Describe about the Contact and Consumer Law for Insensitive External Market.
When a business conduct is too harsh or insensitive to external market forces in a manner that it goes against ethical code of conduct, then, that particular action of an organization is declared as unconscionable conduct. It is mandatory for the business enterprises to avoid such conduct so as to get exempted from any disciplinary actions underneath Australian Consumer Law. The concept is not defined in a specific manner since it is a result of amendments and up gradation of regulations regarding business conduct. When certain cases appeared in front of the court, new laws and jurisdictions have been passed to give effect to such issues. However, it has been referred to as a conduct which is oppressive to customers or competitors of an organization. It is also said to be unfair, but a business action to be declared as unconscionable, it should be more than unfair. As per the jurisdictions from Australian courts, those business operations which involve deliberate misconduct against conscience are declared as unconscionable conducts (Australian Competition and Consumer Commission, 2015).
Summary of the facts
Lux Distributors Pty. Ltd. found to be engaged in unconscionable conduct during the period between 2009 and 2011. It was caught to operate against the section 21 of the Australian Consumer Law. Its conduct also broke the legislations of section 51AB of the Trade Practices Act, 1974. The company was found to be involved in an unconscionable conduct in the facet of dealing with five aged people regarding sale of vacuum cleaners. One of the company’s sales people called some women in their premises by saying that the company is providing free service to its customers. In this scheme, they will give free maintenance service for their vacuum cleaners. The women were pressurised to purchase new vacuum cleaners by unfair sales tactics (Australian Competition and Consumer Commission, 2015).
Results of the prosecution
The company was prosecuted by ACCC in May 2012. But in February 2013, the company was exempted from the case since Justice Jessup declared the company to be innocent. But the case was further presented in Federal Court by ACCC for three customers. Then, in August 2013, the company was declared to be engaged in unconscionable conduct in context of those three customers. The court ordered the company to pay penalty for this misconduct worth $370,000. The amount comprises of fines imposed regarding breach of all the various Acts and laws. The court declared that customers should be entertained via ethical code of conduct, honesty and a fair business should be conducted without deceiving them. It also restricted the company to engage in such activities in future. It asked Lux Distributors Pty. Ltd. to introduce a training and education program for its employees so that they can understand the necessity of compliance to ethics (Australian Competition and Consumer Commission, 2015).
The facts found in this media release, in addition to its results and implications on the company found to be indulged in unconscionable conduct are likely to coincide with the findings given in chapter 3 and chapter 10 of textbook. Hence, the above given facts and results support the sections of textbook.
Australian Competition and Consumer Commission (ACCC), is responsible for checking fair trade practices and conscionable conduct of business operations in the market. It also keeps a check on competition prevailing in the market and make sure that healthy competition prevails among market players so that consumers, business enterprises and the entire community at large can be benefitted. They also hold accountability to impose regulations on services related to national infrastructure. The most critical responsibility of ACCC is to make sure that business enterprise, their employees and even other associates must strictly comply with all the laws given by Australian legislation regarding competitive strategies, fair trading practices and consumer protection regulations. The ethical norms regarding such conduct are listed in the Competition and Consumer Act, 2010.
ACCC is a statutory organization of Australia which also assumes the role of regulator in following areas. First of all, it checks that business firms comply with all the norms of Part IV, IVA, V, VA of the Trade Practices Act and the Prices Surveillance Act. It also has some complementary roles in compliance of various other legislations like Broadcasting Services Act, 1992; Australian Postal Corporation Act, 1989; Telecommunications Act, 1991. The Commission mainly oversees the issues related to fair trade practices, competitive strategies detrimental to customers or market, price fixing, market sharing, boycotts, misuse of market power, exclusive dealings, resale price maintenance, refusal to supply, authorisation, unconscionable conduct, anti- competitive mergers, consumer protection and enforcement of penalties (Spier, 2005).
Hence, it can be concluded that ACCC carries a regulatory role and is quite significant for the Australian economy. Its role is critical in industries like telecommunications and energy and keeps a check on their competition policies. The Commission promotes competition and regulations hand in hand (Spier, 2005).
