Treasury Laws Amendment (More Competition, Better Prices) Act 2022

Second reading speeches in the House

The Bill was introduced into Parliament and read for a second time by Dr Leigh (Assistant Minister for Competition, Charities and Treasury).

Dr Leigh’s second reading speech (page 16 Hansard, 28 September 2022):

This bill will deliver on the government's election commitment to help ease the cost of living by increasing penalties for breaches of competition and consumer laws and to provide greater protections for small businesses from unfair contract terms.

Schedule 1 to the bill will increase the maximum penalty for anti-competitive behaviour under the Competition and Consumer Act 2010(CCA) as well as breaches of the Australian Consumer Law (ACL)to ensure the price of misconduct is high enough to deter unfair activity and to ensure consumers retain a robust level of protection.

In 2018, the Organisation for Economic Co-operation and Development found that the average and maximum competition penalties in Australia are substantially lower than those in comparable international jurisdictions. As a result, there is a risk that a breach of the existing competition law could be seen as an acceptable cost of doing business by some large firms.

The amendments will increase the severity of Australia's penalty regime to be more comparable with international jurisdictions. As a result of this bill, we expect that, in some cases, courts will impose higher penalties for wrongdoing. We want courts to be able to ask themselves, 'Will this penalty deter lawbreaking by this company and others like it?'

By strengthening penalties, Australia will be promoting competition and better corporate behaviour. Greater competition means better prices and more choice for Australian households. No business that complies with the law will face any additional compliance burden as a result of this increase in penalties.

Schedule 2 to the bill strengthens the existing protections against unfair contract terms in the Australian Consumer Law (ACL) and the Australian Securities and Investments Commission Act 2001(ASIC Act).

The reforms will better protect consumers and small businesses from unfair terms, by reducing their prevalence in standard form contracts. This will help to improve consumer and small business confidence when entering into standard form contracts.

Consumers and small businesses often lack the resources and bargaining power to effectively review and negotiate terms in standard form contracts they are offered by a larger party.

The existing unfair contract terms protections in the ACL and the ASIC Act provide that where a court finds a term is unfair, that term is void.

This approach has not provided sufficient deterrence against the use of unfair terms, which remain prevalent in standard form contracts.

The amendments introduce civil penalty provisions prohibiting the use of, and reliance on, unfair terms in standard form contracts. This will enable a regulator to seek a civil penalty from a court. The existing definition of an unfair term remains unchanged.

The government's expectation is that regulators will continue to take a reasonable and proportionate approach to enforcing the unfair contract terms protections, including affording businesses an opportunity to respond to allegations of unfair terms before commencing any legal proceedings.

The bill includes a requirement to review the reforms two years after commencement, and the government will also welcome feedback from stakeholders ahead of this review.

Finally, the Legislative and Governance Forum on Corporations was previously notified in relation to the unfair contract terms amendments as required under the Corporations Agreement 2002.

Full details of the measures are contained in the explanatory memorandum.

Debate adjourned.

Second readings speeches were also given by:

Stuart Robert MP [Liberal National Party of Queensland]
[‘It's wonderful to stand and speak on Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. We love competition and we love lower prices, so the opposition will be supporting the legislation. …’' (focused on unfair terms provisions)]

Julie Collins MP [Australian Labor Party]
[Focus on unfair terms and small business]

David Coleman MP [Liberal Party of Australia]
[‘The opposition will be supporting this bill, which has some sensible provisions in relation to unfair contract terms. …I want to turn to the provisions of the bill. We do support it. … there are important provisions around making unfair contract terms unlawful, giving the courts power to impose additional penalties, increasing some of the penalties that protect small businesses against unfair contract thresholds, and making remedies more flexible so that a court can impose remedies that are most suited to the particular situation. It also improves clarity around standard form contracts so that everyone who's going into a contractual situation—particularly small businesses, who are often at a disadvantage when negotiating with big businesses—is aware of what the standard form contract terms are, and that they willingly go into variations of those terms. These are sensible things and we will support them.

