Scammers face 10 million fines under labor proposal to strengthen watchdog

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SCAMMERS would face fines of up to $10 million under a Labor proposal to give the consumer watchdog bigger teeth.

Labors election pledge, announced by Shadow Assistant Treasurer Andrew Leigh in Melbourne on Wednesday, addresses long-held gripes by the watchdog and consumer advocates that the current penalty regime is too lenient.

Currently, companies can be fined a maximum of $1.1 million for breaches of Australian Consumer Law. The proposal would bring consumer law penalties in line with competition law penalties.

The Australian Competition and Consumer Commission has previously called for the change.

Most recently, the ACCC appealed the $1.7 million penalty handed to Nurofen maker Reckitt Benckiser over its Specific Pain claims, arguing the fine was small relative to the profits made on the products.

The ACCC had been calling for fines of $6 million. The largest penalty ever handed down under the ACL was Coles $10 million fine for mistreatment of suppliers.

By comparison, Colgate-Palmolive was recently fined $18 million and Woolworths $9 million for their role in a scam to force consumers to pay more for laundry detergent.

Labors proposal also includes adopting the European Unions penalty system for anti-competitive conduct, which is based on 30 per cent of the annual sales of the relevant product or service, multiplied by the number of years the infringement took place.

That would be limited to the greater of 10 per cent of the companys annual turnover or $10 million.

In a statement, Labor said that despite the clear case for action, in three years the Abbott-Turnbull governments effort to protect consumers amounted to an ASCII emoticon depicting a person shrugging.

Its frankly puzzling, Dr Leigh told

We ought to have penalties for consumer rip-offs that are as substantial as they are for anti-competitive conduct. And we ought to have penalties for anti-competitive conduct that dont allow firms to profit from collusion.

Right now because weve got a dollar limit on the fine, it can be possible to make a motza from colluding and then just treat it as a cost of doing business.

Labor proposes to use some of the revenue from increased penalties to double the ACCCs litigation budget from its current level of $24.5 million to $49 million.

It would also expand the Competition and Consumer Act 2010 to task the ACCC with conducting market studies, so the watchdog can explore public interest issues such as pricing discrepancies and increased market

Mr Leigh said the ACCC had been heavily constrained. Right now they get around 10,000 complaints every year and theyre able to take up about 60, he said. This is about making sure the ACCC has the resources it needs.