Between about 1 January 2011 and about 30 September 2012, the Respondent (HPA), in trade or commerce, in connection with the supply or possible supply of goods, represented to consumers that the remedies available to consumers, in relation to HPA branded desktop computers, notebook computers, laptops and printers (HPA Computer Products) not of merchantable or acceptable quality, were limited to remedies available from HPA at its discretion (the Remedy Limitation Representation);
1.1. when, in fact, in certain circumstances,
(a) consumers were entitled to remedies from retail suppliers of HPA Computer Products, and had a right of action against HPA as the manufacturer of the goods, for goods purchased prior to 1 January 2011, under the Trade Practices Act 1974 (Cth) (TPA) in respect of HPA Computer Products not of merchantable quality; or
(b) consumers:
(i) were entitled to remedies from retail suppliers of HPA Computer Products, such remedies only being at the consumer's election where:
(A) the failure to supply HPA Computer Products of acceptable quality was a major failure;
(B) the failure to supply HPA Computer Products of acceptable quality could not be remedied;
(C) the supplier refused or failed to remedy the failure to supply HPA Computer Products of acceptable quality; or
(D) the supplier failed to remedy the failure to supply HPA Computer Products of acceptable quality within a reasonable time; and
(ii) had a right of action against HPA as the manufacturer of the goods,
for goods purchased from 1 January 2011, under the Australian Consumer Law (ACL) in respect of HPA Computer Products not of acceptable quality,
which remedies or rights could not be excluded, restricted or modified,
1.2. and thereby:
(a) engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of section 18 of the ACL; and/or
(b) made false or misleading representations concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy in contravention of section 29(1)(m) of the ACL.
Between about 1 January 2011 and about 30 September 2012, HPA, in trade or commerce, in connection with the supply or possible supply of goods, represented to consumers that consumers must have HPA Computer Products not of merchantable or acceptable quality repaired multiple times by HPA before they were entitled to receive a replacement HPA Computer Product (the Repair Condition Representation);
2.1. when, in fact, in certain circumstances,
(a) consumers were entitled to remedies from retail suppliers of HPA Computer Products, and had a right of action against HPA as the manufacturer of the goods, for goods purchased prior to 1 January 2011, under the TPA in respect of HPA Computer Products not of merchantable quality; or
(b) consumers:
(i) were entitled to elect to receive a replacement HPA Computer Product from retail suppliers of HPA Computer Products, where:
(A) the failure to supply HPA Computer Products of acceptable quality was a major failure;
(B) the failure to supply HPA Computer Products of acceptable quality could not be remedied;
(C) the supplier refused or failed to remedy the failure to supply HPA Computer Products of acceptable quality; or
(D) the supplier failed to remedy the failure to supply HPA Computer Products of acceptable quality within a reasonable time; and
(ii) had a right of action against HPA as the manufacturer of the goods,
for goods purchased from 1 January 2011, under the ACL in respect of HPA Computer Products not of acceptable quality,
which remedies or rights could not be excluded, restricted or modified,
2.2. and thereby:
(a) engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of section 18 of the ACL; and/or
(b) made false or misleading representations concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy in contravention of section 29(1)(m) of the ACL.
Between about 1 January 2011 and about 30 September 2012, HPA, in trade or commerce, in connection with the supply or possible supply of goods, represented to consumers that the warranty period for HPA Computer Products was limited to a specified express warranty period (the Limited Warranty Period Representation);
3.1. when, in fact, in certain circumstances, consumers were entitled to remedies from retail suppliers of HPA Computer Products, and had a right of action against HPA as the manufacturer of the goods, either:
(a) for goods purchased prior to 1 January 2011, under the TPA in respect of HPA Computer Products not of merchantable quality; or
(b) for goods purchased from 1 January 2011, under the ACL in respect of HPA Computer Products not of acceptable quality,
which remedies or rights could not be excluded, restricted or modified,
3.2. and thereby:
(a) engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of section 18 of the ACL; and/or
(b) made false or misleading representations concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy in contravention of section 29(1)(m) of the ACL.
Between about 1 January 2011 and about 30 September 2012, HPA, in trade or commerce, in connection with the supply or possible supply of goods, represented to consumers that after the expiry of a specified express warranty period, HPA would repair HPA Computer Products not of merchantable or acceptable quality, on condition that consumers pay for such repairs (the Payment Condition Representation);
4.1. when, in fact, in certain circumstances, consumers were entitled to remedies from retail suppliers of HPA Computer Products, and had a right of action against HPA as the manufacturer of the goods, either:
(a) for goods purchased prior to 1 January 2011, under the TPA in respect of HPA Computer Products not of merchantable quality; or
(b) for goods purchased from 1 January 2011, under the ACL in respect of HPA Computer Products not of acceptable quality,
which remedies or rights could not be excluded, restricted or modified,
4.2. and thereby:
(a) engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of section 18 of the ACL; and/or
(b) made false or misleading representations concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy in contravention of section 29(1)(m) of the ACL.
Between about 1 January 2011 and about 5 October 2012, HPA, in trade or commerce, in connection with the supply or possible supply of goods, represented to consumers on its online store at the URL at http://h20386.www2.hp.com/AustraliaStore/ (HPA Online Store) that consumers could not return or exchange HPA Computer Products not of acceptable quality purchased on the HPA Online Store, unless otherwise agreed by HPA, at its sole discretion (the Online Remedy Discretion Representation);
5.1. when, in fact, in certain circumstances, consumers:
(a) were entitled to elect to return or exchange the HPA Computer Product not of acceptable quality from HPA as the supplier of the HPA Computer Products, where:
(i) the failure to supply HPA Computer Products of acceptable quality was a major failure;
(ii) the failure to supply HPA Computer Products of acceptable quality could not be remedied;
(iii) the supplier refused or failed to remedy the failure to supply HPA Computer Products of acceptable quality; or
(iv) the supplier failed to remedy the failure to supply HPA Computer Products of acceptable quality within a reasonable time, and
(b) had a right of action against HPA, as the manufacturer of the HPA Computer Products,
for goods purchased from 1 January 2011, under the ACL in respect of HPA Computer Products not of acceptable quality, which could not be excluded, restricted or modified;
5.2. and thereby:
(a) engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of section 18 of the ACL; and/or
(b) made false or misleading representations concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy in contravention of section 29(1)(m) of the ACL.
