Companies that attempt to enforce unfair contract terms could be hit with a $50 million fine under new competition and consumer laws passed in Parliament last week.

The changes to legislation consist of two parts: the introduction of penalties relating to unfair contract terms, and significant increases in maximum penalties for breaches of certain provisions of the Competition and Consumer Act, including the Australian Consumer Law.

Maximum penalties for companies that breach those provisions are now $50 million – or three times the value derived from the relevant breach.

“The increase in penalties should serve as a strong deterrent message to companies that they must comply with their obligations to compete and not mislead or act unconscionably towards consumers,” ACCC Chair Gina Cass-Gottlieb said.

“These maximum penalty changes will allow the Courts to ensure that the penalties imposed for competition and consumer law breaches are not seen as a cost of doing business, but rather as a significant impost and something likely to raise the serious attention of owners or shareholders.”

In addition, the ACCC can now crack down on businesses that include unfair contract terms in their standard form contracts with consumers and small businesses.

“We have long highlighted the adverse consequences of unfair contract terms on consumers and small business, including franchisees, and suggested that they be outlawed and penalties are required to provide a stronger incentive for businesses to comply,” Cass-Gottlieb said.

Businesses have 12 months to review and update their standard form contracts before these penalties apply.

“Many small business complaints about big business are about unfair contract terms and it will be an enormous boost to small businesses that there will be a far stronger deterrent against the use of such terms.”