Infringement Notices

Articles Written by Dr. Wolfgang Hellmann (Special Counsel)

Since April 2010, the ACCC has the power to use infringement, substantiation and public warning notices in carrying out its enforcement activities. The ACCC has embraced in particular, infringement notices as a potent tool to effectively resolve minor contraventions of the Australian Consumer Law (ACL).

Within the first 20 months since the new powers came into effect, the ACCC has issued more than 70 infringement notices - 64 of which have been paid in full. Given that infringement notices have become an important part of the ACCC's enforcement activities in the consumer protection space, it is worthwhile having a closer look at the ACCC's practice.

The power to issue an infringement notice provides the ACCC with an alternative to court proceedings when dealing with possible contraventions of the ACL. The ACCC may issue an infringement notice where it has reasonable grounds to believe that a person has contravened certain provisions of the ACL. While the penalty amount may vary depending on the alleged contravention, in most cases it will be $6,600 for a corporation (or $66,000 for a listed corporation) and $1,320 for an individual. Once the infringement notice is paid, the ACCC cannot commence court proceedings in relation to the alleged contravention. Payment of an infringement notice will be published on the ACCC's website, but it is not taken as an admission of the contravention.

The ACCC may consider issuing an infringement notice in non-complex and uncontested matters; court proceedings will remain the appropriate enforcement action for serious matters and contraventions which resulted in a significant public detriment. To date, with the exception of one infringement notice in the area of product safety, all infringement notices concerned alleged contraventions of Part 3 of the ACL ("unfair practices"), in particular false or misleading representations and violations of the single pricing requirement. 

The ACCC may only issue one infringement notice for the same alleged contravention. However, this principle does not protect companies from receiving multiple infringement notices. A false or misleading representation in an advertising campaign, for example, is likely to result in multiple contraventions where the same campaign is run in different types of media, or where the same representation is made in different advertisements.

  • In December 2010, Dodo received four infringement notices in relation to a false or misleading representation in an advertisement campaign - one infringement notice for each type of media on which the advertisement was published: TV, radio, Internet and billboard.
  • In May 2011, SingTel Optus received 27 infringement notices in relation to false or misleading representations about the price of its "Max Cap" plans made in various print and online advertisements.

The ACCC is increasingly seeking other remedies, in particular court-enforceable undertakings, in addition to issuing an infringement notice. In YTD 2011, for example, 60% of the matters which were settled by way of infringement notice also involved the alleged contravener providing a court enforceable undertaking to the ACCC. Importantly, as part of the undertaking, the ACCC will request an admission (or at least an acknowledgement) of the contravention.

The ACCC is likely to seek an undertaking, for example, where it considers that the ACCC's public notice about the payment of the infringement notice may not reach all persons affected by the alleged contravention, and there is a need to inform affected persons about the alleged contravention. In the case of false or misleading advertising, the ACCC may, for example, request the alleged contravener to publish corrective notices in newspapers and on its website and/or to send letters to affected customers informing them about the misrepresentation and their rights. Other undertakings the ACCC often requests in the context of contraventions of unfair practices provisions include:

  • to refrain from engaging in similar conduct in the future; and
  • to implement an ACL compliance program.

An infringement notice is an effective way of resolving a potential contravention of the ACL. The high percentage of infringement notices being paid seems to suggest that the ACCC only issues an infringement notice if it has clear evidence that a contravention of the ACL has occurred. If faced with a strong ACCC case, it will usually be the better option for the alleged contravener to pay the penalty rather than to fight the case in court with the likely prospect of the Court imposing a much higher penalty following potentially lengthy and costly legal proceedings. For example, in 2010, a restaurant owner who did not pay the $6,600 penalty in the infringement notice for a contravention of the single pricing requirement was subsequently ordered by the Court to pay a penalty of $20,000 plus the ACCC's legal costs of $4,500.

However, the ACCC's practice of seeking additional undertakings is likely to make the infringement notice process less attractive and may ultimately result in fewer penalty notices being paid.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).