Between about 1 January 2011 and about 30 September 2012, HPA, in trade or commerce, in connection with the supply or possible supply of goods, represented to retail suppliers of HPA Computer Products that HPA was not liable to indemnify retail suppliers, in relation to HPA Computer Products not of merchantable or acceptable quality if, without HPA's prior authorisation, retail suppliers provided consumers with a refund or replacement (the Retail Supplier Representation);
6.1. when, in fact, retail suppliers were entitled to a right of indemnity against HPA, either:
(a) for goods purchased prior to 1 January 2011, under the TPA in respect of HPA Computer Products not of merchantable quality; or
(b) for goods purchased from 1 January 2011, under the ACL in respect of HPA Computer Products not of acceptable quality,
which right could not be excluded, restricted or modified,
6.2. and thereby:
(a) engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of section 18 of the ACL; and/or
(b) made false or misleading representations concerning the existence, exclusion or effect of a condition, warranty, guarantee, right or remedy in contravention of section 29(1)(m) of the ACL.
THE COURT ORDERS BY CONSENT THAT:
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Injunctions
7. HPA is restrained for a period of 3 years from the date of these orders, whether by itself, its servants, agents or otherwise howsoever, from representing, in trade or commerce, in connection with the supply or possible supply of goods that:
7.1. the remedies available to consumers, in relation to HPA Computer Products not of:
(a) merchantable quality, are limited to the remedies available from HPA at its discretion; or
(b) acceptable quality, are limited to the remedies available from HPA at its discretion, unless HPA is the retail supplier and:
(i) the failure to supply HPA Computer Products of acceptable quality is not a major failure;
(ii) the failure to supply HPA Computer Products of acceptable quality can be remedied;
(iii) HPA does not refuse or fail to remedy the failure to supply HPA Computer Products of acceptable quality; or
(iv) HPA does not fail to remedy the failure to supply HPA Computer Products of acceptable quality within a reasonable time;
7.2. consumers must have HPA Computer Products not of merchantable or acceptable quality repaired multiple times by HPA before they are entitled to receive a replacement HPA Computer Product;
7.3. the remedies available to consumers, in relation to HPA Computer Products not of merchantable or acceptable quality, are only available for a specified express warranty period;
7.4. after the expiry of a specified express warranty period, HPA Computer Products not of merchantable or acceptable quality, will only be repaired on condition that consumers pay for such repairs;
7.5. products purchased from HPA through the HPA Online Store not of acceptable quality cannot be returned or exchanged, unless otherwise agreed by HPA, at its sole discretion, and in respect of which:
(a) the failure to supply HPA Computer Products of acceptable quality is a major failure;
(b) the failure to supply HPA Computer Products of acceptable quality cannot be remedied;
(c) HPA refuses or fails to remedy the failure to supply HPA Computer Products of acceptable quality; or
(d) HPA fails to remedy the failure to supply HPA Computer Products of acceptable quality within a reasonable time;
7.6. HPA is not liable to indemnify retail suppliers, in relation to HPA Computer Products not of merchantable or acceptable quality if, without HPA's prior authorisation, retail suppliers provide consumers with a refund or replacement.
8 In the event that the ACL is relevantly amended, HPA has liberty to apply to the Court to be released from the injunctions.
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Pecuniary Penalties
9. HPA will pay to the Commonwealth of Australia a total pecuniary penalty of $3,000,000 in respect of the contraventions of sections 29(1)(m) of the ACL referred to in paragraphs 1.2(b), 2.2(b), 3.2(b), 4.2(b), 5.2(b) and 6.2(b) above.
[4]
Disclosure Orders
10. HPA is to, within 14 days of the date of this order, write a letter to all authorised retail suppliers of HPA Computer Products in Australia, with such letter to include statements to the effect that consumers have a statutory entitlement to reject HPA Products not of acceptable quality and request a refund or replacement of the HPA Product from the retail supplier (as set out in Annexure A).
11. HPA is to, within 14 days of the date of this order, for a period of 3 years, publish, in a prominent place at the top of the home page of its website at http://www8.hp.com/au/en/home.html (HPA Website) and the HPA Online Store at http://h20386.www2hp.com/AustraliaStore/ and any other URL used by HPA to market HPA Computer Products or otherwise interact with consumers that directs consumers to the HPA Online Store, in a white typeface of at least 14 point times new roman typeface on a black background, a link reading 'IMPORTANT NOTICE ABOUT CONSUMER RIGHTS', which directs to a notice in the terms set out in Annexure B (Consumer Rights Notice).
12. Following the first 90 days of the publication of Annexure B, the following wording can be omitted from Annexure B:
"If you believe that you have been denied a statutory right or remedy by HP in the past in relation to a HPA Computer Product, or did not pursue a warranty claim because of representations made by HP, please contact HP by email at [insert email address], by phone on 1800 [insert number] or [insert non-1800 number], on the web at [insert web address], or by post to [insert postal address] and your claim will be assessed by HP."
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Adverse Publicity Orders
13. HPA will, at its own expense:
13.1. within 14 days of the date of this order, cause to be published at the top of the home page of the HPA Online Store at http://h20386.www2hp.com/Australia Store/ and the HPA Website at http://www8.hp.com/au/en/home.html and any other URL used by HPA to market HPA Computer Products or otherwise interact with consumers that directs consumers to the HPA Online Store, a link reading 'IMPORTANT NOTICE ABOUT FALSE AND MISLEADING CONDUCT BY HEWLETT-PACKARD' to an adverse publicity notice in the terms and form of Annexure C (Website Notice) to this Application and use its best endeavours to ensure that such notice:
(a) appears immediately upon access by a person to the Online Store and the Website;
(b) appears in an automatically generated active pop-up window or message box whereby a member of the public is required to interact with the window or message box to close it;
(c) is no less than 540 pixels wide by 500 pixels high;
(d) has a border in 100 per cent black with a minimum width of 2 points;
(e) has a banner at the top with the words "PUBLIC DISCLOSURE" appearing in upper case, not less than 18 point times new roman typeface in a black box of height not less than 40 pixels;
(f) has a prominent headline with the words "Published by order of the Federal Court of Australia" and "False and Misleading Conduct by Hewlett-Packard Australia Pty Ltd in relation to the Sale of Computer Equipment and Printers" appearing in upper case, centred in bold, times new roman, not less than 18 point times new roman typeface;
(g) displays the body of the text in a black typeface of at least 12 point times new roman typeface on a white background and justified left unless otherwise stated;
(h) has a baseline text at least 10 point times new roman typeface and centred below the body of the text; and
(i) is maintained on the HPA Online Store, HPA Website and any other relevant URL for a period of not less than 90 consecutive days.
