The Trade Practices Act (TPA) was enacted by the Commonwealth Government in 1974. More than 30 years on, many MICE sector businesses still do not comprehend the all-pervasive application the TPA has to their activities.
There is almost nothing you can do in business without having to consider the effect of the TPA. The Australian Competition and Consumer Commission (ACCC) is now a well-funded and well-resourced organisation. If your business breaches the TPA, it is not a matter of if, but when the ACCC will come-a-knockin’!
Advertise or make any promise or claim about your products or services to your customers and you’ll need to ensure there is nothing misleading or deceptive in what you have said. You even have to be careful about what you don’t say, since silence can sometimes be misleading and deceptive if you are in a situation where there is a duty to speak up!
Any arrangements with competitors also have obvious potential for breach of the TPA. The TPA prohibits a wide range of restrictive trade practices and severely penalises collusive conduct between competitors with respect to pricing (this is a major “no-no”) and other forms of restrictive practices. The TPA must also be considered in the context of any merger or business acquisition, especially transactions between competitors.
If your business supplies goods or services to “consumers” (a technical definition applies here), then there is a whole division of the TPA devoted to imposing warranties and obligations into your contracts and obligations towards customers.
The TPA covers such additional matters as industry codes, access to international cargo shipping, price exploitation under the GST legislation, access to telecommunications infrastructure, safety standards for consumer products, franchising codes and a range of other matters.
The TPA applies primarily to corporations, but statutory and other bodies corporate are also caught. Even if your business is run as a sole trader or partnership many of the principles of the TPA will apply to your business, either via the various state Fair Trading Acts or by virtue of the Competition Policy Reform Acts adopted by the states and territories.
The consequences of breaching the TPA can be most severe – pecuniary penalties of up to $10 million per offence can be imposed. Court cases can be long, complex and expensive and the publicity can be very damaging to the reputation of a business. Compliance with the TPA is not just mandatory and enforceable by severe penalties – it makes good commercial sense and will enhance your business reputation.
The need to manage/minimise the risk of breach of the TPA is thus obvious. Staff awareness of the danger areas is essential.
One of the best ways to raise the level of awareness – and to manage risks generally – is to adopt a trade practices compliance policy.
The ACCC, which administers the TPA, encourages businesses to adopt compliance programs and, where a genuine effort has been made to implement a culture of compliance, the ACCC is less likely to prosecute the Act to its fullest extent if a breach inadvertently occurs.
Compliance policy
So what should a compliance policy contain?
What is very clear is that a glib statement that the business intends to comply with the law will not be sufficient. The former chairman of the Australian Competition & Consumer Commission (ACCC), Alan Fels, issued statements saying compliance “will not be achieved merely by having a lawyer to distil legal principles and writing a compliance manual.... Compliance should be integrated into a company’s operations rather than simply being “added on” to avoid the risk of being caught by the regulators”.
A written manual is a useful starting point for any effective compliance program – but rather than summarise the law it should be practical and relevant to your specific business.
It is one thing to adopt a policy, but another to communicate it effectively to the staff – this is an essential feature of any compliance policy. There should be regular training sessions and induction into the compliance program for new staff.
There needs to be an ongoing assessment of the effectiveness of the program and an effort to keep up-to-date with developments in the laws. Adequate resources must be devoted to compliance, such as the appointment of a compliance officer, and sufficient formal time to allow staff to be educated as necessary.
Finally, there must be an appropriate system for identifying and handling problems and complaints if (when!) they arise and a mechanism for developing measures to prevent further breaches once identified.
Pre-fab compliance policies are available, but in our experience they are rarely useful. No two businesses are identical – every business has its own unique range of special risks and issues. There is no substitute for a custom-made program.
Whatever the scope of your TPA issues, a little spent now on a compliance policy may save a great deal of money later in penalties and litigation costs, to say nothing of the stress and distraction this would involve. It may also save your business reputation.
For further details contact Matt Crouch on (02) 8281 7800 or email mcrouch@bartier.com.au
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