Australia is home to a number of overseas companies that operate using foreign laws. But what obligations do these companies have to Australian consumer law and how can Australian legislation and those in government legal jobs oversee the conduct of these companies?
A recent case has clarified a number of important questions about the reach of the Australian Consumer Law (ACL) and its ability to provide fair and honest dealings in the online marketplace.
The Federal Court has decided on a case between the Australian Competition and Consumer Commission (ACCC) and the Washington-state-based game developer and digital distribution company Valve Corporation. The ACCC took legal action against the US entity arguing it had misled consumers through representations of its guarantees.
Valve is better know for its online game distribution platform called Steam, which it operates out of the US.
Specifically, the Federal Court found that the company misled Australian consumers about their rights under the ACL through its Steam Subscription Agreements and two of its refund polices. The misleading representations revolved around the availability of refunds for the purchase of online downloadable computer games by Australian consumers.
Valve argued that it did not supply goods to consumers in Australia. However, this was rejected by the court as it argued that when the ACL was developed, the definition of goods encompassed computer software. At the most basic level, the court found the products Valve supplied to customers included an essential component of computer software.
One of the other issues that the Court had to decide on was if Valve's actions or conduct took place in Australia, or in other words: Was Valve executing business in Australia?
Again Valve argued that it was not conducting itself within the country because, among other reasons, it:
- was a foreign corporation;
- does not have premises or staff in Australia; and
- does not host any URL addresses in Australia.
Yet, the trial judge found that the Valve did conduct business activity in Australia because it:
- had property in Australia, namely servers, worth over $1.2 million;
- had 2.2 million subscribers accounts in Australia; and
- made payment to an Australian bank account of an Australian company.
As the Court found that Valve was operating in Australia, it also found that the ACL was applicable to its conduct.
The case is highly important for those in legal jobs as it sets a new precedent for the reach of the ACL to encompass companies which were traditionally seen as non-Australian. It is also an important reminder that the ACCC takes the online marketplace seriously due to its importance to the country's economic prosperity.