained in a contract proposed by the person is considered a separate contravention.[94] This means a person can be found to have multiple contraventions in a single contract. The Explanatory Memorandum notes that while this could result in a high theoretical maximum penalty:

a court will apply existing principles regarding the assessment of the pecuniary penalty to be imposed, to ensure that the total quantum of penalties is appropriate. Accordingly, these provisions are consistent with the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers.[95]

Penalties under the ASIC Act

Sections 12GBCA of the ASIC Act contains the current penalties that can be issued for various breaches of the ASIC Act. However, this currently does not include breaches of the ASIC Act UCT regime. Items 27 and 28 of Schedule 2 will include the ASIC Act UCT regime into the section 12GBCA, thereby ensuring that the existing penalties will apply for breaches of the prohibitions. This means that:

• for an individual the maximum penalty will be the greater of:
• 5,000 penalty units[96] or
• if the court can determine the amount of the benefit derived and detriment avoided because of the contravention, that amount multiplied by three[97]and
• for a body corporate, the maximum penalty will be the greatest of:
• 50,000 penalty units[98]
• the amount of the benefit derived and detriment avoided because of the contravention multiplied by 3 or
• 10% of the annual turnover of the body corporate for the 12–month period ending at the end of the month in which the body corporate contravened, or began to contravene, the civil penalty provision, or if that amount is greater than an amount equal to 2,500,000 penalty units, 2,500,000 penalty units.[99]

Importantly, the Bill provides that each individual unfair term contained in a contract proposed by the person is considered a separate contravention.[100] This means a person can be found to have multiple contraventions in a single contract as discussed above in relation to the ACL penalty provisions.

Issue: size of potential financial penalties

The potential civil penalties for breaching the UCT regimes are large. In that regard, the Explanatory Memorandum notes that ‘larger penalties are more appropriate for bigger companies, as they provide an adequate deterrent to breaches of the unfair contract terms provisions’.[101] In addition, when determining an appropriate penalty, both the ACL and ASIC Act require a court to consider factors such as:

• the nature and extent of the contravention
• any loss or damage suffered because of the contravention
• the circumstances in which the contravention took place and
• whether the person had previously been found to have engaged in similar conduct.[102]

The Explanatory Memorandum notes that as a result:

a relevant consideration in setting a civil penalty amount is the maximum penalty that should apply in the most egregious instances of non-compliance with the new unfair contract terms provisions. The maximum civil penalty amounts that can be imposed under these new provisions are intentionally significant and are in line with the penalties for other breaches of the ACL (as amended by Schedule 1 to the Bill), and the ASIC Act.[103]

Changes to remedies for breaches of the UCT regimes

Currently under both UCT regimes, where the court determines a term in a standard form contract to be unfair, the term is automatically void.[104] In addition, provided a person has suffered, or is likely to suffer, loss or damage because of the conduct of another person, a court can make orders:

• in relation to the whole or any part of a contract or collateral arrangement made between a respondent and another person, including that the contract or arrangement is void, varied, or is not able to be enforced in relation to:
• a person who is a party to a proceeding before a court
• a person on whose behalf the regulator has brought a matter before a court or
• in relation to non-party persons.[105]

The Bill will expand the above by ensuring that an unfair contract term in a standard form contract remains automatically void but also will allow a court to make orders to void, vary or refuse to enforce the contract, if it is appropriate to:

• prevent loss or damage that is likely to be caused or
• remedy loss or damage that has occurred.[106]

That is, a court will no longer be restricted to redressing actual loss or damage when making an order. The Bill will also enable a court to make orders, on the application of the regulator:

• preventing a term that is the same or substantially similar in effect to a term that has been declared as unfair, from being included in any future standard form small business or consumer contracts[107] and
• to prevent or reduce loss or damage which is likely to be caused to any person by a term that is the same or substantially the same in effect to a term that has been declared unfair.[108]

Statutory review of changes

Item 80 of Schedule 2 requires the Minister to cause a review to be undertaken of the operation of the new UCT provisions introduced by the Bill during the two years post-commencement.

