Australian regulators are active, well-resourced and conscious of the increasing importance of environmental and social credentials in consumer decision-making.
The Australian Consumer Law (ACL) is a nationwide consumer protection law. Some of the consumer protection provisions in the ACL are mirrored in the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) in relation to financial services.
The ACL and ASIC Act prohibit:
The scope of these prohibitions is broad. Conduct is misleading when it leads, or is likely to lead, someone into error. It can occur regardless of whether anyone was actually misled or whether the business or individual intended to mislead or deceive.
Representations in relation to “future matters” can also be taken to be misleading if a person does not have reasonable grounds for making the representation at the time it is made.
The maximum civil penalties per breach for making false or misleading representations under the ACL and ASIC Acts are set out below:
The greater of:
The greater of:
Additional enforcement powers available to regulators can include disqualification orders, injunctions to prevent on-going conduct and corrective advertising orders.
The ACL also provides for a private right of action for damages for misleading or deceptive conduct or false or misleading representations, including representative or class actions.
Australian regulators are actively monitoring and enforcing these laws in ESG-related matters, particularly in relation to “greenwashing” – involving statements that promote environmental credentials, which may not be substantiated by evidence. In March 2022, the ACCC identified consumer and fair training issues in relation to environmental claims and sustainability as its top consumer priority for 2022 – 23.
To date, the focus has been on:
In relation to alleged “greenwashing” in marketing claims, the ACCC has been pursuing high profile cases for over a decade, most recently against Volkswagen AG in late 2019. In that matter:
In addition, Volkswagen, Skoda and Audi faced class actions following the emissions claims and after four years of litigation, settled with the claimants for a further $120 million as well as legal costs.
Publicly listed companies making “net-zero” claims or other climate-change related disclosures also face a heightened risk of litigation by public interest groups as climate-focused advocacy increases. In August 2021, the Australian Centre for Corporate Responsibility sued Santos Limited in the Federal Court for:
This is the first case to challenge the veracity of a company’s claim to be able to meet a net-zero emissions target. The applicant alleges that in making that claim, Santos engaged in misleading or deceptive conduct, and that the claim that gas was a ‘clean’ fuel was liable to mislead the public as to the nature of Santos’ primary product of natural gas, in contravention of the ACL. This case, while novel, highlights the importance of explaining or substantiating all claims with clarity, particularly on environmental and social issues which are now under particular scrutiny.
The ACCC has recently confirmed it will prioritise working closely in this context with other regulators, including ASIC and the Clean Energy Regulator, to identify and act against false, misleading or deceptive conduct in this area.
The CCA is a national law regulating how corporations deal with customers, suppliers and competitors. The CCA prohibits:
Contraventions of the CCA can attract civil and criminal penalties. The maximum penalties for breaches of the CCA are set out below:
Civil penalties for:
Anti-competitive contracts, arrangements or understandings
Misuse of market power
Resale price maintenance
Cartel conduct (civil or criminal penalties)
Corporations wishing to engage in conduct of social or environmental benefit that may otherwise potentially breach the CCA are able to seek an exemption (termed “authorisation”) for that conduct from the ACCC. A grant of authorisation by the ACCC provides certainty that no legal action will be taken by the ACCC in relation to the conduct.
In general terms, the ACCC will only authorise certain conduct if it is satisfied that the likely public benefit of the conduct outweighs the likely public detriment (the Net Public Benefit test). This includes cartel conduct such as price fixing, secondary boycotts and resale price maintenance.
Other types of conduct may be authorised where the Net Public Benefit test is met or the proposed conduct would not be likely to “substantially lessen competition”. This includes anti-competitive agreements, misuse of market power and exclusive dealing provisions.
Any party intending to engage in conduct potentially in breach of one of these provisions of the CCA can apply for authorisation. The applicant bears the onus of satisfying the ACCC that the relevant test for authorisation is met, although the ACCC will also conduct its own inquiries in making its assessment. The ACCC cannot authorise conduct engaged in before its decision on authorisation.
