Business Studies – Competition and Consumers Act

The Competition and Consumers Act (CCA) 2010 aims to enhance the welfare of Australians through the fair-trading of businesses and incorporating provisions to enhance consumer protection. This has a large impact on marketing practices exploited by Australian Businesses. The Competition and Consumer Act is a major legislation that restricts unethical business marketing practices in Australia. It helps to protect consumers against unethical practices in which they may be misled or discriminated against and also to regulate certain trade practices that restrict competition in the market in order to sustain choice for the consumer.

This influences a business’ marketing mix in which certain pricing strategies and advertising techniques can not be enforced. The Competition and Consumer Act imposes certain penalties for breaching the act, which will impact Australian businesses. Breaching the act can result in being charged for criminal or civil proceedings through the ACCC or another consumer agency. Businesses can expect to receive fines of up to $1. 1million for unconscionable conduct (often an act of illegal intent), whilst individuals can be charged up to $220,000.

The ACCC is now enabled to issue On-the-spot infringements to manufacturers making false claims about their products. Without court action, the ACCC is allowed to fine a company $6600 and an individual $1329 for each infringement of the CCA. After legal fees and damage to a business’ reputation, the result of breaching the act can see a negative impact on an Australian business. The Competition and Consumer Act targets practices that are deemed as undesirable and unethical in the eyes of the consumer.

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These include deceptive and misleading advertising, price discrimination, consumer guarantees, warrantees and refunds. Deceptive and misleading advertising can be seen as the most serious because of the influential nature of advertising. Although it is illegal, many businesses still engage in the practice. An example of deceptive and misleading advertising is the use of fine print. Important conditions are usually included in fine print and are hard to read. Another aspect is before and after advertisement in which digitally enhanced images are shown to mislead consumers of the effects of using the product.

Tests and surveys are used to make unsubstantial claims in order to promote their product effectively but unethically. A products country of origin is usually misinterpreted as ‘product of Australia’ tells us that they have used products of Australia whereas ‘made in Australia’ portrays that the product may have been made from imported goods but assembled or produced in Australia. Packaging can deceive consumers referring to the content size of the product, in which it looks ‘fuller’ than what it is.

Lastly, special offers can be seen as misleading if the offer is advertised for a certain time only, but in fact, it is continuously available. There are two deceptive advertising techniques that are very common among Australian businesses. These are bait-and-switch- advertising and dishonest advertising. Bait-and-switch involves offering a product of low quantity at a low price to entice consumers. Once the low quantity of products runs out, all remaining consumers are directed to the newer, more expensive product.

Dishonest advertising is the use of deceptive phrases or words that claim something about the product that isn’t true. This conveys a false impression of the exact nature of the product. Price discrimination is the alteration of prices of a certain product in different locations or markets. This has been effectively noted by the ACC and now is an illegal practice. The price of a product may vary between rural and urban areas, due to a communities overall socioeconomic status. Another reason may be a product differentiation within a market, e. g. ifferent electricity costs for business and domestic users.

Price discrimination can reduce competition, which is prohibited by the CCA. This also applies to aspects such as credits, rebates, refunds etc. A business is prohibited from giving favoured treatment to selected customers. This influences Australian businesses and the choices they make through pricing strategies. Consumer guarantees refer to the comprehensive set of rights for the consumer in regards to defective goods. These rights allow the consumer to confront a business over its implied conditions.

Implied conditions are unwritten terms of a contract that are usually assumed, such as a product being of acceptable quality prior to purchase. The product must be fit for the purpose of which it is being sold and it must be acceptable in appearance, safety and durability as well as being free from defects. Breaching this concept is considered illegal and can have serious repercussions in accordance to a business reputation or fees for its illegal breach. Warranties offer a degree of protection to the consumer if the product is faulty or the service was not performed efficiently.

This is an obligation that a business has to its consumers. A warranty is a promise by a business that if a consumer is to receive a faulty product, they will replace or repair the faulty product. This assures quality in products and gives consumers a sense of comfort when purchasing. False or misleading warranties are prohibited under the regulations of the CCA. A refund is the consumer’s protection of being sold faulty goods. Businesses are required by law to offer a refund if the product provided is faulty, if it does not match its description or it fails to do the job it is supposed to.

A business is not obligated to offer a refund if the consumer changes his mind, has found the product cheaper elsewhere or damage has occurred after purchase. It is important for a business to display its refund policy in order to limit confusion and disputes. The Competition and Consumer Act has allowed consumers to buy with confidence, knowing that they are free from illegal and unethical marketing practices that may lead to the purchasing of inadequate products.

If they are subject to such practices, the ACCC will represent the consumer and legal action will be taken against the business, compensating for the individual’s loss. The Competition and Consumer Act has an impact on Australian Businesses for those who have breached the act and for those who are following the act. Businesses who have breached the act, face fines or on-the-spot infringements, which can impact small businesses emphatically. They also face the aspect of a tarnished reputation, having an impact on the consumer’s opinion on the businesses credibility.

Businesses who are currently following the acts regulations have to deal with both direct cost (monetary) and indirect costs (time) of complying. Overall, the Competition and Consumer Act has allowed consumers to buy with confidence by setting specific restrictions on Australian businesses marketing practices that seem undesirable and unethical. This impacts Australian businesses, both those that comply and breach the act in monetary aspects as well as social such as the businesses reputation. This act aims at making Australia a fair-trading nation in regards to the pathway between businesses and consumers.

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