(Bloomberg) -- Maximum penalties for breaches of consumer law are “too low” to deter corporate wrongdoing, according to the head of Australia's competition watchdog.
Penalties need to be “many times higher than they are now to have a sufficient deterrent effect on larger firms,” Australian Competition and Consumer Commission Chairman Rod Sims said in a speech on Saturday in Sydney.
Sims highlighted the case of Nurofen maker Reckitt Benckiser Group, which was fined A$6 million ($4.45 million) last year for misleading consumers over pain-specific product marketing. He suggested that A$60 million would have been a “more appropriate” deterrent.
The ACCC head also said the penalties imposed in Australia for breaches of competition law were “stunningly lower” than other countries. He highlighted the case of Macquarie Bank Ltd. and Australia & New Zealand Banking Group Ltd., which agreed to pay combined fines of A$15 million after admitting to attempted cartel conduct. At the time, Judge Michael Wigney expressed concerns the agreed penalties were at the “very bottom of the permissible range.”
Sims warned corporate Australia that penalties in the future would likely be much higher following a 2009 legislative change that raised the maximum penalty per breach to $100 million from $10 million. The ACCC is now starting to encounter cases where these higher penalties can apply, he said, pledging to work with the courts to implement a “step-change” in fines.
To contact the reporter on this story: Emily Cadman in Sydney at ecadman2@bloomberg.net.
To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, John McCluskey, Andrew Janes
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