The statutory review must be completed and a report on the review provided to the Minister within six months after the end of the period to which it relates, with a final report required to be tabled in Parliament within 15 days of the relevant Minister receiving a copy.

The Explanatory Memorandum notes that the statutory review:

will allow the Government to carefully examine the effectiveness of the reforms and any potential changes that should be considered.[109]

Views of stakeholders

The National Electrical and Communications Association and National Road Transport Association both welcomed the proposed changes in Schedule 2 to the Bill.

Self-Employed Australia, an industry body representing independent contractors, welcomed the operatively identical proposed reforms to the UCT regimes in the Previous Bill stating:

The implications of this are massive. Businesses that want to screw over consumers and/or small businesses with unfair contracts will be forced to dump those contracts. (Think phone, internet, car and other equipment leasing, land sales and on and on.) This is a huge economic reform that will make for a fairer and stronger Australian economy. More people will be able to do business and buy things with real protections against unfair contracts.[110]

However, Self-Employed Australia also noted ‘one major concern’:

Australian governments, state and federal, routinely break the unfair contract laws. They reckon they are exempt. And most often they are. We need all Australian governments to amend laws to hold government agencies accountable to the same contract laws they expect of the rest of the community.[111]

The National Farmers’ Federation also welcomed the changes included in the Previous Bill.[112]

In relation to the application or exclusion of life insurance from the UCT regimes however, in its 2018 submission to the Hayne Royal Commission the Consumer Law Action Centre argued that any reforms to the application of the UCT regime to life insurance policies should include:

Transitional arrangements … to ensure that certain types of insurance contracts, such as guaranteed renewable life insurance policies, are not effectively carved out of the [UCT] regime.[113]

This may suggest some concern regarding carving out guaranteed renewable life insurance contracts from the UCT regime.

Appendix: increases to penalties under the CCA and ALC

Table 2:     Increases for penalties related to Part IV of the CCA (and Scheduled version of Part IV) (Restrictive Trade Practices)

Provision of CCA	Conduct	Current penalty	Proposed penalty
45AF and 45AG	Criminal cartel offences (only applicable to corporations, not natural persons)	the greatest of: $10 million; if the court can determine the value of the benefit obtained—three times the value of that benefit, and if the court cannot determine the value of the benefit obtained—10% of the body corporate’s annual turnover in the 12 months prior to the act or omission.	the greatest of: $50 million; if the court can determine the value of the benefit obtained—three times the value of that benefit; and if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
45AJ	Making a contract etc. containing a cartel provision	Natural person: $500,000 Body corporate: the greatest of: $10 million; if the court can determine the value of the benefit obtained—three times the value of that benefit, and if the court cannot determine the value of the benefit obtained—10% of the body corporate’s annual turnover in the 12 months prior to the act or omission.	Natural person: $2.5 million Body corporate: the greatest of: $50 million; if the court can determine the value of the benefit obtained—three times the value of that benefit; and if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
45AK	Giving effect to a cartel provision
45	Contracts, arrangements or understandings that restrict dealings or affect competition
45DA	Secondary boycotts for the purpose of causing substantial lessening of competition
46	Misuse of market power
46A	Misuse of market power—corporation with substantial degree of power in trans-Tasman market
47	Exclusive dealing
48	Resale price maintenance
49	Dual listed company arrangements that affect competition
50	Prohibition of acquisitions that would result in a substantial lessening of competition
50A	Acquisitions that occur outside Australia

Source: Explanatory Memorandum, Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022, 8-11.

Table 3:     Increases for penalties related to Part IVBA (News Media and Digital Platforms Mandatory Bargaining Code)

Provision of CCA	Conduct	Current penalty	Proposed penalty
52ZC	Digital service to be supplied without differentiating in relation to registered news businesses	Natural person: $500,000 Body corporate: the greatest of: $10 million; if the court can determine the value of the benefit obtained—three times the value of that benefit, and if the court cannot determine the value of the benefit obtained—10% of the body corporate’s annual turnover in the 12 months prior to the act or omission.	Natural person: $2.5 million Body corporate: the greatest of: $50 million; if the court can determine the value of the benefit obtained—three times the value of that benefit; and if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
52ZH	Obligation to negotiate in good faith
52ZS	Obligation to participate in arbitration in good faith
52ZZE	Bargaining parties must comply with the determination

Source: Explanatory Memorandum, Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022, 8–11.