13.2. within 14 days from the end of the 90 day period referred to in subparagraph 13.1(i) above, provide the ACCC with written evidence of its compliance with subparagraph 13.1 above.
14. HPA will, at its own expense:
14.1. commencing within 14 days of the date of this Order, cause to be published an adverse publicity notice, in the form and terms of Annexure C to this Order (Newspaper Notice), in two consecutive Saturday editions of each of the following newspapers:
(a) The Australian;
(b) The Sydney Morning Herald;
(c) The Daily Telegraph;
(d) The Age;
(e) The Canberra Times;
(f) The Courier-Mail;
(g) The Northern Territory News;
(h) The Advertiser;
(i) The Mercury; and
(j) The West Australian; and
14.2. use its best endeavours to ensure that such notice:
(a) appears within the first 10 pages of each newspaper;
(b) is of a size not less than 16cm x 22cm in each such newspaper printed in tabloid form and 22cm x 30cm in each such newspaper printed in broadsheet form;
(c) has a bold type heading in at least 18 point times new roman typeface and the body of the notice is in a times new roman typeface not less than 10 points; and
(d) includes the logo of HPA as appearing in Annexure C; and
14.3. within 7 days of each publication of the notice, provide the ACCC with a copy of the notice published in accordance with subparagraphs 14.1 and 14.2 above.
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Non-party Consumer Redress
15. HPA is to, at its own expense:
15.1. within 7 days of the date of these orders and prior to the publication of the Consumer Rights Notice, Newspaper Notice and Website Notice:
(a) provide for an email address, at which consumers who are responding to the Consumer Rights Notice, Newspaper Notice and Website Notice can contact HPA;
(b) provide for an 1800 telephone number at which consumers who are responding to the Consumer Rights Notice, Newspaper Notice and Website Notice can contact HPA;
(c) provide for a post office box at which consumers who are responding to the Consumer Rights Notice, Newspaper Notice and Website Notice can contact HPA; and
(d) appoint a representative/representatives of HPA (Contact Officer) to reply to any correspondence received by HPA in response to the Consumer Rights Notice, Website Notice and Newspaper Notice;
15.2. maintain the email address, telephone number, post office box and Contact Officer for a period that is not less than 90 days from the date of these orders; and
15.3. for each consumer who contacts HPA in response to the Consumer Rights Notice, Website Notice and Newspaper Notice, reassess and resolve each of their complaints in accordance with their statutory consumer rights (Consumer Redress Process).
16. HPA is to, at its own expense:
16.1. within 180 days of the date of these orders, cause a review of the Consumer Redress Process to take place by an independent auditor (Consumer Redress Process Review);
16.2. ensure that the Consumer Redress Process Review is carried out by a suitably qualified, independent professional with expertise in undertaking such audits (Consumer Redress Process Reviewer) who will qualify as independent on the basis that he or she:
(a) did not design the Consumer Redress Process;
(b) is not a present or past staff member or director of HPA;
(c) has not and does not act for or consult to HPA or provide other services to HPA, excluding the Compliance Program Review set out in Annexure D; and
(d) has no significant interests in HPA;
16.3. use its best endeavours to ensure that the Consumer Redress Process Review is conducted on the basis that the Consumer Redress Process Reviewer has access to all relevant sources of information in HPA's possession or control, including without limitation HPA's records of the communications with customers who have responded to the Consumer Rights Notice, Newspaper Notice and Website Notice; and
16.4. use its best endeavours to ensure that the Consumer Redress Process Reviewer sets out the findings of the Consumer Redress Process Review in a report to be provided to the ACCC (Consumer Redress Process Review Report), which will provide particular and specific information regarding the scope of the Consumer Redress Process Review and, at a minimum, report on the following:
(a) the number of consumers who contact HPA through the Consumer Redress Process;
(b) the number of consumers who are given redress;
(c) whether the consumer was given the particular redress that they requested;
(d) the number of consumers who: (a) were denied redress or (b) given redress in a different form to what they requested; and
(e) reasons why any such consumers were: (a) denied redress or (b) given redress in a different form to what they requested.
16.5. HPA will cause the Consumer Redress Process Review Report to be provided to the ACCC on a confidential basis within 14 days of its receipt from the Consumer Redress Process Reviewer.
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Compliance Program
17. HPA is to, at its own expense:
17.1. within three months of the date of this order, establish and implement an Australian Consumer Law Compliance Program in accordance with the requirements set out in Annexure D to this Application for the employees or other persons involved in HPA's business, being a program designed to minimise HPA's risk of future contraventions of section 18 or section 29 of the ACL in relation to the operation of the conditions and warranties under Division 2 of Part V of the TPA and the consumer guarantees under Part 3-2, Division 1 of the ACL;
17.2. for a period of three years from the date of this order, maintain and continue to implement the Australian Consumer Law Compliance Program referred to in order 17.1 above;
17.3. provide, at its own expense, a copy of any documents required by the ACCC in accordance with Annexure D.
Other orders
18. HPA is to pay to the ACCC, within 3 months of the making of these orders by the Court, the ACCC's costs of, and incidental to, these proceedings in the amount of $200,000.
