The reforms introduce a number of measures that are likely to have a significant impact on the enforcement of Australian consumer laws. Most importantly, companies lose a number of practical strategic advantages they have had in the past. The reforms mean that the ACCC will no longer have to bring lengthy and expensive legal proceedings and establish contraventions to a standard of proof of beyond reasonable doubt.

Budgetary constraints have meant that the number of proceedings the ACCC has been able to commence in the past have been limited by resources. Infringement notices ("on the spot" fines) will give the ACCC a way of punishing offences which until now have not been pursued. Although the penalties for infringement notices initially might appear quite small compared to the civil penalties, it is not unusual for a number of potential offences to flow from the same factual breach. Multiple penalties are not only possible but seem likely if our experience of the practice of other regulators provides a guide.

The introduction of civil penalties mean that the ACCC no longer needs to prove contraventions to the criminal standard - that is, beyond reasonable doubt - instead only needing to prove contraventions to the lower, civil standard of the balance of probabilities. Other than the burden of proof, there is no material difference between a civil pecuniary penalty and a fine.

In addition, the reforms if enacted will allow the regulator to issue substantiation notices, which effectively shifts the burden of proof to companies to prove the accuracy of their claims. While, in our experience, sponsors of pharmaceuticals and medical devices will, as a matter of routine practice, hold substantiation for the claims made in advertising due to the regulatory environment they operate in, this may not always be readily accessible at short notice - for example, in respect of a global advertising campaign where the substantiation is held by a foreign related entity. Given the short time period allowed to respond to a substantiation notice (21 days, with a possible extension), companies may find it timely to revisit their compliance procedures to ensure that substantiation is held locally for all claims made in advertising.

Further, the ACCC will be given the right to claim non-party redress for consumers. The absence of this power in the past has meant that the regulator has been restricted in the remedies it could seek in litigation in the past and it may have been deterred from bringing a significant number of class actions on behalf of consumers in the consumer protection area. Will this now change?

At this stage it is impossible to say what the precise impact of these reforms on the pharmaceutical and medical device industries will be. However, it is fair to say that these reforms remove some of the obstacles that exist in relation to the ACCC's enforcement powers. As such, we can expect to see the ACCC becoming a more active regulator following the enactment of the Bill.

The full article is available at Mondaq.