Table 4:     Increases for penalties related to Part IVBA (News Media and Digital Platforms Mandatory Bargaining Code)

Provision of CCA	Conduct	Current penalty	Proposed penalty
52ZC	Digital service to be supplied without differentiating in relation to registered news businesses	Natural person: $500,000 Body corporate: the greatest of: $10 million; if the court can determine the value of the benefit obtained—three times the value of that benefit, and if the court cannot determine the value of the benefit obtained—10% of the body corporate’s annual turnover in the 12 months prior to the act or omission.	Natural person: $2.5 million Body corporate: the greatest of: $50 million; if the court can determine the value of the benefit obtained—three times the value of that benefit; and if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
52ZH	Obligation to negotiate in good faith
52ZS	Obligation to participate in arbitration in good faith
52ZZE	Bargaining parties must comply with the determination

Source: Explanatory Memorandum, Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022, 8–11.

Table 5:     Increases for penalties related to Part X (International liner cargo shipping)

Provision of CCA	Conduct	Current penalty	Proposed penalty
10.49A	Contravening an undertaking in relation to restrictive trade practices	Natural person: $500,000 Body corporate: the greatest of: $10 million; if the court can determine the value of the benefit obtained—three times the value of that benefit, and if the court cannot determine the value of the benefit obtained—10% of the body corporate’s annual turnover in the 12 months prior to the act or omission.	Natural person: $2.5 million Body corporate: the greatest of: $50 million; if the court can determine the value of the benefit obtained—three times the value of that benefit; and if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
10.60	Contravening an order or undertaking in relation to carrier with substantial market power
10.65	Contravening an order or undertaking in relation to unfair pricing practices

Source: Explanatory Memorandum, Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022, 8–11.

Table 6:     Increases for penalties related to Part XICA (The Electricity Industry)

Provision of CCA	Conduct	Current penalty	Proposed penalty
153E	Prohibited conduct – retail pricing	Natural person: $500,000 Body corporate: the greatest of: $10 million; if the court can determine the value of the benefit obtained—three times the value of that benefit, and if the court cannot determine the value of the benefit obtained—10% of the body corporate’s annual turnover in the 12 months prior to the act or omission.	Natural person: $2.5 million Body corporate: the greatest of: $50 million; if the court can determine the value of the benefit obtained—three times the value of that benefit; and if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
153F	Prohibited conduct—electricity financial contract liquidity
153G	Prohibited conduct—electricity spot market (basic case)
153H	Prohibited conduct—electricity spot market (aggravated case)

Source: Explanatory Memorandum, Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022, 8-11.

Table 7:     Increases for penalties related to Part XIB (telecommunications industry)

Provision of CCA	Conduct	Current penalty	Proposed penalty
151AK / 151BX	Engaging in anti-competitive conduct	Natural person: $500,000 Body corporate: must not exceed: in circumstance where the contravention continued for more than 21 days—the sum of $31 million and $3 million for each day in excess of 21 that the contravention continued; or otherwise—the sum of $10 million and $1 million for each day that the contravention continued	Natural person: $2.5 million Body corporate: the greatest of: in circumstance where the contravention continued for more than 21 days—the sum of $71 million and $3 million for each day in excess of 21 that the contravention continued; otherwise—the sum of $50 million and $1 million for each day that the contravention continued; or 30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.

Source: Explanatory Memorandum, Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022, 13–14.