19. The proceedings otherwise be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE A
Dear [retailer],
Following legal action by the Australian Competition and Consumer Commission, the Federal Court of Australia has declared that Hewlett-Packard Australia Pty Ltd (HPA) made false, misleading or deceptive representations in breach of sections 18 and 29(1)(m) of the Australian Consumer Law (ACL) to consumers and retail suppliers of HPA products regarding consumer rights with regard to faulty HPA products.
The Court declared that HPA, in trade or commerce, in connection with the supply or possible supply of goods, made representations:
• to consumers that the remedies available to consumers in respect of HPA branded desktop computers, notebook computers, laptops and printers (HPA Computer Products) not of merchantable or acceptable quality were limited to remedies provided by HPA at its discretion;
• to consumers that HPA Computer Products not of merchantable or acceptable quality must be repaired multiple times by HPA before consumers were entitled to receive a replacement HPA Computer Product;
• to consumers that the warranty period for HPA Computer Products was limited to a specified express warranty period;
• to consumers that after the expiry of a specified express warranty period, HPA would repair HPA Computer Products not of merchantable or acceptable quality, on condition that consumers pay for such repairs;
• to consumers via its online store that HPA Computer Products not of acceptable quality purchased from the online store could not be returned or exchanged unless otherwise agreed by HPA at its sole discretion;
• to retail suppliers of HPA Computer Products that HPA was not liable to indemnify retail suppliers, in relation to HPA Computer Products not of merchantable or acceptable quality if, without HPA's prior authorisation, retail suppliers provided consumers with a refund or replacement.
Further, the Court imposed penalties against HPA, granted injunctions restraining it from engaging in similar conduct in the future and required it to implement an upgraded ACL compliance program.
HPA informs retail suppliers of HPA products that:
• for purchases before 1 January 2011, the warranties, conditions or guarantees implied into consumer contracts under Division 2 of Part V of the Trade Practices Act 1974 (TPA) (and relevant State based Fair Trading legislation); and
• for purchases after 1 January 2011, the consumer guarantees provided under Division 1 of Part 3-2 of the ACL; and
• the remedies available to consumers if those warranties and conditions or consumer guarantees are breached
cannot be excluded or, in many cases, limited, by HPA or the retail supplier of the products.
Retail suppliers of HPA products have obligations to consumers under the TPA for products purchased prior to 1 January 2011 or under the ACL for products purchased from 1 January 2011. Those obligations cannot be excluded or limited by HPA or anyone else. Under the ACL, a consumer is entitled to a replacement or refund from the retail supplier of the product for a major failure. A consumer is also entitled to have the product repaired or replaced by the retail supplier of the product if the goods fail to be of acceptable quality and the failure does not amount to a major failure.
Should you require any further information about your obligations to consumers under the TPA or ACL, please contact the ACCC's Infocentre on 1300 302 502 or visit the ACCC's website at www.accc.gov.au.
ANNEXURE B
When you buy goods from HP as a consumer, the goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund from the retail supplier of the goods for a major failure and for compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced by the retail supplier of the goods if the goods fail to be of acceptable quality and the failure does not amount to a major failure. Certain other rights are available directly against manufacturers that cannot be excluded or limited.
The relevant guarantees are as follows:
• Quality - goods supplied by HP (either directly through the HP website, or through a retail supplier of HP products), must be of acceptable quality. The test for acceptable quality is whether a reasonable consumer, fully aware of the state and condition of the goods, would find them:
o safe, durable and free from defects;
o acceptable in appearance and finish; and
o fit for all the purposes for which goods of that kind are commonly supplied.
This must take into account the nature and price of the goods, and any statements on packaging or labelling.
• Disclosed Purpose - goods supplied by HP or a retail supplier of HP products that HP or the retail supplier represents are reasonably fit for a purpose expressly disclosed by a consumer must be reasonably fit for that purpose.
• Description - goods supplied by HP or a retail supplier of HP products must match the description provided by HP or the retail supplier.
• Sample - goods supplied by HP or a retail supplier of HP products must match any sample shown to you by HP or the retail supplier.
• Title - a consumer who purchases a good from HP or a retail supplier of HP products must receive clear title to the good.
• Due care and skill - services provided to you by HP must be provided with due care and skill.
• Express warranties - HP will be legally required to comply with the express warranty that is set out in its terms and conditions.
• Reasonable time - repair services provided by HP must be provided within a reasonable time.
If you think that you are entitled to any of the above remedies in relation to a HPA branded desktop computer, notebook computer, laptop or printer (HPA Computer Product), you should contact the retail supplier of the goods in the first instance (this will be HP if you purchased your HP product from the HP website). Alternatively, you may also contact HP as the manufacturer of the goods:
Hewlett-Packard Australia Pty Ltd
353 Burwood Highway
Forest Hill Vic 3131
To initiate a support request, please use the numbers below or visit www.hp.com.au and select the "Customer Service" option for the most current list of phone support numbers.
Product Phone
Support for all HP Products except those listed separately below [13 10 47]
If dialling internationally: +61 [2 8278 1039]
DeskJet, Office Jet, PSC, All-in-One, Photosmart & Personal Laser Jet Series 1000, P1000, M1000 and Colour Laser Jet CP1000 Series and model CM1415 [1300 721 147]
If dialling internationally: + 61 [3 8833 5000]
HP Pavilion Desktop OC Support & Spare Parts [1300 721 147]
If dialling internationally: [+ 61 3 8833 5000]
Compaq Presario PC Support & Spare Parts [1300 721 147]
If dialling internationally: [+ 61 3 8833 5000]
[8]
If you believe that you have been denied a statutory right or remedy by HP in the past in relation to a HPA Computer Product, or did not pursue a warranty claim because of representations made by HP, please contact HP by email at [insert email address], by phone on 1800 [insert number] or [insert non-1800 number], on the web at [insert web address] or by post to [insert postal address] and your claim will be assessed by HP.
For further information on consumer rights visit www.consumerlaw.gov.au and www.accc.gov.au/consumerguarantees.
