CONVENTION TOPIC: ACCC REVIEWING NEW CAR RETAILING & INDUSTRY PRACTICES

In what appears to be part of a concerted focus on the part of the Australian Competition and Consumer Commission (ACCC) to focus on trading activities in the automotive industry, the ACCC announced in June 2016 that it is launching a market study of the new car retailing industry in Australia.

In a media release dated 17 June 2016, ACCC Chairman, Rod Sims, said the study will take place in the context of new car retailing being a ‘priority area for the ACCC’. Mr Sims also said that the ACCC has been receiving a ‘high volume of complaints’ from consumers about defects with vehicles covering a ‘broad spectrum’ of manufacturers, and that the ACCC regarded the complaints from consumers as showing that many consumers have difficulty enforcing their consumer guarantee rights (apart from manufacturer’s private warranties).

The ACCC’s study will focus on competition and consumer issues, and, in particular, on four main areas:

  1. compliance with consumer guarantees under the Australian Consumer Law (ACL) and consumers’ abilities to enforce those guarantees (against manufacturers and dealers)
  2. false, misleading and deceptive practices in the marketing of performance, fuel consumption and emissions
  3. the effect on competition and consumers of ‘post-sale care arrangements’ – such as servicing, and
  4. whether consumers and business could be affected by any restrictions on vehicle access to data.

The study will also review ‘industry practices’ generally to identify any other sources of risk to consumers and competition.

The ACCC will collect data for its study through its own surveys and public consultation, and will release an issues paper later this year which will set out the scope of the study and invite public submissions. A draft report of findings is expected to be released in the first quarter of 2017.

The ACCC already has investigations into the car retailing industry underway (or concluded), including:
an investigation into the Volkswagen emission issues, including whether:

(a)    possible misleading or deceptive conduct and unfair practices were engaged in related to the sale of vehicles advertised as meeting certain emissions standards when, in fact, the vehicles did not meet such standards, and

(b)    a safety standard has been breached by these vehicles being fitted with a ‘defeat device’ to defeat emissions testing regimes.
an investigation into consumer complaints against Fiat Chrysler Australia (FCA).

The ACCC has also stated that its market studies go hand-in-hand with its enforcement and compliance activities. Previous ACCC studies and investigations have led to enforcement action.

For example, in the case of FCA, an investigation by the ACCC into complaints from customers concerning vehicle faults and complaint handling led to FCA giving undertakings to the ACCC to undertake a ‘Consumer Redress Program’.

The Consumer Redress Program required FCA to:

  1. identify and contact customers who made a complaint to Fiat Chrysler about vehicle issues between 1 January 2013 and 31 December 2014, and who were refused a particular remedy by Fiat Chrysler (other than those customers whose complaints were resolved to their satisfaction or were resolved in a Court or Tribunal)
  2. offer to have an independent person review the customer’s complaint to determine whether the outcome was in accordance with their Australian Consumer Law rights (or rights under pre-existing laws, as the case may be), and
  3. where a review is conducted and it is determined by the independent reviewer that the outcome was not in accordance with the consumer’s rights, provide or procure that a Dealer provide a remedy on Fiat Chrysler’s behalf as recommended by the independent review, which is consistent with the consumer’s rights under the ACL.

The ACCC has made consumer guarantees under the Australian Consumer Law a consistent enforcement priority. In April 2016, during his annual address to the Committee for Economic Development of Australia, Mr Sims specifically cited three recent instances of the ACCC either taking court action or securing undertakings from corporations concerning compliance with consumer guarantees under the ACL. More details of the ACCC’s enforcement activities are published in the ACCC’s quarterly ‘ACCCount’ publication.

The ACCC’s 2016 Compliance and Enforcement Policy states that the ACCC is currently prioritising work concerning consumer issues arising in relation to new car retailing, including responses by retailers and manufacturers to consumer guarantee claims.

Most Dealer agreements set out a required process for Dealers to follow in the event of a consumer dispute. However, if you are unsure about your obligations to consumers and your rights against the manufacturer, or if you are involved in a dispute and concerned that a manufacturer is requiring you to do something inconsistent with the ACL, you should seek legal advice.

 

This article was written by Evan Stents – Lead Partner and Christian Teese – Associate, Automotive Industry Group | HWL Ebsworth Lawyers.

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