Henry Pike MP [Liberal National Party of Queensland] [Hansard p 35]
[… Firstly, I want to discuss the specifics of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. This bill seeks to help improve competition across the private sector, and it does this through two schedules.

Schedule 1 amends the Competition and Consumer Act, the CCA, and the Australian Consumer Law, the ACL. It increases penalties on businesses for breaching anticompetition laws. Specifically, if the ACL is breached, the business will be fined whichever is the higher amount of either $50 million, three times the value of the benefit obtained, or 30 per cent of the body corporate's adjusted turnover during the breach turnover period. If the CCA is breached, the business will again be fined whichever is the greater of four options. For breaches under 21 days in length, it will be $50 million plus $1 million for each day that the contravention continued. For breaches over 21 days in length, it will be $71 million plus $3 million for each day that the contravention continued after the first 21. The other two options are matching the ACL breach punishment: three times the value of the benefit obtained, or 30 per cent of the body corporate's adjusted turnover during the breach turnover period. The maximum punishment for a person in breach that is not a body corporate is $2.5 million, a 400 per cent increase. That's all very technical and very complex but, to put it simply, it increases penalties for businesses acting in an illegal, anticompetitive way.

…

The bill will better align Australia's penalty regime with equivalent jurisdictions, as determined by the OECD, on competition law worldwide. It is a crackdown on the exploitation of consumers and small businesses, and the coalition stands resolutely for these groups and will be supporting this important bill.

Healthy market competition is fundamental to a well-functioning economy. I think everyone in this chamber and, indeed, across this country would agree with that statement. Competition keeps prices low and the quality and choice of goods and services high. Competition is the not-so-secret ingredient that has ensured that our nation and similar nations with similar economies have prospered, while other world economies, without the same level of competition, have stagnated.

…

As I make my way around the businesses and households of the Redlands, that cost-of-living and inflation pressure is absolutely biting, and people are raising it with me all the time. We've got local businesses who are struggling with the pressures of inflation and with supply chain concerns, and certainly I've had many stories raised with me by local businesses who have been doing terrific work—absolutely the right thing, in good faith, every step of the way—but have been hung out to dry by bad operators in the market who act without regard for others or concern for legal consequences.

According to the 2018 OECD report Pecuniary penalties for competition law, Australia lags behind other developed countries in the competition policy space, due to its relaxed laws. In fact, the base penalty for anticompetitive breaches in Australia has not changed in almost 30 years. I looked this up, and, as it turns out, I had just started primary school when some of the penalties were last updated. With rising inflation and a deepening cost-of-living crisis, a realignment of Australia's anticompetitive penalty regime is certainly necessary. This bill provides that realignment in the face of new pressures that are being felt across the economy. Last night's budget warned us, correctly, I think, that we've got more of that to come. That is going to be the challenge before this new government—to make sure that they do take the concrete action needed, not summits or national conversations, to address the economic challenges facing our country.

…

The coalition stands where it has always stood: as a true champion of small business. I hope that this bill will go some way to making their life easier in this very difficult environment. It is open competition between businesses within the context of the free market that makes Australia great, and, at such a challenging time, it is entirely appropriate that the safeguards outlined in this bill are introduced promptly to protect them.

…]

Jenny Ware MP [Liberal Party of Australia] [Hansard p 37]
[I rise to give support to the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. …

This bill seeks to increase the penalties for breaches of the Australian Consumer Law as well as the Competition and Consumer Act 2010. …

We are lucky, in this country, to have strong protections for consumers. It is an important cornerstone in any modern economy for consumers to be confident in the goods and services for which they pay. In Australia, the Australian Consumer Law offers protections in significant areas, including unfair contract terms, consumer rights, product safety, door-to-door sales and telephone sales and lay-by agreements. The benefit of a strong Australian Consumer Law is to allow for these protections to be unified across Australia. We are a federated nation, and certainty for consumers in all states is only logical.