Table 8:     Increases for penalties related to Schedule 2 (The Australian Consumer Law)

Provision of CCA	Conduct	Current penalty	Proposed penalty
20	Unconscionable conduct	Natural person: $500,000 Body corporate: the greatest of: $10 million; if the court can determine the value of the benefit obtained—three times the value of that benefit, and if the court cannot determine the value of the benefit obtained—10% of the body corporate’s annual turnover in the 12 months prior to the act or omission.	Natural person: $2.5 million Body corporate: the greatest of: $50 million; if the court can determine the value of the benefit obtained—three times the value of that benefit; and if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
21	Unconscionable conduct in connection with goods and services
29	False or misleading representations about goods or services
30	False or misleading representations about sale of land
31	Misleading conduct relating to employment
32	Offering rebates, gifts, prizes or other free items with intention of not providing it
33	Misleading conduct as to the nature, manufacturing process, characteristics, suitability for purpose or quantity of any goods
34	Misleading conduct as to the nature, characteristics, suitability for purpose or quantity of services
35	Bait advertising
36	Wrongly accepting payment
37	Misleading representations about certain business activities
39	Unsolicited credit or debit cards
40	Assertion of rights to payment for unsolicited goods or services
43	Assertion of rights to payment for unauthorised entries or advertisements
44	Pyramid schemes
48	Single price to be specified in certain circumstances
49	Referral selling
50	Harassment and coercion
106	Supplying consumer goods that do not comply with safety standards
107	Supplying product related services that do not comply with safety standards
118	Supplying consumer goods covered by a ban
119	Supplying product related services covered by a ban
127	Compliance with recall notices
136	Supplying goods that do not comply with information standards
137	Supplying services that do not comply with information standards

Source: Explanatory Memorandum, Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022, 14–16.

Table 9:     Increases for penalties related to Schedule 2 (Australian Consumer Law) – criminal penalty provisions

Provision of CCA	Conduct	Current penalty	Proposed penalty
151	False or misleading representations about goods or services	Natural person: $500,000 Body corporate: the greatest of: $10 million; if the court can determine the value of the benefit obtained—three times the value of that benefit, and if the court cannot determine the value of the benefit obtained—10% of the body corporate’s annual turnover in the 12 months prior to the act or omission.	Natural person: $2.5 million Body corporate: the greatest of: $50 million; if the court can determine the value of the benefit obtained—three times the value of that benefit; and if the court cannot determine the value of the benefit obtained—30% of the body corporate’s adjusted turnover during the breach turnover period for the offence.
152	False or misleading representations about sale of land
153	Misleading conduct relating to employment
154	Offering rebates, gifts, prizes or other free items with intention of not providing it
155	Misleading conduct as to the nature, manufacturing process, characteristics, suitability for purpose or quantity of any goods
156	Misleading conduct as to the nature, characteristics, suitability for purpose or quantity of services
157	Bait advertising
158	Wrongly accepting payment
159	Misleading representations about certain business activities
161	Unsolicited credit or debit cards
162	Assertion of rights to payment for unsolicited goods or services
163	Assertion of rights to payment for unauthorised entries or advertisements
164	Pyramid schemes
166	Single price to be specified in certain circumstances
167	Referral selling
168	Harassment and coercion
194	Supplying consumer goods that do not comply with safety standards
195	Supplying product related services that do not comply with safety standards
197	Supplying consumer goods covered by a ban
198	Supplying product related services covered by a ban
199	Compliance with recall notices
203	Supplying goods that do not comply with information standards
204	Supplying services that do not comply with information standards

Source: Explanatory Memorandum, Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022, 13–14.

---

[1].       Entities will have 12 months (from the date of Royal Assent), to review and adjust their standard form contracts: Explanatory Memorandum, Treasury Laws Amendment (More Competition, Better Prices) Bill 2022, 2, 48, Schedule 2, items 78 and 79.

[2].       Explanatory Memorandum, Treasury Laws Amendment (More Competition, Better Prices) Bill 2022, 1.

[3].       Explanatory Memorandum, 2.

[4].       Explanatory Memorandum, 1.

[5].       The Statement of Compatibility with Human Rights can be found at page 51 of the Explanatory Memorandum to the Bill.

