What is Australian Competition and Consumer Law? A Guide for Australian Businesses

Co-Author by Zachary Rowsell

KEY INSIGHTS:

• The ACL applies broadly: It regulates how businesses interact with consumers, including advertising, pricing, contracts, consumer guarantees and product safety.

• Businesses must avoid misleading conduct: Claims, pricing, product descriptions and marketing must not be misleading or deceptive.

• Consumer rights cannot simply be excluded: Consumer guarantees apply automatically, and relevant standards for contracts must not contain or rely on unfair contract terms.

• Non-compliance can be costly: ACL breaches can lead to significant penalties, compensation, reputational damages and regulatory action, making regular compliance reviews and legal advice important.

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Australian businesses operate within a legal framework designed to promote fair competition and protect consumers. One of the most important parts of that framework is the Australian Consumer Law (ACL).

The ACL establishes rules which governs how businesses interact with consumers, including rules concerning advertising, pricing, contracts, consumer guarantees, product safety and unfair business practices. For businesses, understanding these obligations is essential to reducing legal risk and maintaining consumer trust.

But what exactly is Australian Competition and Consumer Law, how does it affect your business and how can our commercial law team help?

 

What is the Australian Consumer Law? 

The Australian Consumer Law is set out in Schedule 2 to the Competition and Consumer Act 2010 (Cth). It operates nationally and provides a consistent set of consumer protection rules across Australia.

While the Competition and Consumer Act also contains provisions dealing with competition matters, such as cartel conduct, misuse of market power and certain acquisitions, the ACL specifically addresses consumer protection and fair trading.

The ACL applies to a wide range of businesses and transactions. Whether a business operates from a physical shop, provides professional services or sells products online, its activities may be subject to the ACL.

 

What does the Australian Consumer Law Cover?

The ACL covers a broad range of conduct. Some of the key protections include:

• misleading or deceptive conduct;

• false or misleading representations;

• unconscionable conduct;

• unfair contract terms;

• consumer guarantees;

• product safety requirements;

• pricing practices; and

• various unfair sales practices.

These rules can apply at different stages of the customer relationship, from advertising a product through to entering into a contract and dealing with complaints or defective goods.

 

Misleading or Deceptive Conduct 

One of the fundamental protections under the ACL is the prohibition against misleading or deceptive conduct.

Section 18 provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive.

This can extend beyond deliberately false statements. Businesses should carefully consider whether their advertising, website content, product descriptions, pricing representations and other communications could create a misleading impression.

For example, a business may face legal issues if it makes an unsupported claim about a product’s performance, represents that a discount is greater than it really is, or creates a misleading impression about the characteristics or benefits of its services.

 

Consumer Guarantees

The ACL also provides consumers with automatic consumer guarantees when they acquire qualifying goods or services.

For goods, these guarantees can include requirements that the goods are of acceptable quality, fit for a disclosed purpose and match their description. Services are also subject to guarantees, including that they will be provided with due care and skill and, in certain circumstances, be fit for a particular purpose.

Importantly, consumer guarantees are not the same as a voluntary warranty. Consumer guarantees arise automatically under the law and cannot simply be removed by a business’s terms and conditions.

Where a product or service fails to meet a consumer guarantee, the consumer may have rights to a repair, replacement, refund, cancellation or compensation, depending on the circumstances.

Businesses should therefore avoid statements such as “no refunds” where such statements suggest that consumers have no rights under the ACL.

 

Unfair Contract Terms

The ACL also regulates unfair terms in certain standard form consumer and small-business contracts.

A term may be unfair where it causes a significant imbalance in the parties’ rights and obligations, is not reasonably necessary to protect the legitimate interests of the advantaged party, and would cause detriment if relied upon. The law also requires consideration of the contract as a whole and the transparency of the term.

Since November 2023, proposing, using or relying on unfair contract terms in relevant standard form contracts can attract penalties. Businesses that regularly use standard terms and conditions should therefore review their contracts periodically rather than assuming that previously used clauses remain compliant.

 

What Happens if a Business Breaches the ACL?

A breach of the ACL can have significant consequences.

Depending on the nature of the conduct, enforcement action may result in court orders, compensation, injunctions, enforceable undertakings, infringement notices or financial penalties.

The potential financial consequences can also be substantial. For certain ACL contraventions occurring on or after 28 March 2026, the maximum financial penalty for corporations is the greater of $100 million, three times the reasonably attributable benefit obtained from the conduct, or 30% of adjusted turnover during the relevant breach period where the benefit cannot be determined. Individuals can face maximum penalties of up to $2.5 million for relevant contraventions.

However, financial penalties are not the only risk. Businesses may also experience reputational damage, customer disputes and significant costs associated with rectifying non-compliant practices.

 

How can Businesses comply with the ACL

ACL compliance should form part of a business’s ordinary risk-management processes.

Businesses should regularly review their advertising and marketing claims, pricing practices, contracts and customer-facing policies. Staff should also understand how consumer guarantees operate and how complaints, refunds, repairs and replacements should be handled.

It is particularly important for businesses to ensure that their terms and conditions do not attempt to exclude rights that cannot legally be excluded and that representations made to customers can be substantiated.

The Australian Competition and Consumer Commission (ACCC) continues to focus on areas including misleading pricing, greenwashing, unfair contract terms, digital markets and compliance with consumer guarantees in its 2026–27 priorities.

 

Why Does Australian Consumer Law Matter?

The ACL is relevant to almost every business that deals with consumers. Its requirements can affect everyday decisions, from the wording of an advertisement to the terms of a customer contract and the way a business responds when something goes wrong.

Understanding the ACL can help businesses identify potential risks before they develop into disputes or regulatory action. Where a business is unsure whether a particular practice, contract term or marketing claim complies with the law, obtaining legal advice can help clarify its obligations and reduce the risk of costly consequences.

 

How Can Coutts Help You?

Understanding your obligations under the Australian Consumer Law is an important part of protecting your business and avoiding costly disputes. Whether you are reviewing your advertising and marketing practices, assessing your consumer terms and conditions, responding to a complaint or dealing with an allegation of misleading or deceptive conduct, obtaining the right legal advice early can help you identify and manage potential risks.

At Coutts, our Commercial Law team can help you understand how the Australian Consumer Law applies to your business and provide practical advice tailored to your circumstances. We can assist with reviewing contracts, consumer-facing terms, marketing materials and business practices to help ensure they comply with your legal obligations.

Speak with our Commercial Law team today to discuss your options and how we can help your business navigate its obligations under the Australian Consumer Law.