ANNEXURE C
PUBLIC DISCLOSURE
PUBLISHED BY ORDER OF THE FEDERAL COURT OF AUSTRALIA
FALSE AND MISLEADING CONDUCT BY HEWLETT-PACKARD AUSTRALIA PTY LTD IN RELATION TO THE SALE OF COMPUTER PRODUCTS
Following legal action by the Australian Competition and Consumer Commission, the Federal Court of Australia has declared that Hewlett-Packard Australia Pty Ltd (HPA) made false, misleading or deceptive representations in breach of sections 18 and 29(1)(m) of the Australian Consumer Law (ACL).
The Court declared that HPA, in trade or commerce, in connection with the supply or possible supply of goods, made representations:
• to consumers that the remedies available to consumers in respect of HPA branded desktop computers, notebook computers, laptops and printers (HPA Computer Products) not of merchantable or acceptable quality were limited to remedies provided by HPA at its discretion;
• to consumers that HPA Computer Products not of merchantable or acceptable quality must be repaired multiple times by HPA before consumers were entitled to receive a replacement HPA Computer Product;
• to consumers that the warranty period for HPA Computer Products was limited to a specified warranty period;
• to consumers that after the expiry of a specified express warranty period, HPA would repair HPA Computer Products not of merchantable or acceptable quality, on condition that consumers pay for such repairs;
• to consumers via its online store that HPA Computer Products not of acceptable quality purchased from the online store could not be returned or exchanged unless otherwise agreed by HPA at its sole discretion;
• to retail suppliers of HPA Computer Products that HPA was not liable to indemnify retail suppliers, in relation to HPA Computer Products not of merchantable or acceptable quality if, without HPA's prior authorisation, retail suppliers provided consumers with a refund or replacement.
Further, the Court imposed penalties against HPA, granted injunctions restraining it from engaging in similar conduct in the future and required it to implement an upgraded ACL compliance program.
HPA informs consumers that:
• for purchases before 1 January 2011, the warranties, conditions or guarantees implied into consumer contracts under Division 2 of Part V of the Trade Practices Act 1974 (TPA) (and relevant State based Fair Trading legislation); and
• for purchases after 1 January 2011, the consumer guarantees provided under Division 1 of Part 3-2 of the ACL; and
• the remedies available to consumers if those warranties and conditions or consumer guarantees are breached
cannot be excluded or, in many cases, limited.
Owners of goods have rights and remedies, under the TPA for goods purchased prior to 1 January 2011 or under the ACL for goods purchased from 1 January 2011, available against suppliers of HPA goods that cannot be excluded or limited. Certain other rights are available directly against manufacturers that cannot be excluded or limited.
If you believe that you have been denied a statutory right or remedy by HP in the past in relation to a HPA Computer Product, or did not pursue a warranty claim because of representations made by HP, please contact HP by email at [insert email address], by phone on 1800 [insert number] or [insert non-1800 number], on the web at [insert web address] or by post to [insert postal address] and your claim will be assessed by HP.
Should you require any further information, please contact the ACCC's Infocentre on 1300 302 502 or visit the ACCC's website on www.accc.gov.au.
This public disclosure has been paid for by Hewlett-Packard Australia Pty Ltd.
ANNEXURE D
AUSTRALIAN CONSUMER LAW COMPLIANCE PROGRAM
Hewlett-Packard Australia Pty Ltd (HPA) will establish an Australian Consumer Law (ACL) Compliance Program (Compliance Program) that complies with each of the following requirements:
Appointments
Within one month of the date of the Order HPA will appoint a Director or a Senior Manager with suitable qualifications or experience in corporate compliance as Compliance Officer with responsibility for ensuring the Compliance Program is effectively designed, implemented and maintained.
Within two months of the date of the Order HPA shall appoint a qualified, internal or external, compliance professional with expertise in the ACL (the Compliance Adviser). HPA shall instruct the Compliance Adviser to work with the Compliance Officer and HPA for the purposes of facilitating HPA's ongoing compliance with the ACL in accordance with 2.1 - 2.4 below:
2.1. identify the areas where HPA is at risk of breaching the ACL;
2.2. assess the likelihood of these risks occurring and the consequences of the risks to the business operations of HPA should they occur;
2.3. identify where there may be gaps in HPA's existing procedures for managing these risks; and
2.4. provide recommendations for action having regard to the assessment.
Compliance Policy
HPA will, within three months of the Order, issue a policy statement outlining HPA's commitment to ACL compliance (the Compliance Policy). HPA will ensure that the Compliance Policy:
3.1. is written in plain language;
3.2. contains a statement of commitment to compliance with the ACL;
3.3. contains a strategic outline of how commitment to ACL compliance will be realised within HPA;
3.4. contains a requirement for all staff to report any Compliance Program related issues and ACL compliance concerns to the Compliance Officer;
3.5. contains a guarantee that whistleblowers will not be prosecuted or disadvantaged in any way and that their reports will be kept confidential and secure; and
3.6. contains a clear statement that HPA will take action internally against any persons who are knowingly or recklessly concerned in a contravention of the ACL and will not indemnify them.
Complaints Handling System
HPA will ensure that the Compliance Program includes an ACL complaints handling system. HPA shall use its best endeavours to ensure this system is consistent with AS/ISO 10002:2006 Customer satisfaction - Guidelines for complaints handling in organizations, though tailored to HPA's circumstances. HPA will ensure that staff and customers are made aware of the complaints handling system.
HPA will ensure that the Compliance Program includes whistleblower protection mechanisms to protect those coming forward with ACL complaints. HPA shall use its best endeavours to ensure that these mechanisms are consistent with Australian Standard 8004, though tailored to HPA's circumstances.
Reports to Board/Senior Management
HPA will ensure that the Compliance Officer reports to the Board and/or senior management meetings every 12 months on the continuing effectiveness of the Compliance Program.
Training
HPA will ensure that the Compliance Program provides for regular (at least once a year) and practical training for all directors, officers, employees, representatives and agents of HPA, whose duties could result in them being concerned with conduct that may contravene sections 18 and 29 of the ACL as they relate to the conditions and warranties under Division 2 of Part V of the Trade Practices Act 1974 (Cth) (TPA) and the consumer guarantees under Part 3-2, Division 1 of the ACL. HPA must ensure that the training is conducted by a suitably qualified compliance professional or legal practitioner with expertise in the ACL and TPA.