As part of this bill, body corporates can be fined a maximum of the greater of $50 million or three times the value of the offence, or 30 per cent of the adjusted turnover during the breach period. For persons other than a body corporate, the maximum fine will now be $2.5 million. These amendments will increase the severity of Australia's penalty regime for anticompetitive behaviour and facilitate the imposition of penalties that are more comparable with international jurisdictions.

…]

Aaron Violi MP [Liberal Party of Australia] [Hansard p 39]
[I rise to speak in support of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. This bill significantly increases the fines and penalties that can be imposed upon Australian businesses for breaches of competition and consumer law and, most importantly, it protects small business.

My electorate of Casey is home to many small businesses across various industries. These small businesses are the engine room of the economy. It is these small and medium businesses that are often the ones driving innovation and economic growth, bringing new ideas to the marketplace and creating new jobs. Small business provides 4.7 million jobs in our nation. Small-business owners have risked their financial security to chase their dream but, because of their size, they are vulnerable to the coerciveness of big business. I worked in the small-business environment for 15 years and I saw, directly and indirectly, the pressure that small business faces when working with bigger players. These are negotiations and conversations that you don't forget. When owners know that it's their house and their mortgage on the line, and they're negotiating with a business with significant cash reserves, it's an unfair balance. So we need to protect small business, and this legislation goes towards that.

But small business isn't just about the economic benefits. Small business truly is the heart of the community, especially where I live in Casey. …

This bill will help to further support and protect those small businesses, by sending a clear message that unfair trading will be penalised. As I said in my first speech, we must acknowledge and recognise that big business will naturally support regulation and red tape which stifles small business, to the detriment of competition. As a Liberal, I instinctively support free markets and the benefits they bring to the economy and the nation. However, we have to acknowledge the risk of having dominant players in a market, a risk that I saw firsthand working in the food industry. For Australia to continue to prosper as a nation, we need to ensure our legislation supports the growth of small business in every way.

These reforms will better protect small business and consumers, by increasing penalties for anticompetitive behaviour. This will ensure that the price of misconduct is high and will bring our penalties in line with those in other countries. As I said, this is so important, because small-business owners are risking their homes; big businesses do not have that risk.

…

The 2018 report by the Organisation for Economic Co-operation and Development found that Australia's maximum penalties for anticompetitive conduct were lower than those in the UK, the US and the European Union. At the moment, the maximum penalty for breaches of competition laws in Australia is $10 million or 10 per cent of annual turnover, whichever is greater. This bill will take those maximum penalties from $10 million to $50 million, adding a significant deterrent to big business. Businesses can also be fined 30 per cent of their turnover during the offending period for engaging in anticompetitive behaviour, with maximum penalties for breaching civil penalty provisions jumping from $500,000 to $2.5 million.

The bill will amend three pieces of legislation—the Competition and Consumer Act, the Australian Consumer Law and the ASIC Act—to strengthen the existing protections from unfair contract terms in consumer and small business standard-form contracts. It will introduce a new civil penalty regime for those small businesses that use and rely on unfair contract terms in standard form contracts. Unfair contract terms are those that disadvantage one party but are not necessary to protect the interests of the other. Examples of unfair terms are excessive exit fees, automatic renewal terms, unreasonable termination terms, or price increases affecting only one party. Another example is reserving the right to vary the contract at any time and removing liability for interruptions in supply. And, again, this is a challenge for small business, because many big businesses have the legal support within their organisation to make sure they can review contracts with a fine toothcomb. Small business does not have the ability to spend hundreds of thousands of dollars on lawyers so are at another disadvantage—not just size, but the resources from a legal perspective.