[6].       Parliamentary Joint Committee on Human Rights (PJCHR), Human Rights Scrutiny Report, 5, 2022, 20 October 2022, 37.

[7].       PJCHR, Human Rights Scrutiny Report, 37.

[8].       Organisation for Economic Co-operation and Development (OECD), Pecuniary Penalties for Competition Law Infringements in Australia, (Paris: OECD, 2018).

[9].       Australian Labor Party (ALP), Better Competition, ALP policy document, Election 2022.

[10].    See the Treasury Laws Amendment (2018 Measures No. 3) Act 2018 and Laura Sweeney and Paula Pyburne, ‘Treasury Laws Amendment (2018 Measures No. 3) Bill 2018’, Bills Digest, 113, 2017–18, (Canberra: Parliamentary Library, 2018).

[11].    ‘Pecuniary Penalties for Competition Law Infringements in Australia 2018’, 52.

[12].    Schedule 1, item 25.

[13].    Schedule 1, items 1 and 31 and 33.

[14].    Schedule 1, items 1 and 33.

[15].    Explanatory Memorandum, paras 1.13 and 1.79–1.80.

[16].    Explanatory Memorandum, para 1.81.

[17].    Explanatory Memorandum, paras 1.41, 1.43 and 1.44.

[18].    Schedule 1, items 28 and 29.

[19].    Schedule 1, item 30.

[20].    Productivity Commission (PC), Review of Australia’s Consumer Policy Framework, Inquiry report, 45, two volumes, PC, Canberra, 30 April 2008.

[21].    Paula Pyburne, ‘Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Bill 2019’, Bills Digest, 76, 2019–2020, (Canberra: Parliamentary Library, 2020), 5.

[22].    Part 2–3 of the ACL at Schedule 2 to the Competition and Consumer Act 2010 (CCA).

[23].    Subdivision BA of Division 2 of Part 2 of the Australian Securities and Investments Commission Act 2001 (the ASIC Act).

[24].    See the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015.

[25].    PC, Review of Australia’s Consumer Policy Framework.

[26].    Productivity Commission (PC), Review of Australia’s Consumer Policy Framework, Inquiry report, 45, volume 2, PC, Canberra, 30 April 2008, 149.

[27].    See Trade Practices Amendment (Australian Consumer Law) Act (No. 1) 2010 and Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010.

[28].    Australian Securities and Investments Commission Act 2001, (ASIC Act), section 12BF.

[29].    By the enactment of the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015.

[30].    For information about the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020 see: P Pyburne, Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Bill 2019, Bills Digest, 76, 2019–2020, Parliamentary Library, Canberra, 2020.

[31].    K Hayne (Commissioner), Final report: Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, vol. 1, 2019, 32.

[32].    ASIC Act, section 12BF; CCA, schedule 2, clause 23.

[33].    ASIC Act, section 12BH and CCA, Schedule 2, clause 25 list examples of terms that may be unfair.

[34].    ASIC Act, section 12BK; CCA, schedule 2, clause 27.

[35].    ASIC Act, subsection 12BG(1); CCA, Schedule 2, subclause 24(1).

[36].    ASIC Act, subsection 12BG(3); CCA, Schedule 2, subclause 24(3).

[37].    ASIC Act, section 12BH, CCH Australian Competition and Consumer Law Commentary: [¶39-510] “The types of terms that are unfair”, 28 December 2020; Australian Securities and Investments Commission v Bank of Queensland Limited [2021] FCA 957 as per Banks-Smith J at [16], [46], [61] to [64] (unilateral variation / termination clauses).  

[38].    ASIC Act, subsection 12BI(1); CCA, Schedule 2, subclause 26(1).

[39].    ASIC Act, subsection 12BI(2); CCA, Schedule 2, subclause 26(2).

[40].    ASIC Act, subsection 12BK(1); CCA, Schedule 2, subclause 27(1).

[41].    CCH Australian Competition and Consumer Law Commentary: [28–710] What is a “standard form contract?”, 28 December 2020.

[42].    ASIC Act, subsection 12BK(2); CCA, Schedule 2, subclause 27(2).

