How enforceable undertakings with the ACCC work

An enforceable undertaking is a written commitment a business or individual gives to the Australian Competition and Consumer Commission (ACCC) to fix conduct that may have breached the law, and to keep it fixed. It is binding. It is made public. And if the business does not follow through, the ACCC can take it to the Federal Court and have the terms enforced as court orders.

Undertakings sit in the middle of the ACCC's enforcement toolkit. At one end the regulator can educate or warn. At the other it can sue for penalties, declarations and director disqualification. An enforceable undertaking is the negotiated middle path: the business agrees to concrete steps to stop the conduct, make good the harm and stay compliant, and the matter is usually resolved without a court fight. The ACCC's own description of what it is trying to achieve when it accepts an undertaking is worth keeping in mind: stop the concerning conduct, provide a remedy for people adversely affected, encourage lasting compliance and increase public awareness.

If your business sells goods or services to consumers, this mechanism matters because it is one of the most common ways an ACCC investigation ends. This article explains who is involved, what triggers an undertaking, what terms you can expect to negotiate, what happens if you breach one, and where legal help earns its keep.

The players: who gives, who accepts, who enforces

Three parties do the work, and each has a different role:

The ACCC: investigates the conduct, accepts or rejects the undertaking, publishes it on its public registers, monitors compliance and can apply to court for enforcement orders if it is breached.
The business or individual: must offer the undertaking voluntarily, agree its terms in writing, carry them out and usually report on its progress.
The Federal Court: does not approve the undertaking up front, but it is the enforcement backstop. The Competition and Consumer Act 2010 (Cth) (CCA) defines "the Court" as the Federal Court of Australia, and it is the court the ACCC approaches if it considers the undertaking has been breached.

The statutory home is s 87B of the CCA. Section 87B(1) lets the ACCC accept a written undertaking given by a person in connection with a matter in relation to which the ACCC has a power or function under the Act. That is deliberately broad. It covers the Australian Consumer Law (ACL), which is Schedule 2 of the CCA, but also the competition provisions, product safety matters and the consumer data right. The same power extends to undertakings given in connection with a merger authorisation.

Two features of this arrangement matter for a business deciding how to respond. First, the ACCC cannot compel anyone to give an undertaking. It states this explicitly: the business or individual must offer it. The ACCC's leverage is not that it can demand an undertaking, but that it can decide what happens if no acceptable offer is made, which is usually court proceedings. Second, the ACCC is not bound to accept an offer. It will accept one only where that is the right enforcement outcome in the circumstances.

One further point of context: the ACCC is the Commonwealth regulator, but it is not the only one that uses this tool. State and territory consumer regulators, such as NSW Fair Trading, can also accept enforceable undertakings under their own consumer laws that apply the ACL. The mechanics are the same in substance: a written, binding agreement, monitored and enforced if breached.

What triggers an undertaking

An enforceable undertaking does not appear out of nowhere. It is the product of an ACCC investigation into a suspected breach, usually of the ACL. The typical starting points are a consumer complaint, a market sweep by the regulator, information from a whistleblower, or a business self-reporting its own conduct.

The conduct under investigation is commonly misleading or deceptive conduct under s 18 of the ACL, false or misleading representations under s 29, or a failure to meet the consumer guarantees in Part 3-2 of the ACL. Product safety issues and unfair contract terms also feature. Where the ACCC forms a view that a breach has occurred, it has a range of options: close the matter with education or a warning, accept an enforceable undertaking, issue an infringement notice, or start court proceedings. Undertakings can be used instead of other action or alongside it.

The sequence usually runs like this. The ACCC raises its concerns with the business, often through a formal notice or a request for information and documents. The business, usually with legal advice, decides whether to defend the allegations or resolve them cooperatively. If it chooses the cooperative path, it offers an undertaking tailored to the conduct. The ACCC assesses whether the proposed terms address its concerns and whether an undertaking is enough, or whether the conduct is serious enough that only a court outcome will do. If it accepts, the matter is generally resolved. If the offer is inadequate or the conduct warrants it, the ACCC can decline and take the matter to court instead.

The decision to accept is a judgment call for the ACCC. It has published guidelines on its approach to court enforceable undertakings (September 2024) which explain how it negotiates, accepts and administers undertakings, and include a template of common terms. That template is a useful starting point for understanding what the ACCC expects to see.

