What a year InCompetition!

Published On 24/12/2015 | By James Gould | Consumer protection, Enforcement, Litigation, Reform

By James Gould and Matt Sherman

2015 has been a bumper year in the world of Australian competition law, from the release of the Harper Panel’s report to the disappearance (and subsequent re-emergence) of agreed civil penalties, as well as a number of very significant cases across the competition and consumer sphere. In this post, we look back at some of the highlights of 2015.

Harper Review

In March 2015, the Harper Panel released its final report following its ‘root-and-branch’ review of Australian competition law and policy. However, the change in Prime Minister from Tony Abbott, who initiated the Harper Review, to Malcolm Turnbull in September 2015 (shortly before the Government was due to release its response to the Harper Panel’s recommendations) left the status of the review and recommendations in significant doubt.

Then, in November, Australian Treasurer Scott Morrison released the Government’s response to the Harper Review. The Government has supported most of the Harper Panel’s recommendations, and has not rejected any of them outright. It is currently consulting further on the notoriously vexed question of whether to introduce an ‘effects test’ into section 46 of the Competition and Consumer Act 2010 (Cth) (CCA), which deals with misuse of market power.

Penalty submissions and agreed penalties

In May 2015, the Full Federal Court handed down an explosive decision in CFMEU which examined the extent to which parties may put agreed penalties to the Court to resolve competition and consumer protection matters. The judgment overturned a longstanding practice whereby civil regulators could agree a civil penalty with a respondent and jointly submit that penalty to the Court which, so long as it considered the penalty was within the ‘appropriate range’, would order the penalty be imposed.

This Full Court’s decision was held to follow on from the decision of the High Court of Australia in R v Barbaro, which held that it was inappropriate for prosecuting authorities in criminal cases to make submissions as to the appropriate sentence to be imposed. Under the approach in Barbaro, prosecutors cannot make such submissions and Courts cannot receive them. Post-CFMEU, the Court could not receive, or take into consideration, submissions from civil regulators as to the appropriate civil penalty to be imposed in any particular case.

Given the significance of its effect, the judgment was appealed to the High Court of Australia. On 9 December 2015, the High Court overturned the Full Federal Court’s decision, ruling that its judgment in Barbaro did not apply to civil penalty cases and that it is permissible for regulators (including the ACCC) to place proposed penalties (including agreed penalties) before the Court. Provided the Court is satisfied that the proposed penalty represents an appropriate amount and that the facts on which it is based are accurate, it may approve the amount proposed by the parties. While the Court retains the power to impose a different penalty to that proposed, the High Court indicated that it would generally be “highly desirable in practice for the court to accept the parties’ proposal and therefore impose the penalty”.

Price fixing with agents – Flight Centre and ANZ

August 2015 saw the Full Federal Court hand down two significant decisions in price fixing cases, both of which clarified the position in circumstances involving booking/arrangement services provided by agents:

  • In ACCC v Flight Centre Limited, the Full Federal Court overturned an earlier first instance decision, concluding that the primary judge had erred in finding that there was a separate market for ‘booking and distribution services to customers’. On that basis, there was no competition between the airlines and Flight Centre in respect of any of the relevant services of the kind required by the ‘per se’ price fixing provisions of the CCA.
  • in the ACCC’s case against Australia and New Zealand Banking Group Limited (ANZ), the Full Court found that mortgage brokers did not supply services in competition with ANZ in any market for ‘loan arrangement services’ and as such there was no breach of the price-fixing provisions.

Importantly, however, each Court emphasised that there is no general principle that a business cannot be in competition with its agent and that each case needs to be considered on its own facts and circumstances.  The ACCC is seeking leave to appeal the decision in Flight Centre to the High Court of Australia.

Misuse of market power – Pfizer

2015 also saw the Court decide significant cases brought by the ACCC in the area of misuse of market power.  In particular, in March 2015, the Federal Court dismissed allegations that Pfizer abused its incumbent position as a patent holder to deter competition from general pharmaceuticals when its cholesterol drug Lipitor came off patent.  While the ACCC did succeed in proving the normally problematic element of ‘taking advantage’ of market power, it failed to prove that Pfizer was acting for the requisite purpose of deterring or preventing other suppliers from engaging in competitive conduct.  The ACCC’s appeal of this decision was heard in November 2015 and judgment is reserved.

King & Wood Mallesons

2015 has also been a busy year for the InCompetition team and for King & Wood Mallesons’ competition team more generally. This year, we have brought you over 80 blog posts on diverse topics ranging from the always pun-rich area of free-range egg claims to Hong Kong’s new competition laws. King & Wood Mallesons has been acting in a number of significant matters on which we have reported in this blog during the course of the year.

We would like to take this opportunity to wish our readers a very happy festive season. We look forward to keeping you informed on developments in 2016, which is sure to be a similarly eventful year as the Government further develops its response to the Harper Review.

Photo: Flickr / Bart Fields

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About The Author

is a Senior Associate in the Sydney office of King & Wood Mallesons, specialising in competition law and dispute resolution.

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