ACCCounting for an emboldened regulator
Does the latest ACCCount report signal an emboldened regulator?
The most recent quarterly ACCCount of the ACCC’s regulatory and enforcement activities paints a picture of a regulator emboldened by the new environment cultivated by the Financial Services Royal Commission.
In an address to the Law Council of Australia in August 2018, Chairman Rod Sims acknowledged that the Royal Commission had highlighted the increased importance of a strong regulatory framework and the need for effective deterrence through meaningful sanctions. Mr Sims flagged the ACCC’s growing use of its compulsory information gathering powers under section 155 of the Competition and Consumer Act, including to seek information, documents and sworn evidence at a formal examination in respect of a broad range of conduct. The Commission’s inclination to further utilise its section 155 powers, amongst others, is apparent in the most recent ACCCount report.
Across the mergers and enforcement spheres, the final quarter of 2018 saw the ACCC:
- commence proceedings against NSW Ports Operations Hold Co for making agreements with the state of New South Wales that allegedly have an anticompetitive purpose and effect;
- notch up a win in the High Court with Yazaki’s application for special leave to appeal the Full Federal Court’s earlier decision dismissed, and the $46 million penalty for cartel conduct against Yazaki continuing to stand;
- suffer a loss in the High Court with the ACCC’s application for special leave to appeal the Full Federal Court decision in a case against Pfizer Australia dismissed;
- commence seven consumer protection cases, including contested proceedings against TPG Internet for engaging in misleading conduct relating to mandatory $20 ‘prepayments’ on customers’ phone plans;
- record $27.75 million in total penalties for breaches of the ACL, including $12 million against We Buy Houses and $6 million against its sole director, Rick Otton, for making false and misleading representations. These penalties were the highest ever imposed for contraventions of the ACL by a corporation and an individual respectively;
- pre-assess 91 confidential merger matters (up from 70 during the previous year), undertake six public reviews, release two statements of issues and determine seven final authorisations. Significantly, the ACCC decided to not oppose Nine Entertainment’s proposed merger with Fairfax Media, Cabcharge Australia’s proposed acquisition of Mobile Technologies International, and Thales’ proposed acquisition of Gemalto; and
- release a number of publications, including the Residential Mortgage Price Inquiry Final Report, the Consumer Data Right Rules Outline, the annual report on the private health insurance industry, and the third Measuring Broadband Australia report.
A further 12 competition and 27 consumer enforcement proceedings remain on foot.
The general flurry of enforcement activity is likely to continue, with the latest ACCCount report confirming there has been a 25% increase in the number of section 155 notices issued, compared to the same period last year. At his annual address to the Committee for Economic Development Australia on 26 February 2019, Mr Sims reiterated the Commission’s continuing expansion of its enforcement activities and capabilities, making particular mention of further criminal cartel investigations and taking advantage of the newly passed increased maximum penalties for contraventions of the ACL.
It is also apparent that the ACCC sees market studies and inquiries as an essential non-enforcement component of its overall arsenal. From recent inquiries, such as the digital platforms and foreign currency inquiries, to long-term studies such as the east coast gas market and retail electricity pricing inquiries, the ACCC continues to utilise its broad ranging inquiries powers to achieve outcomes for consumers that it considers are not possible through enforcement action alone.
In the aftermath of the Royal Commission, we expect to see an already active ACCC expand its investigation and enforcement activities through an increased focus on using its compulsory information gathering powers and pursuing higher penalties against both corporations and individuals.
Image credit: Pixabay / Licence / Filtered to B&W and resized
This post has been authored by Kritika Rampal, Solicitor, and Tom Norris, Senior Associate.