Product Liability - Australia

Recommendations
Impact on Business
What Next?

On December 12 2007 the Productivity Commission published a draft report on its review of the consumer policy framework (for further details please see “Productivity Commission Publishes Draft Report”). This draft report made many recommendations aimed at enhancing consumer protection and providing greater certainty and lower compliance costs for businesses.

Recommendations

The report's recommendations include:

• introducing mandatory reporting requirements for product recalls, which will be common to all jurisdictions;
• replacing existing laws with a single national consumer protection law to reduce costs for service providers and provide consistent protection for consumers;
• developing a national ‘unfair contract terms’ law that would void terms in standard-form contracts that have caused actual consumer detriment. It is recommended that these provisions largely mirror provisions in the Victorian Fair Trading Act;
• appointing the Australian Competition and Consumer Commission as enforcer of the consumer safety provisions in the new national generic consumer law;
• permitting consumer regulators to enforce their powers by issuing:
  • civil pecuniary penalties;
  • disqualification orders;
  • notices requiring suppliers to substantiate their claims;
  • public warning powers; and
  • infringement notices;
• expanding the powers of consumer regulators to enable them to commence representative actions on behalf of consumers not party to the proceedings;
• introducing hazard identification systems for consumer product incidents; and
• requiring suppliers to report breaches associated with serious injury and death, or products which have been the subject of a successful product liability claim or multiple out-of-court settlements.

The Productivity Commission’s final report, entitled “Review of Australia’s Consumer Policy Framework”, was released on May 8 2008 and included the above-mentioned recommendations.

Following on from this final report, on August 15 2008 the Ministerial Council on Consumer Affairs (MCCA) released a joint communiqué endorsing a single national consumer protection law. The MCCA comprises commonwealth, state, territory and New Zealand ministers responsible for fair trading, consumer protection laws, trade measurement and credit laws. The MCCA’s joint communiqué endorses the key recommendations of the Productivity Commission’s final report.

The MCCA’s proposals will form the basis of an overarching consumer policy framework for Australia, to be endorsed by the Council of Australian Governments on October 2 2008. If endorsed, legislation will be drafted to implement the report’s recommendations. Such legislation will have wide-reaching consequences for both product manufacturers doing business in Australia and consumers.

Impact on Business

For many businesses the proposed new consumer protection law may result in reduced regulation and compliance costs. The new law aims to address existing inconsistencies, gaps and overlaps in Australia’s consumer framework - for example, there will be uniform legislation concerning product recalls, which should reduce compliance costs. However, the new law may also expand the scope of regulation in some areas - for example, the definition of ‘consumer’ will include small businesses.

What Next?

The MCCA’s proposals will form the basis of an overarching consumer policy framework for Australia, to be endorsed by the Council of Australian Governments on October 2 2008. It is expected that the new consumer protection law will come into operation by the end of 2011. Transitional arrangements will be implemented to ensure that businesses have sufficient time to modify their contracts accordingly.

For further information on this topic please contact Julie Walsh, Moira Saville or Tania Noonan at Mallesons Stephen Jaques by telephone (+61 2 9296 2000) or by fax (+61 2 9296 3999) or by email (julie.walsh@mallesons.com or moira.saville@mallesons.com or tania.noonan@mallesons.com).