…

By strengthening penalties, Australia will be promoting competition and setting standards for corporate behaviour. Increased competition means prices are kept in check, and there is more choice for Australian families. With the current cost of living soaring, the last thing small-business owners need is the headache of navigating dodgy business contracts. It is vital that we support small business to thrive. They've survived two years of COVID and state-imposed restrictions on their trading. They are currently going through significant rising costs with energy and with labour shortages. It has never been tougher to be in small business.

For Australia to continue to prosper, we must ensure our legislation supports the growth of all businesses. These new offences and higher penalties will make business think twice before including unfair terms in their contracts. Larger fines for anticompetitive behaviour will ensure a more level playing field for business. I will always support small business; it's in my blood, and that is why I am supporting this bill today.]

James Stevens MP [Liberal Party of Australia] [Hansard p 41]
[I rise to speak in support of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022, which, as has been outlined, has two core elements: one is to do with increasing fines and the other is to expand the protections around unfair contract terms. My understanding is the OECD had undertaken a good body of work around the consequences of anticompetitive behaviour in different regimes within the OECD. The outcome of that was that, in this country, we have not been putting in place sufficient fines.

You would hope there was a disincentive, from a moral point of view, for people not to engage in uncompetitive behaviour in our economy. But, of course, we need safeguards in place, and the OECD—which probably reflects on the value of that organisation—to be able to give us this sort of comparative policy analysis and advise this jurisdiction that we are at the lower end of the sorts of penalties that are put in place within other similar OECD nations, particularly the United States and the United Kingdom. The first element of this really dramatically increases the penalties that can be put in place within our competition framework, and that's a really important thing. As a proud free market capitalist, I'm equally very conscious of the importance of having a very robust framework in place to ensure that we have free, fair and open markets and free and fair competition within our economy. The framework that we've got in place, and organisations like the ACCC, do an excellent job in making sure they're protecting consumers, but we're clearly always going to need to be vigilant in looking at opportunities to make sure the protections are in place at the appropriate level to ensure that we have free and fair competition.

In this country, we haven't had a really concerning history of major anticompetitive examples. Some jurisdictions—like the United States—talk about antitrust, which is the same sort of principle. In fact, if ever we have had anticompetitive issues, it has always been because of government enterprises that have had the ability to compete with the strength of government in what should be a free and fair market. It's a great commendation to people like Bob Hawke and Paul Keating, who recognised that maybe the private sector could run airlines in our economy, rather than government running one and stifling competition in a sensible market like that, which should be free and open for private sector to compete with each other in and, hopefully, achieve good outcomes for consumers in that market, through that competition, with the lowest possible price being achieved.

We welcome the upgrade to penalties, …

The second element within this legislation is the issue of unfair contract terms. …

We thank the OECD and the other processes that put us in a position to become aware of the need to improve and update the way in which we protect consumers, small businesses and individuals in our economy. A strong free market, like the one we've got in this country, is always going to need those very important protections for consumers and for fair competition in our economy. On the basis of that, I commend the bill to the House.]

Dr Andrew Leigh MP [Australian Labor Party] [Hansard p 43]
[Includes comparing monopolists to the Borg in Star Trek [possibly my favourite ever Hansard reference]]

[emphasis added on competition-specific and penalty-related reforms] ‘My thanks to the members who have contributed to this debate. I acknowledge the work of both Small Business Minister Julie Collins and Assistant Treasurer Stephen Jones on this bill. This bill delivers on an election commitment to protect Australian households and small businesses by banning unfair contract terms and increasing penalties for anticompetitive behaviour.

The Australian Labor Party has a long history of economic reform that builds a fairer and more resilient economy. Competition is an essential part of that for three key reasons. First, competition is about fairness. Without government action, monopolists can wield their power to rig the game in their favour rather than compete on even terms. Second, competition deals with cost-of-living pressures and makes our supply chains more resilient. Competition means businesses offer Australians the best prices they can. A diverse and dynamic economy, a resilient economy, helps to absorb, adapt and solve the challenges of an uncertain world. Third, competition is about jobs and skills. Competition helps to ensure that the most innovative, creative and savvy businesses are the ones that thrive. Those are the businesses that are best placed to offer jobs that are stable, secure and well paid. Competition also gives workers more options, empowering employees to negotiate pay and conditions that reflect their true value.