[43].    ASIC Act, subsection 12BK(2); CCA, Schedule 2, subclause 27(2).

[44].    ASIC Act, subsection 12BF(4); CCA, Schedule 2, subclause 23(4).

[45].    Schedule 2, item 47, proposed subsections 23(4), (5), (6) and (7) of Schedule 2 of the CCA.

[46].    Schedule 2, item 49, proposed subsections 49(4) to (8) of the ASIC Act.

[47].    Proposed subsection 23(5) of Schedule 2 of the CCA (at item 47 of Schedule 2); proposed subsection 12BF(6) of the ASIC Act (at item 49 of Schedule 2).

[48].    Proposed paragraph 27(2)(ba) of Schedule 2 of the CCA (at item 41 of Schedule 2); proposed paragraph 12BK(2)(ba) of the ASIC Act (at item 43 of Schedule 2).

[49].    Proposed subsection 27(3) of Schedule 2 of the CCA (at item 42 of Schedule 2); proposed subsection 12BK(3) of the ASIC Act (at item 44 of Schedule 2).

[50].    Explanatory Memorandum, 38–39.

[51].    ASIC Act, section 12GNB; CCA, Schedule 2, clause 239.

[52].    ASIC Act, section 12BA; CCA, Schedule 2, clause 2.

[53].    Explanatory Memorandum, 31, 46–47.

[54].    Schedule 2, items 59 to 75.

[55].    ASIC Act, paragraph 12BI(1)(c); CCA, Schedule 2, clause 26(1)(c).

[56].    ASIC Act, subsection 12BL(1); CCA, Schedule 2, clause 28(3).

[57].    ASIC Act, subsection 12BL(2); CCA, Schedule 2, clause 28(4).

[58].    CCA, Schedule 2, subclauses 28(1) to (3).

[59].    ASIC Act, subsection 12BL(1A).

[60].    ASIC Act, paragraph 12BI(1)(d) and subsection 12BI(4).

[61].    Explanatory Memorandum, 41.

[62].    Schedule 2, item 53 (proposed subsection 26(1) of Schedule 2 of the CCA) and item 56 (proposed subsection 128BI(1) of the ASIC Act).

[63].    Explanatory Memorandum, 42.

[64].    Explanatory Memorandum, 42.

[65].    Proposed subclause 28A(1) of Schedule 2 of the CCA (at item 55 of Schedule 2); proposed subsection 12BLC(1) of the ASIC Act (at item 58 of Schedule 2). The operating rules are made and have effect as a contract in accordance with Subdivision B of Division 3 of Part 7.2 and Subdivision B of Division 2 of Part 7.3 of the Corporations Act 2001, respectively.

[66].    Proposed subclause 28A(2) of Schedule 2 of the CCA; proposed subsection 12BLC(2) of the ASIC Act.

[67].    Proposed subclause 28A(1) of Schedule 2 of the CCA; proposed subsection 12BLC(1) of the ASIC Act.

[68].    Proposed subclause 28(5) of Schedule 2 of the CCA (at item 54 of Schedule 2); proposed subsection 12BL(4) of the ASIC Act (at item 57 of Schedule 2).

[69].    Explanatory Memorandum, 43.

[70].    Explanatory Memorandum, 43.

[71].    Explanatory Memorandum, 43–44.

[72].    Explanatory Memorandum, 44.

[73].    ASIC Act, subsection 12BG(3).

[74].    ASIC Act, paragraph 12BI(1)(d).

[75].    Explanatory Memorandum, 44.

[76].    Explanatory Memorandum, 44–45.

[77].    Explanatory Memorandum, 45.

[78].    Item 58, proposed section 12BLA of the ASIC Act.

[79].    Explanatory Memorandum, 44–45.

[80].    Item 58, proposed paragraph 12BL(2)(a) of the ASIC Act.

[81].    Item 58, proposed paragraph 12BL(2)(b) of the ASIC Act.

[82].    Item 58, proposed paragraph 12BL(2)(c) of the ASIC Act.

