Compliance with the Trade Practices Act 1974

The inquiry into compliance with the Trade Practices Act began with terms of reference dated 17 December 1992.

The final report (ALRC Report 68) reviewed the sanctions, penalties, remedies and other provisions in the Trade Practices Act 1974 (TPA) relating to compliance with Part V, having regard to the need for effective compliance, difficulties that had been experienced, and the need for quick, cost effective and fair remedies.

ALRC Report 68 also addressed whether the recommendations in relation to the consumer protection provisions in Part V should be applied to the provisions on restrictive trade practices in Part IV or those on unconscionable conduct in Part IVA.

The ALRC found that generally the TPA was working with the fair trading principles being effective and well regarded. However, the report outlined that there were a number of impediments to the Trade Practices Commission, lack of understanding by consumers and business as to their rights and obligations under the TPA, inappropriate court procedures, limitations in penalties and lack of access to the TPA because of the high cost of litigation.

Key recommendations

• There should be a national scheme of consumer protection laws.
• There should be greater emphasis on voluntary compliance by clarifying the Trade Practices Commission’s objectives and functions and giving priority to persons who suffer loss or damage.
• Civil penalties should be introduced into Part V of the Trade Practices Act.
• There should be new penalties available for contravening the Trade Practices Act. These should include corporate probation orders, corporate community service orders and adverse publicity orders.

Implementation

The federal Government responded to the report in its Justice Statement of May 1995.

The main recommendations of the report were agreed to or accepted in principle including recommendations aimed at encouraging voluntary compliance with the Trade Practices Act 1974 (Cth), enabling the Trade Practices Commission to bring representative actions on behalf of consumers and for an enhanced trade practices enforcement regime. The government also announced that, as well as making necessary amendments to the Trade Practices Act 1974 (Cth), it would be pursuing the Commission’s recommendations on the development of a national scheme of consumer protection laws. The recommendations on new remedies and administrative powers were not accepted.

The Trade Practices Amendment Act (No 1) 2001 came into effect in July 2001. The major features of the Act are:

• An increase in the maximum penalty levels under the TPA to $1 million for offences against the consumer protection provisions.
• The ACCC has power to intervene in private proceedings and institute representative actions for contravention of the restrictive trade practices provisions.
• The court can impose non-monetary penalties such as community service orders, probation orders and adverse publicity orders for contravention of the TPA.
• The limitation periods are extended to six years.

• An amendment clarifies that the courts are to give preference to compensation over fines and pecuniary penalties if both are ordered.

Most of the provisions in this Act are based upon recommendations in ALRC 68 (although the limitation period amendment goes against ALRC recommendations).