Competition and Consumer Law Update – August/September 2020 Edition

Competition and Consumer Law Update – August/September 2020 Edition

Competition and Consumer Law Update – August/September 2020 Edition

This is the latest in a series detailing developments in competition and consumer law in Australia, including the activities of Australia’s competition and consumer regulator, the Australian Competition and Consumer Commission (ACCC), published judgments, recently issued proceedings and any relevant changes in the law.

This article covers events which occurred in August and September 2020, including the ACCC’s continuing response to the COVID-19 pandemic. The previous June and July 2020 update is available here.

Oscar Wylee penalised $3.5 million for misleading charity claims

The Federal Court of Australia has ordered that eyewear retailer Oscar Wylee pay $3.5 million in penalties for misleading or deceptive conduct regarding its “buy one pair give one pair” charity claims:

The ACCC commenced proceedings against Oscar Wylee early this year, as covered in our December 2019 / January 2020 update, alleging that Oscar Wylee’s charity claims were misleading, as it has only donated 3,000 frames (without lenses) over a period in which it sold over 320,000 glasses. The ACCC also alleged that Oscar Wylee’s claims regarding an association with Rose Charities were misleading, as it had only ever made a small donation to that charity in 2014. Oscar Wylee admitted liability and made joint submissions with the ACCC to the Federal Court regarding appropriate penalties. Justice Katzmann approved the orders sought by the parties, including $3.5 million in penalties, the publication of a corrective notice, and the implementation of a compliance program. The ACCC media release can be viewed here.

Health Engine ordered to pay $2.9 million in penalties for misleading reviews

In 2019, the ACCC commenced proceedings against Health Engine, an online marketplace used by patients to book appointments with health professionals. The ACCC alleged that Health Engine had engaged in misleading and deceptive conduct by:

  1. sharing patient information with third party private health insurance brokers without adequately disclosing this to customers; and
  2. not publishing approximately 17,000 negative reviews, and editing a further 3,000 reviews to remove negative aspects, to create a more favourable impression of health professionals registered with their system.

Health Engine has now admitted liability. The Federal Court has ordered Health Engine to pay $2.9 million in penalties for the infringing conduct. This is the latest in a series of cases over the last few years tackled by the ACCC involving allegedly misleading online reviews. The ACCC media release can be viewed here.

The ACCC loses appeal against Woolworths’ “compostable” decision

The Full Court of the Federal Court of Australia has dismissed an appeal from the ACCC in relation to environmental claims made by Woolworths regarding its “Select Eco” products. We first covered this judgment in our July 2019 update. Woolworths represented that this line of products was “biodegradable and compostable”, when in fact, the ACCC alleged, the products did not decompose “within a reasonable time”. In agreeing with the trial judge, the Full Court held that the words “biodegradable and compostable” referred to an inherent characteristic of the products, and did not amount to a representation regarding a future matter (i.e., that the products would decompose within a reasonable time). The Full Court therefore dismissed the appeal. The ACCC media release can be viewed here.

ACCC commences proceedings against Sumo Power

The ACCC has commenced proceedings in the Federal Court of Australia against Sumo Power. The ACCC alleges that Sumo Power made false or misleading representations to Victorian customers by promoting energy plans with low rates and discounts to consumers when it planned to substantially increase these prices within a few months. The ACCC alleges that this was misleading, as Sumo Power allegedly represented that the customers would benefit from the rates and discount for the duration of their 12 month contract. The ACCC media release, including the Concise Statement used to commence the proceedings, can be viewed here.

Battle over digital news media bargaining code heats up

In July 2020, the ACCC released its draft code of conduct designed to address bargaining imbalances between Australian news media business and digital platforms, in particular Google and Facebook. The public consultation process has now closed, but the media battle appears to be just beginning. On 31 August 2020, Facebook Australia released a statement threatening to block Australian users from sharing news on Facebook if the code becomes law. The ACCC shot back, claiming that this threat was “ill-timed and misconceived”, and that the bargaining code was intended to ensure Australian news organisations “get a seat at the table” for negotiations with global digital platforms. Google, meanwhile, has been running its own campaign against the proposed code, prominently displaying “warning” messages to Australian users and publishing an open letter decrying the proposed changes. The ACCC has released a short response claiming that the letter contains “misinformation”. The ACCC is now considering the public submissions to finalise its recommendations to the Treasurer.

Further interim authorisations granted by the ACCC

In response to the COVID-19 pandemic, the ACCC has granted various interim authorisations to certain industries allowing companies to cooperate to ensure continued supply of goods and services, when this may otherwise constitute anti-competitive behaviour. The ACCC has now extended the authorisations provided to supermarkets (see the media release here) and oil companies (see the media release here) until 31 March 2021. The ACCC has also granted a “strict” authorisation to energy companies, pursuant to which electricity and gas companies may cooperate on measures to secure Australia’s energy supplies subject to certain conditions, such as oversight by the industry body. The ACCC media release can be viewed here.

Physiotherapy studio agrees to remove unfair contract term

Back in Motion Physiotherapy has provided a court-enforceable undertaking that it will remove certain conditions in its franchisee contracts. The allegedly unfair terms provided that:

  1. any franchisee who leaves the group was prohibited from being involved in a competing practice within 10km of a Back in Motion Physiotherapy franchise for up to 12 months; and
  2. Back in Motion Physiotherapy could charge a franchisee a ”buy out fee” equal to four times their annual royalty rates, if they opted to be released from the restraint of trade clause.

Back in Motion Physiotherapy has agreed not to enforce these terms in existing franchising agreements and will not include them in its future agreements. The ACCC media release can be viewed here.

Live Life Alarms agrees to pay penalties for misleading advertising

Personal alarm company Live Life Alarms has agreed to pay penalties of $25,200 after the ACCC issued infringement notices regarding allegedly misleading advertising on its website. The ACCC alleged the Live Life Alarms made false or misleading representations by publishing a testimonial for a competitor’s product as if the review was for its own product, and by advertising a “14 day money back guarantee” policy when, in fact, it would deduct a sum of $95 (almost 20% of the purchase price) from any refund. The ACCC media release can be viewed here.

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