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Route IV · The consumer law

Misleading conduct by a competitor: the consumer law’s route

Section 18 of the Australian Consumer Law bans conduct in trade or commerce that is misleading or deceptive, or likely to mislead or deceive, and the ACCC says the law covers conduct that misleads other businesses as well as consumers, whether or not anyone meant to mislead. The ACCC takes reports from businesses about false or misleading claims by other businesses, but it does not intervene directly in disputes.

General information about the Australian Consumer Law, not legal advice. The official places to check are the ACCC and your state or territory’s consumer protection agency.

The rule in the Act

“(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

Australian Consumer Law, section 18, Federal Register of Legislation

The ACCC’s guidance spells out that it covers conduct likely to mislead consumers or other businesses, and that it applies even where no one intended to mislead and no one has yet suffered loss. The ACCC also says any information or claim a business provides about its products or services “must be accurate, truthful and based on reasonable grounds.”

The ACCC frames the purpose in terms a competitor will recognise: “Enterprising small businesses should be able to prosper on the merit of their products or services without fearing that competitors will gain an unfair competitive advantage from dishonest representations.”

Online is not a separate case. In its advertising and selling guide, the ACCC says “there are no specific or different consumer laws in place for social media”, and that the same laws apply there as in any other marketing channel.

What the ACCC does with a report

The ACCC says it does

  • accept reports where people consider a business is doing something it shouldn’t;
  • use those reports to inform its education, compliance and enforcement work;
  • investigate anti-competitive business behaviour that may be illegal, and take action against businesses that break the law.

The ACCC says it does not

  • intervene directly in disputes;
  • give legal advice.

Penalties are a court’s decision. The ACCC says only a court can determine the fine or penalty in any court case, and that the ACCC makes submissions to the court on what it considers appropriate. The Australian Consumer Law is enforced jointly by the ACCC and the state and territory consumer protection agencies.

The steps the ACCC sets out between businesses

For a problem with another business, the ACCC’s page on resolving an issue sets out an order of steps. In outline:

  1. Prepare. Review the communications and any agreements with the other business, so the issue can be explained clearly.
  2. Make contact. Tell the other business what the problem is, the outcome wanted, and what action would settle it.
  3. Put it in writing. If talking does not work, write before taking the issue further: set out the problem and the steps that will follow if it is not resolved, and ask for a reply within a reasonable time. The ACCC notes some third parties expect this step before they will help.
  4. Look for help outside court. If other options fail, the ACCC says to consider seeking independent legal advice; the law society in each state or territory can give information about getting legal advice and refer to a lawyer. Mediation or conciliation involves “an independent third-party” stepping in to help both businesses settle without going to court, and the ACCC says these are usually quicker and cheaper than legal action.
  5. A court or tribunal. The ACCC calls this expensive, stressful and time consuming, and says it should only be considered if all other options have failed. A small claim, generally under $25,000, may be able to go to a small claims court or tribunal.

What the Act itself provides

Part 5-2 of the Australian Consumer Law sets out the remedies, including injunctions under section 232. Section 236 lets a person who suffers loss or damage because of another person’s conduct in breach of Chapter 2 or 3, which holds section 18, recover the amount of that loss by action against that person or anyone involved in the contravention. It sets the time for doing so:

“(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.”

Australian Consumer Law, section 236, Federal Register of Legislation

That is a long way from defamation’s year in Queensland and South Australia, set out in the guide to concerns notices and time limits. The two routes also ask different things. Defamation looks at harm to reputation, and in Queensland lets a company sue only if it is an excluded corporation; section 18 looks at whether conduct in trade or commerce misleads, and its text holds no employee count. The corporations rule is in the guide to defamation and businesses.