What an undertaking contains, and what the ACCC will not accept

The terms of an undertaking are negotiated, so they vary with the conduct, but they cluster around a few familiar shapes:

Stopping the conduct: a commitment to cease the advertising, representation or practice that caused the problem, usually within a set timeframe.
Consumer redress: a scheme to compensate or refund customers who were harmed, sometimes with a specified dollar amount and a deadline for payments.
Corrective action: corrective advertising, correcting previous statements, or amending contracts, warranties or policies to bring them up to standard.
Compliance measures: implementing a competition and consumer law compliance program, training staff, and engaging an independent compliance professional to review or audit the business.
Reporting: commitments to give the ACCC information or documents so it can check that the undertaking is being carried out.

The ACCC considers the length of the undertaking by reference to the extent of the conduct, the steps needed to correct it and relevant market conditions. Three-year terms are common. In deciding whether a term is acceptable, the ACCC has a firm set of red lines. Its guidance on accepting undertakings says it will not accept undertakings that include terms which:

deny the concerning conduct;
impose obligations on the ACCC;
limit the ACCC from instituting proceedings in the future;
state that the undertaking is not an admission for third-party actions;
impose obligations on third parties;
set up defences for possible non-compliance;
state that the conduct was inadvertent or accidental; or
make self-serving statements seeking to minimise the consequences of the conduct, including for public relations or reputational purposes.

The practical effect of these red lines is worth spelling out. A business cannot use an undertaking to pretend the problem never happened, to shield itself from future claims by affected customers, or to extract concessions from the regulator. An undertaking is a genuine acceptance of responsibility expressed in concrete commitments. That is a hard truth for businesses that hope an undertaking is a quiet way to make a problem disappear.

Acceptance and the public register

An undertaking must be in writing, and it is accepted under s 87B(1). Once accepted, it is not a private settlement. The ACCC keeps public registers of undertakings on its website, and each accepted undertaking is published there. Competitors, customers, the media and future investigators can all read exactly what the business promised.

There is limited room for confidentiality. Where an undertaking contains genuinely sensitive commercial or confidential information, such as pricing data, the ACCC may allow some terms to be redacted from the published version. But redaction is the exception, not the rule, and it applies to genuinely sensitive material rather than to the substance of the commitments.

The public nature of the register cuts both ways. It gives the undertaking teeth, because the business knows its promises are on the record. It also means a poorly scoped undertaking can create reputational and commercial exposure long after the underlying conduct has been fixed.

Varying or withdrawing an undertaking

Circumstances change, and a term that looked sensible when it was signed can become impractical later. Section 87B(2) allows the person who gave the undertaking to withdraw or vary it at any time, but only with the consent of the ACCC. Consent is not automatic.

The ACCC's guidance identifies the circumstances in which a variation or withdrawal may be appropriate: the terms have become too difficult or impractical to comply with, there has been a material change in the business's circumstances since the undertaking was accepted, or other exceptional circumstances apply. Critically, a variation or withdrawal should not change the objectives and purpose of the original undertaking. In other words, a business cannot use the variation process to quietly water down the commitments it made. If the ACCC does not agree that the circumstances justify the change, the original terms stand.

Monitoring and what happens on a breach

Once an undertaking is accepted, the work begins. Monitoring compliance is usually the responsibility of the business itself, and undertakings routinely require the business to submit information or documents to the ACCC and to maintain specified records. Some undertakings require an independent compliance professional to conduct reviews or audits, at the business's cost. For a small business, these ongoing obligations are a real operational burden, not a formality.

If the ACCC considers that a term has been breached, s 87B(3) allows it to apply to the Federal Court. The court's powers, set out in s 87B(4), are the teeth of the whole scheme. If satisfied that the person breached a term of the undertaking, the court may make all or any of the following orders:

an order directing the person to comply with the term;
an order directing the person to pay to the Commonwealth an amount up to the financial benefit the person obtained, directly or indirectly, that is reasonably attributable to the breach;
any order the court considers appropriate directing the person to compensate any other person who suffered loss or damage as a result of the breach; and
any other order the court considers appropriate.

The second of these is easy to underestimate. A business that profits from breaching its undertaking can be ordered to hand that benefit to the Commonwealth, on top of being forced to comply and to compensate affected people. The residual "any other order" power also gives the court considerable flexibility to design a remedy that fits the breach.

