Looking in the rear view mirror: ACCC Annual Report 2018/19
The ACCC has published its 2018/19 Annual Report, providing us with an in-depth look at its operations for the year.
The ACCC has been actively enforcing competition law in the past year. Although it fell short of its target number of investigations (40), it commenced 23 investigations for alleged breaches of competition law.
The ACCC has maintained its pursuit of alleged cartel conduct, including further criminal cartel enforcement. In conjunction with the Department of Public Prosecutions, the ACCC commenced a civil and criminal cartel investigation against the CFMMEU for allegedly attempting to induce suppliers to agree to contracts with cartel provisions and Vina Money Transfer for allegedly fixing the Australian Dollar-Vietnamese Dong exchange rate and fees.
The ACCC also brought its first successful action for “gun-jumping” cartel conduct against Cryosite Limited, who was selling its business to a competitor, was found to have coordinated activities with the competitor prior to formal completion of the sale.
There was also a flurry of applications for merger clearances in 2018/19. The ACCC assessed 331 merger applications, up from 281 in the previous year. The vast majority of clearance requests were cleared in pre-assessment stage (92%), with 26 applications analysed in more detail. Significantly, two merger clearance applications were opposed by the ACCC—the TPG/Vodafone and Pacific National/Aurizon acquisitions—which are currently being appealed in the Federal Court.
The ACCC has been actively enforcing alleged breaches of consumer law, conducting 49 Australian Consumer Law interventions, exceeding its target (40).
The ACCC’s enforcement approach in 2018/19 was focused on stated priority areas, with 87.5% of interventions occurring in the priority areas outlined in the Enforcement Policy, compared with 76.8% the previous year. In particular, the ACCC prioritised consumer law actions relating to consumer guarantees, digital platforms, agriculture and broadband.
- Consumer guarantees: The ACCC obtained a $1.95m penalty against Jetstar for misleading consumers about the availability of refunds and entering into enforceable undertakings with Jetstar, Qantas, Tiger and Virgin in relation to refund policies. The ACCC also tested the new excessive surcharge provisions in Court against Europcar, who were penalised $350,000.
- Digital platforms: The ACCC commenced proceedings against a number of online companies for misrepresenting information to consumers. The ACCC is particularly interested in the use of algorithms to present search results to consumers, and commenced proceedings against Trivago NV for ranking search results based on referral fees earned by the company rather than the customer’s criteria.
- Agriculture: The ACCC has focused on the removal of alleged unfair contract terms between farmers and food processors. The ACCC also issued its first infringement notice and penalty under the 2017 Horticultural Code of Conduct to Stuart Dickson Produce Pty Ltd for trading without a written horticulture produce agreement with growers.
- Broadband: The ACCC has stepped up enforcement action against NBN retailers for misleading consumers about the speed of broadband plans.
The ACCC has also been focusing on enforcing the Franchising Code of Conduct, targeting compliance in the café, restaurant and takeaway food services industries.
Following changes to the Australian Consumer Law which saw an increased maximum penalty (see our earlier post here), consumer law penalties rose significantly in 2018/19. The Federal Court imposed a record $18 million penalty against We Buy Houses and its sole director for making false and misleading representations.
Market studies and inquiries
As we discussed in an earlier post, market studies and inquiries have become a key tool in driving cultural change in the market and provides support for the ACCC’s enforcement function. A number of studies were wrapped up in 2018/19, including the:
- Digital Platforms Inquiry: This inquiry investigated the impact of digital platforms on the supply of news and journalistic content and the implications of digital platforms for media content creators, advertisers and consumers. It made a number of recommendations to the ACCC, including proposed codes of conduct between digital platforms and publishers, which are currently being considered by the Federal Government.
- Residential Mortgage Price Inquiry: The ACCC found a lack of vigorous price competition between relevant banks and opaque pricing structures that inflate borrower’s costs. Following on from this report, the ACCC is conducting a home loan pricing inquiry.
Legislative and policy developments
There were a number of changes made to the Competition and Consumer Act 2010 (Cth) and the Australian Consumer Law in 2018/19.
- The maximum penalties for breaches of the Australian Consumer Law were increased to be in line with penalties under Part IV of the Competition and Consumer Act.
- Section 51(3), which provided for an intellectual property exemption from Part IV of the Competition and Consumer Act, was repealed.
- The Consumer Data Right was introduced. This right will allow consumers to obtain access to their data and have it transferred to other service providers. At present, it applies to basic product information in the banking sector and the ACCC is working to expand this to consumer data for mortgage accounts, credit and debit cards, and deposit and transaction accounts in early 2020.
How did the ACCC perform?
ORIMA Research was engaged to conduct an independent assessment of the ACCC.
ORIMA liaised with 35 stakeholders including government officials, industry associations, consumer groups and technical experts to determine how the ACCC performed in 2018/19. It found that the ACCC scored favourably in its key focus areas, being to:
- maintain and promote competition;
- protect the interests and safety of consumers and support fair trading in markets affecting consumers and small business;
- infrastructure regulation; and
- market studies and inquiries to support competition, consumer and regulatory outcomes.
The House of Representatives Standing Committee on Economics is yet to release its review of the ACCC Annual Report.