Written by The Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 has passed through both first and second reading speeches in parliament and if passed into law, will substantially increase the maximum penalties applicable to certain breaches of the Competition and Consumer Act 2010 (Cth) and the Australian Consumer law, as well as prohibit outright the proposal, application or reliance on unfair contract term in standard form or small business contracts. It seeks to overhaul the unfair contract regime and give Courts more flexibility in terms of remedies.
For body corporates, the new proposed maximum penalties would be the greater of: $50 million; three times the value of the benefit obtained or; if the court cannot determine the total value of the benefits, 30% of adjusted turnover during the ‘breach or turnover period.’ For individuals, the maximum penalty would be $2.5 million. The Federal Government has emphasised that the proposed increases in penalties are necessary to ensure the price of misconduct is high enough to deter unfair activity.
Moreover, the Bill expands the operation of the unfair terms regime and prohibits unfair terms outright, making the proposal, application, or reliance on an unfair term in standard form contracts subject to a civil penalty. This is different to the recent Fujifilm decision in this month’s edition of Legalese – where there were no immediate pecuniary consequences for a party trying to enforce an unfair term.
The Bill has a 12-month grace period following royal assent, but businesses should continue to monitor and review their contracts to avoid unfair contract terms.