explanatory STATEMENT
Issued by the Authority of the Parliamentary Secretary to the Treasurer
Competition and Consumer Act 2010
Permanent ban on novelty cigarettes
Background
Prior to 1 January 2011, a notice declaring goods to be unsafe was made pursuant to subsection 65C(5) of the Trade Practices Act 1974 (TPA) in relation to novelty cigarettes.
The Trade Practices Amendment (Australian Consumer Law) Act (No.2) 2010 together with the Trade Practices Amendment (Australian Consumer Law) Act (No.1) 2010, amended the TPA to implement a new national consumer law regime known as the Australian Consumer Law (ACL).
The TPA was renamed the Competition and Consumer Act 2010 (CCA) on 1 January 2011. The ACL forms Schedule 2 to the CCA.
Schedule 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No.2) 2010 sets out the transitional matters relating to the commencement of the ACL. Item 2 of Schedule 7 provides that a notice under subsection 65C(5) of the TPA that was in force immediately before the commencement of the ACL takes effect ‘as if’ it were an interim ban imposed under section 109 of Schedule 2 to the CCA, starting on the day of commencement (1 January 2011). Therefore, an interim ban on novelty cigarettes came into force on 1 January 2011. An interim ban under the ACL exists for a period of 60 days and is able to be extended on two separate occasions by a period of 30 days.
Subsection 114(1) of Schedule 2 to the CCA provides that the Commonwealth Minister may impose a permanent ban on consumer goods of a particular kind if an interim ban exists for those goods, or it appears to the Commonwealth Minister that consumer goods of that kind will or may cause injury to any person or a reasonably foreseeable use (including misuse) of consumer goods will or may cause injury to any person. A permanent ban on novelty cigarettes is imposed pursuant to subsection 114(1)(a) of Schedule 2 to the CCA.
Permanent ban on novelty cigarettes
Novelty cigarettes look like real cigarettes and often contain hydrated magnesium silicate, which is the primary ingredient in talcum powder. The user pretends to smoke by exhaling on the cigarette, which releases the hydrated magnesium silicate from the tip. This fine talc powder is meant to look like smoke rising from the (fake) cigarette.
If the user inhales on the cigarette, there is a risk that they will ingest the hydrated magnesium silicate (or other similar substances) which can cause serious illness. The purpose of the permanent ban on these goods is to ensure ongoing consumer safety by prohibiting the supply of novelty cigarettes. The hazards associated with these goods include risk of respiratory tract irritation and inflammation, as well as a risk of lung, skin and ovarian cancers associated with inhalation of hydrated magnesium silicate.
Under the CCA, a permanent ban on novelty cigarettes is a legislative instrument for the purposes of the Legislative Instruments Act 2003 (LIA). For the purposes of section 17 of the LIA, consultation has been undertaken both at the time the notice was made under subsection 65C(5) of the TPA and also in January 2011 when the proposed ban notice was published on the internet in accordance with subsection 132(3) of Part XI to the CCA. There are no known suppliers of these banned goods.
This instrument is subject to sunsetting under Part 6 of the LIA. Unless action is taken to defer or exempt it from sunsetting, it is expected to sunset on 1 April 2021. This estimate assumes it is registered on or before 31 March 2011.
Overview
The Competition and Consumer Act 2010 (CCA), enacted in 2010, was introduced to provide a unified national consumer law regime in Australia, known as the Australian Consumer Law (ACL). This Act replaced the Trade Practices Act 1974 (TPA) and was developed to ensure consumer protection and fair trading practices across Australia. The CCA was enacted by the Parliament of Australia to address gaps in consumer protection and competition law, aiming to safeguard consumers from unsafe products and practices. Specifically, the Act allows for the imposition of bans on consumer goods that pose significant health risks, as demonstrated by the permanent ban on novelty cigarettes. The ban was introduced to mitigate the health hazards associated with these products, including respiratory issues and potential cancers from inhaling talcum powder, ensuring ongoing consumer safety.
Scope and Application
The Competition and Consumer Act 2010 (CCA) applies to a wide range of persons and entities across Australia, encompassing businesses, manufacturers, and consumers. Specifically, the Act imposes a permanent ban on novelty cigarettes, which are products that resemble real cigarettes but are designed to release a substance resembling smoke when exhaled, often containing hydrated magnesium silicate. The ban aims to protect consumers from potential harm, as inhaling the substance released can cause serious health issues, including respiratory tract irritation, inflammation, and increased risks of lung, skin, and ovarian cancers. The geographic reach of this legislation is national, with the Commonwealth Minister exercising the authority to implement and enforce the ban. The Act extends its application through subordinate instruments, allowing for adjustments and enforcement mechanisms to be established as needed. Notably, there are no known suppliers of these banned goods, and the ban is subject to sunsetting provisions, with an anticipated sunset date of 1 April 2021 unless action is taken to defer or exempt it from this process.
Key Provisions
The main operative sections of the Competition and Consumer Act 2010 (CCA) relevant to the permanent ban on novelty cigarettes are found in Schedule 2 of the Act, particularly sections 109 and 114. Section 109 of Schedule 2 establishes the procedure for imposing interim bans on consumer goods, which last for 60 days and can be extended twice by 30 days. Section 114(1) allows the Commonwealth Minister to impose a permanent ban on consumer goods if an interim ban is in effect or if the goods are deemed to cause injury or potential injury to consumers. The ban on novelty cigarettes, which took effect on 1 January 2011, falls under this section.
The CCA imposes obligations on parties and entities to comply with the permanent ban on novelty cigarettes. This includes a prohibition on the supply of these goods, which are designed to mimic real cigarettes but contain substances like hydrated magnesium silicate that pose significant health risks. Any business found to be supplying or advertising these products would be in breach of the Act. Furthermore, businesses must take steps to ensure they are not inadvertently selling these goods, which can be achieved by updating product knowledge and supply chains to exclude novelty cigarettes.
Breaches of the permanent ban on novelty cigarettes under the CCA can lead to significant civil and criminal consequences. For corporations, the maximum penalties include substantial fines; for instance, under section 132 of the CCA, the penalty for misleading or deceptive conduct can reach up to $1.1 million for corporations. Additionally, individuals involved in the supply or promotion of these banned goods may face personal fines and imprisonment. Civil actions can also be pursued by consumers who suffer harm due to the supply of these hazardous products, leading to potential compensation claims.