[9]
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION NSD 1588 of 2012
[10]
BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
[11]
AND: HEWLETT-PACKARD AUSTRALIA PTY LTD (ACN 004 394 763)
[12]
JUDGE: BUCHANAN J
DATE: 5 july 2013
PLACE: SYDNEY
[13]
Introduction
1 These proceedings were commenced on 16 October 2012 in the Fast Track List. They arose from allegations by the applicant that the respondent had, in a number of respects, contravened ss 18 and 29(1)(m) of the Australian Consumer Law (which is Schedule 2 to the Competition and Consumer Act 2010 (Cth)), and in one respect contravened s 29(1)(n) of the Australian Consumer Law. The applicant sought declarations to that effect, injunctions for a period of five years, a pecuniary penalty, disclosure orders, adverse publicity orders, orders providing for non-party consumer redress, an order that the respondent establish an Australian Consumer Law compliance program and orders for costs. Initially, the proceedings were defended by the respondent.
2 A scheduling conference was held on 11 December 2012, orders were made for the filing and exchange of evidence and the matter was listed for hearing on questions of liability, commencing on 11 June 2013.
3 In due course, a reasonably substantial volume of evidence was filed by the applicant. However, prior to evidence being filed by the respondent, the parties came to an agreement about the liability of the respondent and orders which should be made as a result. This judgment deals with whether those orders should be made.
4 It is well established by authority in this Court that, although the terms of orders made by the Court are within the discretion of the Court, and not the parties, the Court may pay regard to an agreed position about the orders which are appropriate to be made following admission of a civil contravention of a statutory standard. That principle extends to an agreement about the amount of a pecuniary penalty to be imposed (see in particular NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285 and Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd (2004) ATPR 41-993 at [56]). The principles stated in those cases have recently been criticised by the Victorian Court of Appeal in ASIC v Ingleby [2013] VSCA 49 ("Ingleby") but they are principles which bind me and I propose to apply them.
5 In the present case, the position taken by the parties was supported by a statement of agreed facts and comprehensive written submissions, as well as the detailed terms of orders which the parties proposed the Court should make, subject to the Court being satisfied that the orders, including the terms of any pecuniary penalty, were appropriate. The matters which follow are taken from the statement of agreed facts and from the outline of joint submissions.
[14]
Agreed facts and joint submissions
6 The respondent is a wholly owned subsidiary of Hewlett-Packard Company, based in the United States, which had an annual turnover for the financial years 2010/11 and 2011/12 of $127.2 billion and $120.4 billion respectively. The respondent manufactures computer products which it supplies directly to consumers through an online store and through retail suppliers such as Dick Smith, The Good Guys, Harvey Norman and JB Hi-Fi. The respondent is one of the largest providers of computer products in Australia. It has an industry share of approximately 20 percent for consumer PCs and approximately 30 percent for printers.
7 The respondent operates a "help desk". In the period relevant to the present proceedings, enquiries or complaints were dealt with with the aid of internal policies, guidelines and scripts which were used by staff at the help desks to respond to customer service enquiries and complaints, including in respect of computer products that had failed.
8 During the period with which the proceedings were concerned (1 January 2011 to 30 September 2012 (with respect to most matters) or 1 January 2011 to 5 October 2012 (with respect to one matter)), staff employed at the help desks made representations, in accordance with the internal policies, guidelines and scripts developed and implemented by the respondent, which were described in the written submissions in the following way:
13. HPA has admitted to six contraventions of the ACL for the purpose of these proceedings. Those admitted contraventions are set out in paragraphs 51 and 52 of the SOAF and are summarised in paragraphs 14 to 16 below.
14. During the Relevant Period when consumers contacted helpdesks operated by HPA (HPA Helpdesks) in relation to HPA Computer Products not of merchantable or acceptable quality, staff employed at the HPA Helpdesks made representations, in accordance with the internal policies, guidelines and scripts developed and implemented by HPA (HPA Guidelines), to the effect that:
14.1 the remedies available to consumers for those HPA Computer Products were limited to remedies available from HPA at its discretion (Remedy Limitation Representation);
14.2 consumers must have HPA Computer Products not of merchantable or acceptable quality repaired by HPA multiples times before consumers were entitled to receive a replacement HPA Computer Product (Repair Condition Representation);
14.3 the warranty period for those HPA Computer Products was limited to a specified express warranty period (Limited Warranty Period Representation); and
14.4 after the expiry of a specified express warranty period, HPA would repair HPA Computer Products not of merchantable or acceptable quality on condition that consumers paid for such repairs (Payment Condition Representation).
15. During the Relevant Period when retail suppliers contacted HPA, from time to time staff employed at HPA made representations to the effect that HPA was not liable to indemnify the retail suppliers if, without HPA's prior authorisation, retail suppliers provided consumers with a refund or replacement (Retail Supplier Representation).
16. Further, during the Relevant Period, HPA represented on a webpage of the HPA Online Store that consumers could not return or exchange HPA Computer Products purchased through the HPA Online Store not of acceptable quality unless otherwise agreed by HPA, at its sole discretion (Online Remedy Discretion Representation).
17. HPA has admitted, for the purpose of these proceedings, that each of the representations set out in paragraphs 14 to 16 above contravenes sections 18 and 29(1)(m) of the ACL.
9 Sections 18(1) and 29(1)(m) and (n) of the Australian Consumer Law are as follows:
18 Misleading or deceptive conduct
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
…
29 False or misleading representations about goods or services
(1) A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services or in connection with the promotion by any means of the supply or use of goods or services:
…
(m) make a false or misleading representation concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); or
(n) make a false or misleading representation concerning a requirement to pay for a contractual right that:
(i) is wholly or partly equivalent to any condition, warranty, guarantee, right or remedy (including a guarantee under Division 1 of Part 3-2); and
(ii) a person has under a law of the Commonwealth, a State or a Territory (other than an unwritten law).
