The Australian Competition and Consumer Commission (ACCC) believes bigger fines for big business is the key to changing corporate culture in 2018.
The consumer watchdog listed cost-of-living issues as among its key priorities, including energy costs, NBN speeds, consumer guarantees and mortgage pricing.
But ACCC chairman Rod Sims stressed the need for stronger penalties for big business to change corporate culture and improve the treatment of consumers.
Under new laws before Parliament, the penalty for consumer breaches by a company will rise from $1.1 million to $10 million, or 10 per cent of turnover. Fines for individuals will increase from $220,000 to $500,000.
“We really need much larger penalties for big companies when they mislead consumers as this can cause a lot of consumer harm and it has to be stopped,” Mr Sims said.
For larger companies, we really need penalties of well above $100 million for those companies to get the message that this is behaviour that they should not be engaged in.”
While penalties for consumer breaches look likely to be strengthened, Mr Sims conceded the ACCC may have gone too soft on companies in the past when it came to competition cases handled by the regulator.
“I am happy to admit that we haven’t done enough on our side,” he said.
“We may have in the past settled too many cases on the basis of low penalties.”
The Organisation for Economic Co-operation and Development (OECD) has been asked to compare Australia’s penalties with those overseas.
The ACCC will use the report to push the need for greater financial penalties.
“We will use that comparison to see what we can do to get much higher penalties when companies breach competition law, whether that is cartel behaviour, misuse of market power or anti-competitive agreements,” Mr Sims said.
“Our job is to make sure that we don’t settle cases unless the penalty is appropriate, and our job is to argue before the courts that with the change in the law, we really need to be having penalties that are larger than before.”
ACCC signals ‘turning point’ in fight against cartels
The competition regulator said cartels would be under the microscope this year.
In 2017, Japanese shipping company NYK was convicted and fined more than $25 million in what was only the second criminal prosecution in Australia of its type in more than 100 years.
A criminal cartel prosecution involving Japanese shipping line K-Line is also currently before the Federal Court.
“We are now signalling that 2018 is the year of criminal cartel prosecutions. We will see a continuing number in the years ahead. This year will be a turning point,” Mr Sims said.
But he refused to be drawn on whether criminal prosecutions could extend to bank executives under scrutiny.
“I am not signalling out any sector but I am saying executives of large companies could find themselves facing criminal charges in the Federal Court,” he said.
Along with a focus on cost-of-living issues, the ACCC will also revisit national traders, like car retailers, that ignore consumer guarantees.
Mr Sims admitted the systemic issue had been hard to tackle, but said the proposed law to increase penalties for consumer breaches could put an end to the practice.
“We have made consumer guarantees a priority for a number of years. We have taken a lot of action and yet we still see the problems,” he said.
“It is extremely frustrating that companies aren’t getting the message.
“We wonder how many times we have to keep taking people to court to get the message.”