The regulator’s net

Published On 19/08/2016 | By Rob Hirst | Cartels, Enforcement, Litigation, Mergers

ACCC Chairman Rod Sims has used his annual address to the Law Council of Australia (available here) to outline the ACCC’s continuing priority areas: cartel conduct, penalties, merger reviews and market studies.

Deterring cartel conduct

According to Sims, there remains too much cartel conduct occurring in Australia, to the detriment of the economy as a whole, and the ACCC needs to do more to discourage it. An important part of this will be making greater use of the criminal cartel provisions. Although the first ever criminal cartel charges were only laid on 14 July this year (discussed here), Sims disclosed that there are currently 10 to 12 criminal investigations under way and that the ACCC is aiming bring 1 or 2 criminal cases each year.

Commercially relevant” penalties

Another goal of the ACCC is to ensure that penalties are “commercially relevant” and large enough to deter illegal conduct. Sims illustrated this by pointing to the ACCC’s current appeal against Federal Court’s decision in the ACCC v Cement Australia (discussed here) which imposed a $17m penalty when the ACCC had argued for penalties exceeding $90m.

Efficient merger reviews

The ACCC Chairman went on to promote the ACCC’s record on merger reviews. In the last financial year, the ACCC considered 319 mergers but only conducted 31 public reviews with the balance being pre-assessed by ACCC staff. Of the 31 that were subject to public review, 17 were not opposed, 6 were withdrawn by the merger parties and six involved a section 87B undertaking. Only two were opposed.

Sims explained that the ACCC aims to quickly clear straight-forward applications so that resources can be focussed on the contentious ones. He was at pains to emphasise however that efficiency is a “two way street” and requires merger parties to be responsive to the ACCC.

Regular market studies

Sims said that market studies have now become part of the ACCC’s core business. These are general examinations of particular markets where no clear contraventions have taken place. Their benefits include allowing the concerns of market participants to be aired, promoting public debate and informing government policy. They can also reveal illegal conduct and lead to investigations. Sims also said that the mere announcement of a market study had changed behaviour in some instances. Market studies have recently been completed on the east coast gas market, petrol prices in Darwin and Launceston and private health insurance. There currently market studies under way on the beef cattle, motor vehicle retailing and communications.

The importance of enforcement

Sims made it clear that enforcement continues to play an important role in deterring conduct:

Strong and visible enforcement….creates a multiplier effect, as others take notice, word gets around and people know and respect what can and cannot be done.

In addition to the recently filed criminal proceedings, the ACCC’s most recent quarterly report notes that 13 competition and 28 consumer protection cases remain on foot before the Courts.

Picture: Courtesy Wikimedia Commons / Jrcla2

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About The Author

is a solicitor in the competition team in the Sydney office of King & Wood Mallesons.

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