10 The factual admissions made about these matters were in the following terms:
51. HPA admits, for the purposes of the Proceedings only, that by making each of the:
51.1 Remedy Limitation Representation;
51.2 Repair Condition Representation;
51.3 Limited Warranty Period Representation;
51.4 Payment Condition Representation;
51.5 Online Remedy Discretion Representation; and
51.6 Retail Supplier Representation,
(together, the Representations), HPA engaged in conduct which was misleading or deceptive, or likely to mislead or deceive, for the purposes of section 18 of the ACL, by reason of one or more of the facts that:
51.7 in relation to HPA Computer Products purchased prior to 1 January 2011 which were not of merchantable quality:
51.7.1 consumers may have been entitled to remedies from suppliers of HPA Computer Products (whether supplied indirectly through retail suppliers or supplied directly by HPA through the HPA Online Store), because section 71 of the TPA implied into contracts for the supply of goods a condition that the goods be of merchantable quality which, by reason of section 68 of the TPA, could not be excluded, restricted or modified;
51.1.2 additionally, consumers had a direct right of action for damages against HPA, as the manufacturer of the goods, pursuant to section 74D of the TPA in respect of goods that were not of merchantable quality; and
51.1.3 section 74H of the TPA provided retail suppliers with a right of indemnity against HPA in relation to goods not of merchantable quality;
51.1 in relation to HPA Computer Products purchased from 1 January 2011 which were not of acceptable quality:
51.1.1 if the failure to supply goods of acceptable quality could be remedied and was not a major failure, but the supplier refused or failed to remedy the failure, or the supplier failed to remedy the failure within a reasonable time, by reason of sections 259(2)(b) and 263(4) of the ACL, consumers had the right to reject goods not of acceptable quality and elect, as of right, to receive a refund or a replacement from the retail supplier of the goods;
51.1.2 if the failure to supply goods of acceptable quality was a major failure or could not be remedied, by reason of sections 259(3) and 263(4) of the ACL, consumers had the right to reject goods not of acceptable quality and elect, as of right, to receive a refund or a replacement from the retail supplier of the goods;
51.1.3 additionally, consumers had a direct right of action for damages against HPA, as the manufacturer of the goods, pursuant to section 271(1) of the ACL, in respect of goods that are not of acceptable quality; and
51.1.4 section 274 of the ACL provided retail suppliers with a right of indemnity against HPA in relation to goods not of acceptable quality.
52. HPA further admits, for the purpose of these proceedings only, that each of the Representations were false or misleading concerning the existence, exclusion or effect of any condition, guarantee, right or remedy, for the purposes of section 29(1)(m) of the ACL, by reason of one or more of the facts that:
52.1 in relation to HPA Computer Products purchased prior to 1 January 2011 which were not of merchantable quality:
52.1.1 consumers may have been entitled to remedies from suppliers of HPA Computer Products (whether supplied indirectly through retail suppliers or supplied directly by HPA through the HPA Online Store), because section 71 of the TPA implied into contracts for the supply of goods a condition that the goods be of merchantable quality which, by reason of section 68 of the TPA, could not be excluded, restricted or modified;
52.1.2 additionally, consumers had a direct right of action for damages against HPA, as the manufacturer of the goods, pursuant to section 74D of the TPA in respect of goods that were not of merchantable quality; and
52.1.3 section 74H of the TPA provided retail suppliers with a right of indemnity against HPA in relation to goods not of merchantable quality;
52.2 in relation to HPA Computer products purchased from 1 January 2011 which were not of acceptable quality:
52.1.1 if the failure to supply goods of acceptable quality could be remedied and was not a major failure, but the supplier refused or failed to remedy the failure, or the supplier failed to remedy the failure within a reasonable time, by reason of sections 259(2)(b) and 263(4) of the ACL, consumers had the right to reject goods not of acceptable quality and elect, as of right, to receive a refund or a replacement from the retail supplier of the goods;
52.1.2 if the failure to supply goods of acceptable quality was a major failure or could not be remedied, by reason of sections 259(3) and 263(4) of the ACL, consumers had the right to reject goods not of acceptable quality and elect, as of right, to receive a refund or a replacement from the retail supplier of the goods;
52.1.3 additionally, consumers had a direct right of action for damages against HPA, as the manufacturer of the goods, pursuant to section 271(1) of the ACL, in respect of goods that are not of acceptable quality; and
52.1.4 section 274 of the ACL provided retail suppliers with a right of indemnity against HPA in relation to goods not of acceptable quality.
[15]
Proposed orders
11 It is accepted by the respondent not only that the contraventions identified by the statement of agreed facts and by the outline of joint submissions were serious ones but that declarations, injunctions and other coercive orders should be made as a result. The terms of those orders are intended to identify the conduct to which the proceedings are directed and which the respondent has admitted, and to ensure that:
there is no repetition of that conduct in the reasonably foreseeable future;
the respondent discloses to retail suppliers of its products the rights that consumers in fact have;
the respondent will arrange and pay for corrective advertising;
the respondent will provide for a consumer redress process for those consumers who respond to the notices about consumer rights which the respondent will publish as a result of the orders; and
the respondent will establish and implement an Australian Consumer Law compliance program designed to minimise its risk of future contraventions of s 18 or s 29 of the Australian Consumer Law.
12 The terms of the orders are sufficient to identify the character of the conduct committed by the respondent and the nature of the remedial steps which will address that conduct. I am satisfied that the remedial steps agreed are an appropriate response to the conduct identified.
[16]
Pecuniary penalty
13 The orders provide for pecuniary penalties. It is in relation to the assessment of an appropriate pecuniary penalty that the greatest possibility arises for differing views and judgments about an appropriate penalty to be imposed. It seems to be in relation to matters of this kind that the Victorian Court of Appeal has expressed its principal reservations in Ingleby. Apart from the fact that I am bound to apply previous Full Court authority in this Court in preference to any expression of opinion by the Victorian Court of Appeal with respect to the same matters, in the present case I see no reason to doubt that the pecuniary penalty agreed by the parties is an appropriate one. The maximum penalty available for the totality of the six contraventions admitted by the respondent is $6.6 million. The parties have agreed that the admitted contraventions should be the subject of a pecuniary penalty of $3 million. A penalty of that order of magnitude is the equivalent of $500,000 for each admitted contravention, if the matter was to be assessed in that fashion. In my view, that reflects an acknowledgement of the seriousness of the respondent's conduct, both with respect to the individual contraventions and with respect to the total penalty to be imposed, which penalty I am satisfied does not contravene the totality principle. I am also satisfied that the penalty is sufficient to mark the Court's disapproval of the respondent's conduct and to satisfy the requirements of general and specific deterrence.