Summary of the facts
This media release is about an Australian company named Moore Talk communications Pty. Ltd. which is in the business of telecommunications and mobile phones from the city of Brisbane. The company is listed in Australian Stock exchange with the name of MT Marketing. It conducted a national campaigning program outside Brisbane for telemarketing during the period between February 1999 and October 1999. This marketing campaign had an underlying survey for which potential customers of the company’s products were contacted via telephone. They were asked to take part in a survey. To attract a handsome amount of gathering, they offered free digital mobile phones to the lucky customers who will be selected at the end of the survey. While talking with the customers at phone, they were asked to give their consent immediately to attend the campaigning and survey process. If any customer shows interest, he/ she will have a call from another salesman of MT Marketing Campaign. The customer will be told that he/ she is the lucky client of the company to receive a mobile phone free of cost as a gift from the company’s premises. The details will be given to them via fax and a plan for how to access their gift from nearby stores. But the twist was that the customer will receive the receipt of mobile phone only if he agrees to sign up with an access plan of the company. If customer gives his consent to sign up for the plan, a document will be sent to him/ her via fax to be signed. But the company officials did not provide any terms and conditions regarding the plan before signing.
This was suspected by Australian Competition and Consumer Commission. They intuited that the company is involved in misleading and deceptive activities against customers and may adversely impact 2000 of them.
Results of the prosecution
This misleading and deceptive plan of the company compelled Federal Court to order it to receive consent orders from the court before further continuing the plan. Consequently, the Federal Court ordered the company to stop their conduct of misleading customers to an immediate effect. It also added that if MT Marketing wants to continue their campaign they must issue a proper draft to its clients clearly stating all the terms and conditions of the access plan before asking the customers to sign the contract. Section 87B of the Act also enforced certain requirements for the company. It asked the company to have an internal review of all of its activities and processes. It also enforced ethical trade practice compliance for the company. These regulations and investigation against the company show that rules are very stringent in context of telemarketers that all the information, terms and conditions regarding contract should be communicated to client upfront (Enright, 2001).
Considering the above stated summary of the facts and the results regarding misconduct and deceptive activities of companies, it appears to support the explanation given in chapter 10 of the textbook.
The underlying company of this case study is from information technology industry named as Computershare Limited which is a public company in Australia. It operates in various countries offering services in the areas of corporate trust (it acts as a fiduciary entity for its corporate clients and works in their best interest), transferring stocks of customers to other clients and preparing employees stock option plans for other companies. Currently, the company is having its operations in 20 countries which include Australia, UK, US, South Africa, Canada, Hong Kong, New Zealand, Denmark, Germany, etc.
Frauds and dishonest conduct: The Company under study acts as a fiduciary body, which means acting in best interest of the client. If it involves in frauds and provide false information to its clients, it will be very harmful for them. Hence, it will be declared as unconscionable conduct.
Gift giving scams: In a marketing program, offering gifts to customers and deceiving them to enter into contracts without communicating the terms of the contract.
Bribery: Offering some advantages to clients to give them business or to government officials asking for certain permissions and grants.
For unconscionable conduct, Australian Competition and Consumer Commission (ACCC), is held responsible and is required to present such cases in front of the law.
Other tribunals will include the Federal Court of Australia and the Federal Circuit court (Brennan, 2006).
References
Australian Competition and Consumer Commission, 2015. Full Federal Court declares Lux conduct unconscionable. [Online] Available at: https://www.accc.gov.au/media-release/full-federal-court-declares-lux-conduct-unconscionable [Accessed 7 September 2016].
Brennan, S., 2006. Court and Tribunal Decisions Australia.
Enright, M.L., 2001. Mobile phones: Misleading and deceptive conduct. [Online] Available at: https://www.accc.gov.au/media-release/mobile-phones-misleading-and-deceptive-conduct [Accessed 7 September 2016].
Spier, H., 2005. The Role of the ACCC. [Online] Available at: https://www.accc.gov.au/system/files/The%20Role%20of%20the%20ACCC.pdf [Accessed 7 August 2016].
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