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ACCC pushes for ‘general safety provision’ by end of 2019

The ACCC wants a ‘general safety provision’ introduced into the Australian Consumer Law (ACL) by the end of 2019. Such a provision would impose an obligation on suppliers to not supply unsafe products to Australian consumers.[1] 

What is a ‘general safety provision’?

A general safety provision imposes a statutory obligation on a supplier not to supply unsafe goods to consumers – as opposed to a supplier merely being exposed to consumer claims for damages and other remedies after an injury has been caused by the goods.

The practical effect of such a provision is that suppliers must (in order to avoid contravention and penalties) take proactive steps to check the safety of a product before they make a decision about whether to supply it to consumers. While it may come as a surprise to many, no such obligation currently exists under the Australian Consumer Law.

General safety provisions are in effect in several overseas jurisdictions including the United Kingdom, the European Union, Canada, Malaysia, Singapore and Brazil. For example, the general safety provision in the United Kingdom states:

 ‘no producer shall place a product on the market unless the product is a safe product.’

This relatively concise provision is supported by detailed regulations that clarify how compliance with the general safety provision is achieved.

Current position in Australia 

There are various provisions in the ACL that address product safety issues. In particular:

  • Suppliers of goods to Australian consumers have a statutory obligation to ensure that the products they supply comply with mandatory safety standards applicable to that type of product. For example, there is a mandatory safety standard for children’s’ toys that the toy itself, and any of its removable parts, must not be smaller than a certain size so as to minimise choking risks.

  • A supplier of a ‘consumer good’ (which is a good intended to be used, or which is of a kind ordinarily used, for personal, domestic or household use or consumption) has an obligation to notify the ACCC within two days of the supplier becoming aware of the death or serious injury or illness of any person that the supplier considers was caused, or may have been caused, by the use or foreseeable misuse of the consumer good. Depending on the circumstances, a voluntary recall (by the supplier) or compulsory recall (by the responsible Minister) may be required.

  • Goods that are unsafe may contravene statutory guarantees created by the ACL, such as the guarantee as to acceptable quality, which expressly requires goods supplied to a consumer to be safe.

  • Individuals (whether or not they purchased the good in question) are able to bring claims directly against the manufacturer of a good for loss or damage the individual suffers as a result of the good having a safety defect.

However, a supplier does not contravene the ACL by supplying that product to Australian consumers (unless it is subject to a mandatory standard), even if it knows or suspects that it is potentially unsafe.

The ACCC wants this ‘reactive’ product safety framework to be rebalanced through the introduction of a statutory obligation for suppliers to take proactive steps to determine whether products they propose to supply to Australian consumers are safe (and not supply them if they are found to be unsafe).

It is not yet clear whether the ACCC intends for contravention of the general safety provision it is proposing would attract civil or criminal liability. In the UK, contravention of its general safety provision is a criminal offence which can result in up to 12 months imprisonment.

Potential impacts

While there is good logic behind the introduction of a general safety provision, its introduction raises some uncertainties that policymakers and suppliers need to grapple with. For example:

  • Would the provision apply to all participants in the supply chain or only the manufacturer or importer of the product? The meaning of ‘manufacturer’ in the ACL is very broad and can include not just the person that made or assembled the goods but also an importer, a person that holds themselves out as the manufacturer of the goods and a person that allows their name, brand or mark to be applied to the goods.

  • By what standard is a supplier required to determine whether a particular product is ‘safe’ or ‘unsafe’?

  • To what extent (if any) must a business conduct testing to ensure the safety requirement is satisfied, would there be any ‘presumption of conformity’ as is the case under the UK product safety laws, and would a supplier be entitled to rely upon assurances provided by the manufacturer?

  • If the testing demonstrated that the product was safe, what impact does that have on liability for injuries, illness or death that the product may subsequently cause?

In order to discharge their obligations under the general safety provision, suppliers of goods to Australian consumers are likely to need to direct additional resources toward assessing products that they propose to supply (and creating a documentary record of those assessments). 

While a general safety provision may increase compliance requirements, it may also provide some competitive advantage for those businesses that already take proactive steps to test and ensure the safety of their products before supplying them to Australian consumers.

In this regard, chairman of the ACCC, Rod Sims, commented that the provision would “create a level playing field so that those firms who deliberately supply cheap but unsafe products do not derive a financial benefit.”



Authors

MCCOWAN-mark-highres_SMALL
Mark McCowan

Head of Competition

CAMERON james highres2 SMALL
James Cameron

Special Counsel


Tags

Competition/Antitrust

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