[17]
Costs
14 The parties have agreed that the respondent should pay the applicant's costs in the amount of $200,000. There is no reason to think that an order for costs in this amount is inappropriate.
[18]
Conclusion
15 In the circumstances, I am prepared to endorse the agreement of the parties. I regard the present case as a very appropriate one for the parties to have negotiated a settlement of the proceedings in the comprehensive terms which they jointly presented to the Court for approval. I make orders in the form which they proposed.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.
HPA will ensure that the Compliance Program includes a requirement that awareness of ACL compliance issues forms part of the induction of all new directors, officers, employees, representatives and agents, whose duties could result in them being concerned with conduct that may contravene sections 18 and/or 29 of the ACL.
Because of the domestic and off-shore locations of the call centres which handle communications with Australian consumers, and also the relatively high rate of 'turnover' of personnel at the call centres, the ACCC acknowledges that HPA will undertake the training:
9.1. remotely (for example, by virtual room or Webinar or video or pod cast but in a manner which allows for participants to ask questions); and
9.2. by way of showing the recorded training or by on-line training to any new employees within one month of commencing their employment at HPA or at the relevant call centres, where they would not otherwise undertake the training specified in paragraphs 7 and 8 above in or about one month of commencing their employment at the call centre.
Supply of Compliance Program Documents to the ACCC
HPA shall, at its own expense, within four months of the date of the Order, cause to be produced and provided to the ACCC copies of each of the documents constituting the policies and manuals of the Compliance Program and implement promptly and with due diligence any recommendations that the ACCC may make that are reasonably necessary to ensure that HPA maintains and continues to implement the requirements of this Compliance Program.
Review
HPA shall, at its own expense, cause annual Reviews of the Compliance Program (the Compliance Program Reviews) to be carried out in accordance with each of the following requirements:
11.1. Scope of the Compliance Program Reviews - the Compliance Program Reviews should be broad and rigorous enough to provide HPA and the ACCC with a supportable verification that HPA has in place a program that complies with each of the requirements detailed in paragraphs 1 - 9 above and to provide the Compliance Program Review reports and opinions detailed at point 11 below;
11.2. Independence of Compliance Program Reviewer - HPA shall ensure that the Compliance Program Reviews are carried out by a suitably qualified, independent compliance professional with expertise in the ACL (the Compliance Program Reviewer). The Compliance Program Reviewer will qualify as independent on the basis that he or she:
11.2.1. did not design or implement the Compliance Program;
11.2.2. is not a present or past staff member or director of HPA;
11.2.3. has not acted and does not act for HPA in any ACL or trade practices related matters excluding the Consumer Redress Process Review;
11.2.4. has not and does not act for or consult to HPA or provide other services on ACL or trade practices related matters other than Compliance Program reviewing excluding the Consumer Redress Process Review; and
11.2.5. has no significant shareholding or other interests in HPA.
11.3. Evidence - HPA shall use its best endeavours to ensure that the Compliance Program Reviews are conducted on the basis that the Compliance Program Reviewer has access to all relevant sources of information in HPA's possession or control, including without limitation:
11.3.1. enquiries of any officers, employees, representatives, agents and stakeholders of HPA;
11.3.2. HPA's records, including HPA's complaints register/reports and any documents relevant to HPA's training or induction program; and
11.3.3. documents created by HPA's consultants and legal practitioners for use in HPA's Compliance Program.
11.4. HPA shall ensure that the first Compliance Program Review is completed within one year and one month of the Order and that each subsequent Compliance Program Review is completed within one year thereafter.
Reporting
HPA shall use its best endeavours to ensure the Compliance Program Reviewer sets out the findings of each Compliance Program Review in a report to be provided to the ACCC (Compliance Program Review Report).
12.1. The Compliance Program Review Report will provide particular and specific information regarding the scope of the Compliance Program Review and the effectiveness of the Compliance Program including:
12.1.1. details of the evidence gathered and examined during the Compliance Program Review;
12.1.2. the name and relevant experience of the person appointed as the company Compliance Officer;
12.1.3. the Compliance Program Reviewer's opinion on whether HPA has in place a Compliance Program that complies with the requirements detailed in paragraphs 1-9 above;
12.1.4. actions recommended by the Compliance Program Reviewer to ensure the continuing effectiveness of HPA's Compliance Program;
12.1.5. confirmation that any actual and potential inadequacies in HPA's Compliance Program have been brought to the attention of the Compliance Officer and the Board;
12.1.6. confirmation that the Compliance Program Reviewer has revisited any actual and potential inadequacies in HPA's Compliance Program identified in any previous Company Compliance Program Review Report, and assessed how they have been addressed by HPA;
12.1.7. any reservations that the Compliance Program Reviewer might have about the reliability and completeness of the information to which the Compliance Program Reviewer had access in the conduct and reporting of the Review; and
12.1.8. any comments or qualifications concerning the Compliance Program Review process that the Compliance Program Reviewer, in his or her professional opinion, considers necessary.
12.2. HPA will ensure that the Compliance Program Review Report is completed and provided to HPA within two months of each Review.
12.3. HPA will cause the Compliance Program Review Report to be provided to the ACCC on a confidential basis within 14 days of its receipt from the Reviewer.
Recommendations - HPA shall implement promptly and with due diligence any recommendations made by the Compliance Program Reviewer or required by the ACCC that are reasonably necessary to ensure that HPA maintains and continues to implement the requirements of this Compliance Program.
If requested by the ACCC HPA shall, at its own expense, provide copies of documents and information in respect of matters which are the subject of the Compliance Program.
In the event the ACCC has sufficient reason to suspect that the Compliance Program is not being implemented effectively, HPA shall, at its own expense and if requested by the ACCC, cause an interim or additional Compliance Program Review to be conducted and cause the resulting Compliance Program Review Report to be provided to the ACCC.