One distinction is worth making precise. Breaching an undertaking is not itself contempt of court, because the undertaking is not a court order. But if the court makes an order under s 87B(4) and the business then disobeys that order, the disobedience can amount to contempt of court, with its own penalties. The chain of enforcement runs from undertaking, to court order, to contempt, and each link adds consequence.

A worked example: the Qantas "ghost flights" undertaking

The ACCC's register entry for Qantas shows how the mechanism operates in a large consumer matter. In August 2023 the ACCC sued Qantas in the Federal Court, alleging it had offered and sold tickets on flights it had already decided to cancel, and kept showing those flights on customers' booking pages. Qantas admitted contraventions of ss 18, 29(1)(b), 29(1)(g) and 34 of the ACL between May 2021 and August 2023.

In May 2024 the ACCC accepted a court enforceable undertaking from Qantas. Under it, Qantas committed to notify existing ticketholders of a cancellation within 48 hours of the cancellation decision, to stop selling tickets on the cancelled flight within 24 hours, to pay roughly $20 million in compensation to eligible customers (amounts of $225 for domestic and Trans-Tasman flights and $450 for international flights departing Australia), to appoint an independent auditor to audit its compliance, and to amend its compliance program. The undertaking was varied in August 2024, with the ACCC's consent, to add updated compliance program requirements.

The example is instructive in several ways. The undertaking sat alongside court proceedings rather than replacing them. It combined immediate remediation with ongoing compliance commitments. And the compensation terms were specific enough to be audited: fixed amounts, deadlines for contacting customers and paying claims. That is the shape of a modern s 87B undertaking: precise, measurable and publicly documented.

Where businesses get caught out

A few misunderstandings recur when businesses first confront the possibility of an undertaking:

Treating it as a private deal: An undertaking is published on a public register. There is no quiet exit.
Expecting an admission-free shield: The ACCC will not accept a term stating that the undertaking is not an admission for third-party actions. Affected consumers and business customers can still bring their own claims against the business.
Under-scoping the compliance burden: An undertaking that looks modest on paper can require years of reporting, audits and program reviews. The ongoing cost is often the largest part of the price.
Assuming the ACCC will accept anything: Where conduct is serious, repeated or deliberate, the ACCC may prefer court proceedings and penalties over an undertaking. An offer is not a guaranteed resolution.
Forgetting the personal dimension: Undertakings can be given by individuals as well as companies. Directors and business owners can find themselves personally bound and personally monitored.
Giving up negotiating room: The ACCC negotiates the terms, and the template in its guidelines is a starting point, not a finished document. A business that simply signs what is put in front of it gives away its best opportunity to shape the outcome.

When a lawyer should be involved

The point at which legal help matters most is early, before the business responds to the ACCC's concerns. A lawyer can help in several concrete ways:

Assess the substance: Is the conduct actually a contravention, and is the ACCC's characterisation of it accurate? The strength of the regulator's case determines how much leverage the business has.
Weigh undertaking against defence: Where the allegations are contestable, defending may be the better commercial outcome. Where they are not, an early, well-scoped undertaking can avoid the cost and uncertainty of litigation.
Negotiate the terms: A lawyer can push back on scope, duration and reporting obligations, and make sure the commitments are achievable, unambiguous and no broader than they need to be.
Draft with precision: The ACCC will hold the business to the words of the undertaking. Vague drafting creates exposure later.
Structure compliance and reporting: A compliance program and audit arrangements that fit the business's size will cost far less than one designed for a much larger operation.
Manage the monitoring relationship: When circumstances change, a lawyer can frame the case for variation or withdrawal and negotiate it with the ACCC.

Because variation requires ACCC consent, the negotiation of the original terms is effectively the only point at which the business fully controls its own obligations. That is where professional advice pays for itself.

The negotiation is where the outcome is set

Every enforceable undertaking is public, binding and enforceable by court order, but its actual cost to the business is largely settled in the negotiation that happens before it is signed. The commitments to stop, to pay, to audit and to report are all on the table in that window, and the ACCC's willingness to accept an offer depends on the terms being serious and workable. A business that engages early, with advice, can turn an investigation into a managed outcome. One that waits until proceedings are imminent, or signs whatever is offered, has given away its leverage. The best time to think about an enforceable undertaking is before you have to respond to the ACCC, and a short consultation with a lawyer at that point is usually far cheaper than the price of getting the terms wrong.