Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Australian Competition and Consumer Commission Chairman Rod Sims provides overview of ACCC priorities, (Aug 12, 2013)

By Peter Reap, J.D., LL.M.

In a speech before the Law Council of Australia’s annual general meeting in Sydney on August 9, Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims provided an overview of ACCC priorities. The ACCC has made available both a summary of the speech, and its transcript.

Sims prefaced his speech with a tribute to Ron Bannerman, the Trade Practices Commission’s first Chairman who died two weeks previously at the age of 91. Bannerman was a wise and highly effective leader of the Commission who oversaw the development of competition and fair trading so that they became intrinsic parts of Australian business culture, according to Sims.

Important regulatory issues. Sims next discussed several important regulatory tasks facing the ACCC for the remainder of 2013. He mentioned that the National Broadband Network will be a wholesale only network, so regulation of it would be less complicated than the previous experience of the vertically integrated Telstra. The Fixed Services Review will involve the review of access regulation for fixed line telecommunication services.

The NSW State Water Corporation pricing determination relates to water charges for 2014-2017 for eight valleys and one water supply scheme serviced by State Water within the Murray Darling Basin. Sims reported that the ACCC will test the proposed tariff structure under the Water Charge (Infrastructure) Rules and having regard to the water charging principles and objectives in the Water Act 2007.

From October 2014, access to port terminal services for bulk wheat export is expected to be governed by a mandatory code of conduct, to be enforced by the ACCC. The ACCC is currently involved in the development of this code of conduct, with the Department of Agriculture, Fisheries and Forestry and Treasury, and with input from the industry representatives on the Code Development Advisory Committee, including port operators, exporters, and producer groups. “The key issue is to ensure an effective code that can achieve the objectives of the previous undertaking regime,” Sims asserted.

For rail transport, the ACCC assesses proposed third party access undertakings, monitors compliance with accepted undertakings, and may arbitrate access disputes in relation to rail infrastructure. The ACCC is currently assessing a variation to incorporate track used by coal producers in the Gunnedah Basin into the Hunter Valley access undertaking. The ACCC is also involved in discussions regarding access to proposed new rail infrastructure projects in places such as the Pilbara region of Western Australia, according to Sims.

Merger review. Given that the ACCC last undertook a substantive review of the Process Guidelines in 2006, it is not surprising that after 7 years some aspects of the Guidelines no longer accurately reflect the way that the ACCC conducts informal merger reviews in 2013, Sims stated.

“The ACCC has been working diligently in the past months to update the Merger Process Guidelines,” Sims added. “While we are not quite there yet, we are close to finalizing the revised Process Guidelines. We are extremely grateful for the thoughtful input provided by members of the Law Council throughout our public consultation on the Guidelines.”

Public Competition Assessments. Consistent with its previous approach, the ACCC will generally publish a Public Competition Assessment (PCA) where a merger is opposed; where it accepts undertakings; at the request of the merger parties; or where a merger is cleared but raises important issues that the ACCC considers should be made public.

The ACCC will in future generally aim to publish PCAs within 30 business days after announcing its final decision. In addition, the ACCC is giving thought to providing more detailed public register entries for some cleared mergers. In some of these matters the ACCC may decide that a PCA is not warranted but that the public would benefit from additional detail on the ACCC’s approach and reasons for its decision, Sims explained. This may be the case where a Statement of Issues has previously been published or if a matter raises analytical or competition issues which warrant a longer public register entry.

Compliance and enforcement. “It is fair to say that the ACCC has enjoyed a high level of success before the courts,” Sims stated. “Indeed, we now seem to be winning around 80 per cent of the cases we take.”

“One case where the court did not agree with our arguments was the Lux case brought in the Federal Court last year. The ACCC alleged that Lux had engaged in unconscionable conduct in relation to the sale of vacuum cleaners to five elderly women in their homes and, although that application was dismissed by the trial judge, we are certain that the case was one that needed to be brought. The ACCC has appealed this decision, and the appeal was heard last week by the Full Court,” according to Sims.

Consumer protection and fair trading. In the last two years, the ACCC has secured pecuniary penalties in 33 cases, totaling almost $22 million. Further, more than 100 infringement notices have been issued, some comprising multiple notices to a single company reflecting a range of contraventions, with over $620,000 in penalties paid.

The next area of focus in the energy sector is misleading discount claims. The ACCC is increasingly concerned about possible misleading conduct by energy retailers in their promotion of energy plans. These concerns relate to the promotion of discounts and savings off energy use and/or supply charges under those plans.

“New to our priorities this year is an interest in credence claims, particularly those in the food industry, which have the potential to have a significant effect on consumers and importantly, the competitive process,” Sims announced. “Consumers are increasingly placing weight on premium claims made by producers. Consumers are not in a position to fact check every claim and are in the hands of the producer who makes claims about their goods or services.”

“Given the increasing number of consumers shopping online, another emerging area of complaint that we are interested in is fake testimonials and online reviews,” Sims added. “Fake testimonials can mislead consumers and give an unfair advantage to unscrupulous traders. We are working with consumer organizations, review platform sites and regulators (international and State) to learn about the market for reviews, industry trends and consumer/business detriment. We are putting together a position on how we will view and treat testimonials or reviews and how we will enforce that view.”

Competition. “During the past 18 months we have seen what cumulatively are the largest penalties for cartel conduct in the history of the ACCC,” according to Sims. “In my first year at the ACCC we instituted proceedings in one competition case (against Flight Centre); in my second year there have been five cases; there will likely be more over the coming year.”

Immunity policy. The ACCC is conducting a review of its immunity policy. This is the second time it has reviewed the immunity policy since its launch in 2005 and, like last time, the objectives are to: (1) increase the effectiveness of the policy; (2) update guidance material to provide better clarity; and (3) improve its related internal business practices. Sims expects the review will be finalized in the coming months.

Product safety. Sims declared that product safety issues which have the potential to cause serious harm to consumers will always be a priority for the ACCC. Later this year, the ACCC will join with the International Consumer Product Health and Safety Organization to host a major international product safety conference on the Gold Coast, an event to be open to anyone involved in selling, importing, exporting, or regulating consumer goods in the ACCC’s region.

Asian engagement. “For the first time, later this month, I will take part in the East Asia Top Level Officials Meeting on Competition Policy in Manila, at the invitation of our East Asian counterparts,” Sims stated. In addition, Australia and the ACCC play host to the 2015 International Competition Network annual conference. “Securing this event in our region is important for all of us,” according to Sims.

Conclusion. Sims concluded by saying: “From the regulation of access to wheat port infrastructure to court proceedings against companies such as Visa and Apple, and to the safety of magnetic balls, there is never a dull moment in the world of competition and consumer law.”

News: Antitrust