[83].    Item 58, proposed section 12BLB of the ASIC Act.

[84].    Schedule 2, item 78 (proposed section 305 of Schedule 2 of the CCA) and item 79 (proposed section 342 of the ASIC Act).

[85].    Schedule 2, item 78 (proposed subsections 305(3) and (4) of Schedule 2 of the CCA) and item 79 (proposed subsections 342(3) and (4) of the ASIC Act).

[86].    Explanatory Memorandum, 48.

[87].    Schedule 2, item 79, proposed subsection 343(1) of the ASIC Act.

[88].    Schedule 2, item 79, proposed subsection 343(2) of the ASIC Act.

[89].    Explanatory Memorandum, 29–30.

[90].    Schedule 2, items 1 to 4, proposed subsections 23(2A) to (2C) of Schedule 2 of the CCA and proposed subsections 12BF(2A) to (2C) and amendments to subsections 12BG(1) and 12BH(1) of the ASIC Act.

[91].    Schedule 2, items 1 and 2, proposed subsections 23(2C) of Schedule 2 of the CCA and proposed subsection 12BF(2C) of the ASIC Act.

[92].    Schedule 2, items 1 to 4, proposed subsections 23(2A) to (2C) of Schedule 2 of the CCA and proposed subsection 12BF(2A) of the ASIC Act.

[93].    Schedule 2, items 12 and 13, proposed subsections 224(3) and (3A) of the ACL; Schedule 1, item 103, proposed subsections 224(3) and (3A) of the ACL; Explanatory Memorandum, 36–37.

[94].    Schedule 2, item 1, proposed subsection 23(2B) of Schedule 2 of the CCA.

[95].    Explanatory Memorandum, 32.

[96].    Currently $1,110,000; Crimes Act 1914 section 4AA and the Notice of Indexation of the Penalty Unit Amount made under that section set the current value of a penalty unit at $222.

[97].    ASIC Act, subsection 12GBCA(1); Schedule 2, items 27 and 28, proposed subsections 12BA(1) and proposed paragraph 12GBA(6)(a) of the ASIC Act.

[98].    Currently $11,100,000.

[99].    ASIC Act, subsection 12GBCA(2); Schedule 2, items 27 and 28, proposed subsections 12BA(1) and proposed paragraph 12GBA(6)(a) of the ASIC Act. 2,500,000 penalty units is currently equal to $555 million.

[100].  Schedule 2, item 2, proposed subsection 12BF(2B) of the ASIC Act.

[101].  Explanatory Memorandum, 37.

[102].  ASIC Act, subsection 12GBB(5); CCA, Schedule 2, subclause 224(2).

[103].  Explanatory Memorandum, 36–37.

[104].  ASIC Act, subsection 12BF(1); CCA, Schedule 2, subclause 23(1).

[105].  See for example: ASIC Act, subsection 12GM(7); CCA, Schedule 2, clause 243.

[106].  Proposed clause 243A of Schedule 2 to of the CCA (at item 24 of Schedule 2); proposed section 12GNE of the ASIC Act (at item 40 of Schedule 2).

[107].  Proposed paragraph 243B(1)(a) of Schedule 2 of the CCA (at item 24 of Schedule 2) ; proposed paragraph 12GNF(1)(a) of the ASIC Act (at item 40 of Schedule 2).

[108].  Proposed paragraph 243B(1)(b) of Schedule 2 of the CCA; proposed paragraph 12GNF(1)(b) of the ASIC Act.

[109].  Explanatory Memorandum, 47.

[110].  ‘Confronting bullies in our own (Australian) backyard – Unfair Contracts’, Self-Employed Australia.

[111].  ‘Confronting bullies in our own (Australian) backyard – Unfair Contracts’, Self-Employed Australia.

[112].  ‘Tougher unfair contract protections good first step towards better deal for farmers’, National Famers’ Federation.

[113].  Consumer Action Law Centre, Submission to Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, 25 October 2018, 32.

 

For copyright reasons some linked items are only available to members of Parliament.

---

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Enquiry Point for referral.