This side of the House has a long record of supporting competition. It was Labor Attorney-General Lionel Murphy who introduced the Trade Practices Act 1974, which outlawed businesses colluding at the expense of Australian consumers. It was Paul Keating in the 1990s who recognised that competition eased cost-of-living pressures by lifting wages and lowering prices. Working with Fred Hilmer, he backed it up by implementing reforms that transformed swathes of Australian regulation for the better and helped deliver the 1990s productivity surge. National competition policy was far-reaching. Government businesses were restructured and made more efficient. A competitive National Electricity Market was established. Barriers to the free trading of gas across state and territory boundaries were removed. Before national competition policy, bakers in New South Wales could only bake bread at certain times of the day. Families across the nation had to do their grocery shopping in a mad, crazy rush on Saturday morning before shops closed for the weekend.

As a result of national competition policy, the Productivity Commission has estimated that the size of Australia's economy was permanently increased by 2.5 per cent. Today, that equates to some $5,000 per household. But productivity growth has slowed in Australia since the mid-2000s. From its peak of 2.5 per cent in the late 1990s, average productivity growth in the past 20 years was 1.2 per cent. Weak productivity hits real wages and the cost of living. By hitting national incomes, it stifles our ability to invest in infrastructure, to plan for the future and to lift up those who need support.

The productivity slowdown has been driven, at least in part, by a decline in dynamism. When workers move to more productive firms, they earn higher wages, and the economy benefits. Yet job switching has slowed in recent years, which can account for about a quarter of the recent productivity slowdown. Creating more opportunities for job switching through competition is crucial to reverse this trend.

Another crucial measure of the health of the economy is the startup rate. How many new companies, which employ people, are created every year? We can think of this as the business equivalent of the birth rate. That measure is in decline. Since the 2000s, there's been a downward trend in the rate at which new businesses enter the market. More than ever we need settings that allow startups to enter the market and challenge the old guard on even terms, and that means reversing the trend of market power concentrating in a smaller number of firms. When power is concentrated, monopolists can shift away from competing to instead focus on trying to dig moats that keep the competition out. Monopolists awash in cash simply buy out new rivals and, much like the Borg in Star Trek, assimilate those rivals to take their strengths as their own.

One way of analysing market power is to look at industry concentration. Since 2000, those figures show the market share of the largest firms in each industry has trended upwards. From baby food to beer, the largest firms hold a high and growing share of the market. For Australian consumers, that means higher prices, because businesses that dominate the market tend to impose on consumers bigger mark-ups. According to recent estimates, mark-ups—the gap between prices and production costs—increased by six per cent over the past two decades. Australians cannot afford for the trend in declining competitive pressures to continue.

That need for change to our competition laws is something that the Council of Small Business Organisations Australia has noted. In May this year, CEO Alexi Boyd said:

Reforming competition policy is crucial to ensure Australia remains a place where small businesses can grow and thrive …

The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, welcomed the introduction of this legislation. As he noted, rebalancing relationships between small and large enterprises has an important role to play in promoting economic growth. Mr Billson also said that penalties for anticompetitive behaviour 'need to be more meaningful and not just an easily absorbable cost of doing business'.

Schedule 1 of this bill seeks to do just that—to increase the maximum penalty available for breaches of competition and consumer laws to ensure the price of misconduct is high enough to deter unfair activity and to ensure consumers retain a robust level of protection. By strengthening penalties, Australia will be promoting competition and better corporate behaviour. Greater competition means better prices and more choice for Australian households.

