Consumer watchdog v big business: the top 10 ACCC court cases

admin | 杭州桑拿
7 Apr 2019

Jetstar and Virgin: Accused of misleading customers about airfares. Photo: Louise Kennerley EnergyAustralia: In the hot seat over door-to-door selling. Photo: Ryan Osland

Woolworths: Breached shopper docket undertakings about fuel discounts. Photo: Brad Kanaris

Coles: Found guilty of misleading customers about its bread. Photo: John Woudstra

Rod Sims, head of the ACCC. Photo: Nic Walker

Egg producers: “Planned a cartel”. Photo: Michele Mossop

Coles in trouble over spring apple claims

Misleading claims, drip-pricing and cartel conduct – some companies will do anything to squeeze every dollar out of your wallet and, at times, in breach of the law.

The Australian Competition and Consumer Commission won 100 per cent of its 28 consumer protection-related cases that were closed by the Federal Court in the past financial year, trumping companies such as Scoopon, Luv-a-Duck and EnergyAustralia.

The watchdog secured $12.1 million in penalties and other remedies in the process, its annual report shows. It is still locked in 12 consumer protection-related court battles.

Of the seven competition-related cases closed in the past financial year, the ACCC won four, lost and appealed in a case against ANZ, lodged a cross-appeal in a case against Flight Centre and lost a case against Coles.

The watchdog also received $220,000 from 23 infringement notices, including $51,000 from the owners of the GAP fashion chain for flogging non-compliant kids’ pyjamas and $20,400 from Carlton and United Breweries for tricking punters into thinking its Byron Bay Pale Lager was made by a small, local brewer.

Here is a wrap of the most noteworthy ACCC Federal Court cases in the past couple of years.


Status: In court

In May, the ACCC launched court action against Coles, claiming it was engaging in “unconscionable conduct” by forcing 200 suppliers to pay ongoing rebates to fund the supply chain improvement program, Active Retail Collaboration.

Last month, the regulator launched a second round of legal action against the supermarket giant, alleging it was forcing suppliers to unfairly plug gaps in its profits and pay for “markdowns” and “waste”.

Coles had a “Perfect Profit Day” each year, a day to bully small suppliers into paying the gap when their products failed to hit budgeted profits, court documents allege.

Coles rejects the accusations and both matters are before the court.


Status: In court

A toddler suffered chemical burns, a woman fractured her vertebra and a man hit his head on concrete, because Woolworths knowingly sold hazardous home-brand products through its stores, the ACCC alleges.

In September, the watchdog issued Woolworths with court papers, alleging it failed to alert authorities promptly and to begin recalls after receiving reports of serious injuries linked with some of its products, including deep fryers with weak handles, self-igniting safety matches, drain cleaners with a faulty child-resistant cap, and collapsing chairs.

It alleges that, by offering the products for sale, Woolworths made them out to be safe when they were not. The next hearing will occur on November 18.


Status: In court

In August, the watchdog chased after the heavyweights of the petrol world, accusing them of co-ordinating fuel prices via a Brisbane-based website that updated pump price listings every 15 minutes.

The ACCC claimed BP, Caltex, Coles, Woolworths and 7-Eleven were using the website Informed Sources in a manner “likely to increase petrol price co-ordination” and dampen competition, leaving motorists worse off.

A lift of 1¢ a litre in the petrol price would cost Australian motorists about $190 million a year, the ACCC says. The retailers and the price-monitoring firm face up to $10 million in penalties if found liable.


Status: In court

The ACCC began legal proceedings against Jetstar and Virgin in June for luring online customers with low headline airfares, only to make them pay more by “dripping” fees and charges during the booking process.

Prosecutors alleged they failed adequately to disclose an extra booking and service fee, which for Jetstar customers was $8.50 on a one-way ticket, and for Virgin customers $7.70, therefore misleading and deceiving customers.

In court, Virgin’s barrister said the fees were common practice.

“The familiarity of consumers with booking and service fees and like charges has the potential to bear on the issue of what consumers are likely to understand of what a website is likely to convey.”

Jetstar’s next day in court is on November 17.


Status: In court

Egg farmers planned to kill millions of hens prematurely and bury their eggs as part of an industry-wide strategy to boost their profits, the Federal Court was told in May.

The ACCC alleged the farmers, who were facing a “catastrophic” oversupply that would swamp the market, drew up the plan to create a false shortage and increase consumer demand to keep their profits intact.

It accused the industry body Australian Egg Corporation of attempting to create a cartel to manipulate egg prices for both grocery shoppers and businesses.


Status: ACCC one win, one loss

In February, the ACCC took Coles and Woolworths to court in separate misuse of market power cases, saying both had breached an undertaking limiting fuel discounts linked to supermarket purchases to a maximum of 4¢ a litre.

Both chains had introduced new schemes soon after that allowed shoppers to increase their discounts by spending money at their petrol stations’ convenience stores.

The Federal Court in April ruled Woolworths guilty of breaching the undertaking made to the regulator, although it cleared Coles of wrongdoing. The ACCC says it remains concerned.


Status: ACCC one win, one in court

Two of Australia’s biggest egg producers fronted the Federal Court in December 2013 after the ACCC began separate legal actions against them over the use, or misuse, of the term “free range”.

In September, the court declared NSW-based Pirovic had misled consumers by trying to pass off eggs as free range when their hens were housed in crowded barns, slapping it with a $300,000 fine.

The ACCC is still locked in a court battle with Western Australia’s egg giant Snowdale, which it says has “free range” hens that cannot move about freely because of various factors, including stocking density and barn openings.


Status: In court

Unilever blew the whistle on an alleged laundry detergent cartel it was involved in with the makers of Radiant (made by Cussons) and Cold Power (made by Colgate-Palmolive) since 2009, with the knowledge of Woolworths.

It was granted immunity, as the ACCC began court action in December against Colgate-Palmolive, one of its former directors Paul Ansell, Cussons and Woolworths, over an alleged attempt collectively to deny consumers the benefits of lower prices for laundry detergent.

The scheme was code-named “project mastermind” in an internal Cussons email.

The ACCC is seeking damages of up to $10 million or 10 per cent of each company’s annual turn­over.

“These alleged arrangements also standardised the ultra-concentrate products offered, denying consumers a variety of choices on pricing, package volumes and the strength of the concentrate product,”  ACCC chairman Rod Sims said at the time.


Status: ACCC win

The mislabelled bread saga began when former Victorian premier Jeff Kennett discovered his “freshly baked” Cuisine Royale bread from Coles was made in Ireland. Angry, he mailed the offending items to Mr Sims who launched an inquiry.

The ACCC took Coles to court in June last year for misleading consumers to think its bread was made on the day at the store when, in some cases, the bread was partially baked months earlier in factories as far away as Denmark, Germany and Ireland.

The judge declared Coles guilty in June this year and, in a ruling in September, banned the chain for three years from advertising its bread is made or baked on the day it is sold when this is not the case.

The court is yet to hand down its decision on the penalty, which could be more than $3 million.


Status: ACCC win

Last year, the ACCC concentrated its efforts on the harm caused by energy retailers involved in door-to-door selling, securing $5 million in penalties, two court-enforceable undertakings and infringement notices totalling $26,400.

In one of the larger cases, the regulator launched court action in March 2013 against EnergyAustralia and four of its associated marketing companies for making misleading claims and engaging in deceptive conduct while signing up consumers in their homes.

In April, the Federal Court ordered by consent that EnergyAustralia pay a penalty of $1.2 million for unlawful door-to-door selling practices.

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