As it does annually the Australian Competition and Consumer Commission (ACCC) has announced its enforcement and compliance activities for 2024- 2025.
These cover a range of areas which will have the ability to potentially impact on franchise businesses.
This article highlights those with the most likelihood of impacting franchises and thus the areas which should have closer attention paid to them to ensure compliance and avoid regulator intervention.
Areas for ACCC enforcement and compliance activity
2024 is a significant year as it is the 50th anniversary of the Trade Practices Act 1974 (Cth), now of course known as the Competition and Consumer Act 2010 (Cth), for which the ACCC regulates.
The work the ACCC has announced it will specifically target its enforcement and compliance activities around in 2024-2025 which has the potential to directly affect franchises includes:
Consumer product, fair trading and competition concerns in relation to environment and sustainability claims.
On 12 December 2023 the ACCC released 8 principles to guide businesses in respect of environmental claims they intended to make. Non-compliance with that guidance could see ACCC action being taken.
Fair trading issues in the digital economy with a focus on misleading and deceptive advertising within influencer marketing, online reviews and in-app purchases and price comparison websites
For example on:
(a) 15 March 2024 the ACCC announced that Bloomex has been ordered to pay $1 million for misleading and deceptive online star ratings and price representations.
(b) 26 February 2024 the ACCC announced it was suing Grays eCommerce Ltd, the Australian wide auction business, over false or misleading descriptions of cars on its sites including make, model, or undisclosed obvious faults with the cars.
Unfair contract terms (UCT) in consumer and small business contracts
On 21 August 2023 the ACCC engaged with fertiliser suppliers to amend their fertiliser supply agreements to remove unfair contract terms after an ACCC investigation.
On 11 September 2023 the ACCC issued a media release warning franchise businesses to remove UCTs before the new penalties came into force.
Then on 15 December 2023 the ACCC released a report of its observations from a review of small franchise systems for the attention of franchisors indicating what it considered would be required in respect of certain terms which had been included in franchise agreements.
A failure to consider the applicability of the ACCC observations from its report on franchise agreement terms could result in adverse action by the ACCC.
Enduring Priority Compliance and Enforcement activity
In addition enduring ACCC priorities for which compliance activity continues to occur include:
Anti-competitive conduct
On 14 March 2024 the ACCC confirmed that it had denied an authorisation request from Bakers Delight to implement price tiers in new point of sale system.
On 23 February 2024, it was reported that criminal sentences were imposed on Bingo and Aussie Skips and their former CEOs for price fixing for demolition waste services after referral of the matter by the ACCC to the Commonwealth DPP.
On 15 December 2023 Honda was ordered to pay $6 million in penalties for misleading consumers about franchise dealership closures.
On 1 December 2023 Techtronic, a seller of power tools, was ordered to pay $15 million in penalties for resale price maintenance – the highest amount in Australia at the time– after it entered 97 agreements containing resale price maintenance provisions and enforced those terms 27 times.
Bluescope Steel was also ordered to pay $57.5 million for attempting to fix prices for flat steel products supplied in Australia as was reported on 29 August 2023 by the ACCC.
Small business including codes of conduct
For example the ACCC successfully obtained $1.5 million in penalties against Ultratune around March 2024 for contempt of Court due to Ultratune’s failure to comply with orders made by the Court including for Ultratune to comply with marketing fund statement updating and implement a compliance program.
Also on 13 December 2023 the ACCC announced that Delicia Franchising provide an enforceable undertaking in respect of marketing fund statements for 2020, 2021, 2022 which did not give sufficient detail and were not provided within 30 days.
Increasing business compliance with consumer guarantees especially electronics and online delivery
For example on 4 March 2024 the ACCC commenced proceedings against Mosaic Brands (owners of Katies, Noni B, Rivers) in respect of a failure to deliver hundreds of thousands of products in accordance with the delivery time advertised on their website.
On 14 February 2024 the ACCC reported that Mazda had been ordered to pay $11.5 million for misleading consumers about consumer guarantee rights for serious vehicle failures.
On 20 December 2023 the ACCC reported that Airbnb had been ordered to pay $15 million in compensation and $15 million in penalties for misleading consumers about the currency of the prices in tis accommodation platform
Franchises should be conscious of the activity being undertaken and review their operations and agreements to ensure they remain compliant with their legal obligations in order to avoid regulator action against them.
Please contact us if you would like more information or would like to discuss any of the above:
Alicia Hill
Principal
T: +61 3 9611 0180 | M: +61 484 313 865
E: ahill@sladen.com.au
Meagan O’Connor
Principal
T: +61 3 9611 0106 | M: +61 438 531 978
E: moconnor@sladen.com.au
Dean Beaumont
Special Counsel
T: +61 3 9611 0129 | M: +61 437 257 648
E: dbeaumont@sladen.com.au
Inshani Ward
Senior Associate
T: +61 3 9611 0110 | M: +61 413 557 157
E: iward@sladen.com.au