The ACCC’s authorisation process, which gives protection for potentially anti-competitive conduct where a Net Public Benefit test is met offers a possible regulatory avenue for ESG activities between actual or potential competitors that might otherwise be in breach of the CCA.
The CCA does not define “public benefit” or “public detriment” but it is understood broadly as anything of value to the community generally. Relevant ACCC Guidelines already identify “addressing externalities”, including deliver environmental benefits, as a legitimate public benefit claim that applicants might raise. Some examples include:
In September 2020, the ACCC granted a five-year authorisation to enable the Battery Stewardship Council (BSC) to establish and operate a national stewardship scheme for managing certain types of batteries. The scheme, which aimed to provide for appropriate disposal and re-use of batteries, was to be primarily funded by a levy to be passed on to consumers. The ACCC concluded that the significant public benefits to the environment, increased public awareness of recycling and re-use and support for increased innovation, research and development weighed heavily in favour of authorising the conduct.
In August 2021, the ACCC granted a 24-year authorisation to Nike, Goldman Sachs, H&M and Equinix (Australia) Enterprises to pool their electricity demand and jointly tender and negotiate power-purchasing agreements from a solar or wind electricity generation facility. The ACCC considered that there would be minimal public detriment, but significant public benefit in transaction cost savings, greater competition for the supply of electricity and environmental benefits through a reduction in greenhouse gas emissions.
The ACCC legislative framework aligns with current trends in other jurisdictions.
For example, each of the European Commission and UK Competition Markets Authority (CMA) are engaging in separate public consultations regarding how competition and consumer law can better support the transition to a low-carbon economy and sustainability goals.
The focus of competition regulators’ attention in these contexts is ‘sustainability agreements’ between competitors that have the objective of improving sustainability in the relevant industry. These agreements run the risk of falling afoul of cartel prohibitions but foreign regulators are also recognising that the scale of change that sustainability agreements can bring may be required for the transition to low-carbon economies.
It is important to ensure your business is compliant with the CCA and Australian Consumer Law, and is proactive in managing relating to environmental or social issues.
Within the business, and in claims made about products, it is important to avoid fusing the broader environmental values or aims of the business with the credentials of the products themselves. Vague claims like ‘environmentally friendly’ should be avoided unless they can be substantiated.
Further, all claims with an environmental or social dimension made in market-facing documents should also be carefully considered and supported by evidence. Litigation relating to environmental claims can cause great reputational and financial damage, and the frequency of these actions, and their scope, will only increase as environmental issues take centre stage over the coming decade.
 The ACL is Schedule 2 of the Competition & Consumer Act 2010 (Cth) and is applied in each state or territory via each jurisdiction’s applicable laws. It is administered and jointly enforced by the ACCC and the State and Territory consumer protection agencies
 The Australian Securities & Investments Commission (ASIC) is responsible for administering and enforcing the ASIC Act
 Sections 18 & 29, ACL and sections 12DA & 12DB, ASIC Act
 Section 4(1), ACL and section 12BB, ASIC Act
 The value of a penalty unit is prescribed under the Crimes Act 1914 (Cth) and is currently $222 for offences committed on or after 1 July 2020
 See ACCC, Green marketing and the Australian Consumer Law (2011)
 See ASIC, Corporate Finance Update – Issue 4 (March 2021)
 The CCA is applied in each state or territory via each jurisdiction’s applicable laws. It is administered and jointly enforced by the ACCC and the State and Territory consumer protection agencies
 Section 45, CCA
 Section 88(6), CCA
 See Re 7-Eleven (1994), ATPR 41-357 at [42,677] ACCC, Guidelines for Authorisation of Conduct (non-merger) (2019) at p.47
 See ACCC, Guidelines for Authorisation of Conduct (non-merger) (2019) at p.45
 See ACCC Determination for authorisation AA1000476 dated 4 September 2020
 See ACCC Determination for authorisation AA1000558 dated 11 August 2021
 See the European Union’s September 2021 Competition Policy Brief exploring how EU competition rules can complement environmental and climate policies more effectively and its ongoing specific consultations on competition policy, and the CMA’s Call for input on Environmental sustainability and the competition and consumer law regimes, September 2021
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