Australia's competition laws have long needed an update. It's been close to 30 years since the maximum penalty for anticompetitive behaviour was increased. As a result, we've fallen behind our international peers. In 2018, the OECD found that the average and maximum competition penalties in Australia are substantially lower than in comparable jurisdictions. The amendments in schedule 1 will increase maximum penalties for corporations that engage in anticompetitive behaviour from $10 million to $50 million and from 10 per cent of annual turnover to 30 per cent of annual turnover for the period the breach took place. The maximum penalty for individuals who engage in anticompetitive conduct will increase from $500,000 to $2.5 million. This will bring Australia into line with comparable international jurisdictions and will ensure that fines have a meaningful deterrent effect.

It's been noted by the Parliamentary Joint Committee on Human Rights that the increases in penalties are substantial enough to warrant considering whether a criminal standard ought to be considered rather than a civil standard of balance of probabilities. I have great respect for the Parliamentary Joint Committee on Human Rights, ably chaired by the member for Macnamara, and I thank the committee for bringing this issue to the parliament's attention. However, the Albanese government believes the use of the civil standard is appropriate and proportionate.

As I have noted, Australia's fines are presently substantially lower than in equivalent jurisdictions. This bill seeks to ensure we do not fall behind and risk those penalties being treated as just a cost of doing business. Increases to penalties are necessary for effective deterrence. The bill also provides discretion to the courts on how these penalties are enforced. While the maximum penalty is being raised, judges will continue to use their discretion and apply maximum penalties only to the most egregious cases. I appreciate the Parliamentary Joint Committee on Human Rights raising this important point, and I am confident that protecting the courts' right to discretion will ensure that all are treated fairly.

Schedule 2 to this bill will better protect consumers and small businesses from unfair contract terms by strengthening the existing protections against unfair terms in standard-form contracts. Standard contract terms are a commonly used and cost-effective option for businesses, as they avoid costs associated with negotiated contracts. An unfair contract term is one that's one sided and excessive and isn't necessary to protect one party's interests but causes detriment to the other party. Protections were first introduced in 2010 for consumer contracts and in 2016 for small-business contracts, to deal with terms that caused significant imbalance in the parties' rights and obligations. However, consultation with stakeholders suggested that unfair terms are still prevalent. While courts presently have the power to void unfair contract terms, what has become clear is that it is necessary to introduce strong deterrents. That's partly because consumers and small businesses generally lack the bargaining power to effectively review and negotiate terms when entering into contracts with larger parties. The hallmark of effective legislation is that it has a deterrent effect on the behaviour it seeks to regulate. It is unfortunately evident that unfair contract terms remain a significant problem.

What do we mean by 'unfair contract terms'? Let me take the House through some examples. In one case, the ACCC raised concerns about contracts between farmers and milk processors in the dairy industry. The contracts allowed milk processors to unilaterally change basic supply terms, such as the price they paid, without giving farmers the option to terminate the contract. The contracts also required that farmers comply with lengthy notice periods before terminating the contract, while giving milk processors much greater flexibility to terminate the contract.

In another case, a contract between a potato wholesaler and potato growers included terms that allowed the wholesaler to unilaterally determine or vary the price it paid farmers for potatoes; unilaterally vary other contract terms; declare potatoes as wastage without a mechanism for proper review; and prevent farmers from selling potatoes to alternative purchasers. In another case, the ACCC noted that chicken growers were being locked into contracts with meat processors that allowed processors to force growers to upgrade their facilities to fit with the needs and preferences of the processors.

The ACCC has also raised concerns about a supplier of serviced office space that was imposing on tenants terms that allowed the supplier to automatically renew contracts unless the customer opted out; unilaterally increase the contract price; and unilaterally terminate a contract. There was even a contract term that allowed the supplier to keep a customer's security deposit if the customer failed to request its return. In another case, the ACCC raised the issue of a company which leases photocopiers, scanners and printers to thousands of small businesses. Its contracts contained unfair terms such as automatic renewal that meant contracts were automatically renewed unless the customer cancelled a certain number of days before the end of the contract; termination payment terms that required customers to pay excessive exit fees when they cancelled their contract; and unfair payment terms that required customers to pay for software licences as part of the agreement even when they had not received the software.

Contract law can be complicated, but the principle is simple: big and powerful firms must stop putting unfair terms into their contracts with consumers and small business.

This bill will introduce stronger deterrents by prohibiting, through civil penalty provisions, the use of and reliance on unfair terms in standard form contracts. It will also provide a 12-month transition period that will allow businesses time to prepare. The bill will also expand the class of contracts that are covered, to ensure that a larger number of small business contracts are afforded protection. The government's expectation is that regulators will continue to take a reasonable and proportionate approach to enforcing these protections. These amendments will ensure customers and small businesses get a fair go when entering into standard-form contracts with larger partners.

Since at least the days of Adam Smith, economists have recognised the central role of competition in driving growth and productivity. If we are to increase living standards and deliver for consumers, the Australian economy needs a dose of competition reform. By strengthening the deterrents against bad behaviour by monopolists, we make our economy fairer, more dynamic and more competitive. I commend this bill to the House.

Question agreed to.

Bill read a second time.’

Second reading speeches in the Senate

Senator Jonathon Duniam [Liberal Party of Australia] [Senate Hansard, 27 October 2022]
The opposition will not be opposing this legislation, the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022. …

Senator Carol Brown [Australian Labor Party] [Senate Hansard, 27 October 2022]
The Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 will deliver on the government's election commitments to help ease the cost of living by increasing penalties for breaches of competition and consumer laws, and to provide greater protections for small businesses from unfair contract terms.

Schedule 1 to the bill will increase the maximum penalty for anticompetitive behaviour under the Competition and Consumer Act 2010 as well as breaches of the Australian Consumer Law to ensure the price of misconduct is high enough to deter unfair activity, and to ensure consumers retain a robust level of protection.

In 2018, the Organisation for Economic Co-operation and Development found that the average and maximum competition penalties in Australia are substantially lower than those in other international jurisdictions. As a result, there is a risk that a breach of the existing competition law could be seen as an acceptable cost of doing business by some large firms.

Consumers and small businesses often lack the resources and bargaining power to effectively review and negotiate terms in standard form contracts they are offered by a larger party.

The existing unfair contract terms protections in the ACL and the ASIC Act provide that where a court finds a term is unfair, the term is void.

This approach has not provided sufficient deterrence against the use of unfair terms, which remain prevalent in standard form contracts.

The amendments introduce civil penalty provisions prohibiting the use of, and reliance on, unfair terms in standard form contracts. This will enable a regulator to seek a civil penalty from a court. The existing definition of an unfair term remains unchanged.

The government's expectation is that regulators will continue to take a reasonable and proportionate approach to enforcing the unfair contract terms protections, including affording businesses an opportunity to respond to allegations of unfair terms before commencing any legal proceedings.

The bill includes a requirement to review the reforms two years after commencement, and the government will also welcome feedback from stakeholders ahead of this review. I commend the legislation to the Senate.’

Senator Nick McKim [Australian Greens] [Senate Hansard, 27 October 2022]
The government is to be commended for bringing forward this bill. It will increase penalties for anticompetitive conduct and it will expand the scope of unfair contract terms. The Greens will be supporting this legislation accordingly. In particular, the Greens welcome the increase in civil penalties for various contraventions of competition and consumer law. Under the bill, maximum civil penalties for individuals—and I want to highlight those words, 'civil penalties for individuals'—including the CEOs and other executives of corporate Australia, will increase from $500 million to $2.5 million. As the government has explained, this will put penalties for anticompetitive conduct in Australia on par with those in comparable jurisdictions around the world. After nine years of the Liberal government dragging the chain, this bill will finally bring Australia up to scratch. …