INSIGHT

Competition law update

By Fiona Crosbie
Competition law Consumer law Litigation

In brief

In touch: Competition law update is a regular publication by the Allens Competition group to keep you informed of the latest news and developments in this area. For more information or for legal advice, please contact one of the Partners listed below. We look forward to hearing from you.

Significant matters

ACCC identifies compliance and enforcement priorities for 2014

The ACCC has released its 2014 Compliance and Enforcement Policy. Each year, the ACCC updates its policy to outline its priority areas for the year and sets out the factors to be taken into account when deciding whether to pursue matters.

While the policy does not differ markedly from the 2013 edition, there are some new focuses noted.

In the area of consumer protection, the ACCC highlights:

  • a particular focus on savings representations – 'discounts off what?';
  • emerging consumer issues in the online marketplace, particularly incremental disclosure of additional fees and charges (including credit card surcharges) – 'drip-pricing' and comparator websites;
  • competition and consumer issues in highly concentrated sectors, in particular supermarkets and fuel;
  • scams and representations about consumers rights; and
  • the ACL consumer guarantees regime, particularly representations about consumer rights when buying products including in the context of the sale of extended warranties.

Possibly in light of the Coalition Government's focus on small business in its election campaign and in the draft terms of reference for the proposed 'root and branch' review of competition law and policy, the ACCC's consumer protection aims specifically mention the protection of small business in addition to consumers in the context of scams, credence claims and complexity and unfairness in small business contracts.

In the area of international cartels, the ACCC states that it will focus on pursuing cartels that have a connection to, or cause detriment in, Australia – ie, cartels that involve Australians, Australian businesses or entities carrying on business in Australia.

In the area of product safety (among other activities) the ACCC will focus its activities on unsafe imports and the regulation of chemicals in consumer products.

Finally, the ACCC notes that it is increasingly working with its international counterparts both bilaterally and through global and regional forums as Australia's trade, business and cultural ties with Asia deepen. Read the ACCC media release and the policy.

National access regime is here to stay – (with changes)

On 11 February 2014, the Federal Government released the final report of the Productivity Commission on the national access regime contained in Part IIIA of the Competition and Consumer Act 2010 (Cth).

In October 2012, the Productivity Commission was asked to examine the effectiveness of the national access regime and report on a number of matters, including whether the regime should continue to exist, how effective it has been, the costs and benefits associated with the regime and how it could be improved . In May 2013, the Productivity Commission released a draft report.

The final report supports the retention of the national access regime, with specific changes recommended to the declaration criteria and a number of other recommendations addressing certification and undertakings, extensions, ministerial decisions and recommendations with broader policy context. The Government will now formulate its response to the report, including acting on any legislative changes it accepts. The Productivity Commission has recommended another review of the regime within 10 years of the Government's response to this review. Read the Productivity Commission report.

ACCC News

ACCC to adopt price monitoring role on carbon tax repeal – 24 Feb 2014

The ACCC has been given a formal monitoring role in preparation for the repeal of the carbon tax post July 2014.

The ACCC is to monitor prices, costs and profits to assess the general effect of the repeal of the carbon tax scheme in Australia. Similar to the role it had on the introduction of the scheme, the ACCC will collect information and monitor prices with a view to tackling any price exploitation that may occur. The focus will be on suppliers of regulated goods, namely natural gas, electricity and synthetic greenhouse gases, as well as corporations identified as liable entities under the Clean Energy Act 2011 (Cth). Read the ACCC media release.

ACCC not to oppose iSentia's acquisition of AAP's media monitoring business – 20 Feb 2014

The ACCC will not oppose the acquisition of Australian Associated Press Ltd (AAP)'s media monitoring business by iSentia Pty Limited.

iSentia (formerly Media Monitors) is a privately owned media intelligence company with operations in Australia, New Zealand and Asia. AAP is Australia's national news agency distributing independent news and information to the Australian media and the private and public sectors. iSentia and AAP are the only national providers of media monitoring services capable of providing a full suite of print, online and broadcast monitoring.

The ACCC concluded that it was highly unlikely that AAP would continue to operate its media monitoring business if the proposed acquisition did not proceed. Market inquiries also revealed that it is highly unlikely that an alternative buyer for AAP's media monitoring business will appear. Read the ACCC media release.

ACCC grants authorisation to Myer for 'stores within stores' promotions – 20 Feb 2014

The ACCC has granted authorisation to Myer to continue inviting certain merchandise and service suppliers, known as concessions or licensee businesses operating within Myer stores, to participate in various promotions. These 'stores within stores' display and sell only the brand of product promoted and sold by the relevant licensee business, and are operated independently of Myer.

Authorisation enables Myer to continue to invite licensee businesses to participate in storewide and category wide promotions that may otherwise raise concerns under the Competition and Consumer Act. Read the ACCC media release.

ACCC not to oppose Amcor's acquisition of Detmold's Australian operations – 20 Feb 2014

The ACCC will not oppose the acquisition by Amcor Ltd of Detmold Group's Australian flexible packaging operation.

Detmold competes with Amcor in the supply of value-added flexible packaging, particularly to manufacturers of fast moving consumer goods (FMCG).

The ACCC concluded that the acquisition of Detmold's Australian flexible packaging operations would be unlikely to substantially lessen competition. Market inquiries confirmed that FMCG manufacturers across a range of sectors can, and do, successfully manage their supply chain through importing value-added flexible packaging. Importers also have a growing presence in Australia and are able to offer warehousing, technical and sales staff to assist customers manage an import supply chain.

The ACCC's review indicated that customers of value-added flexible packaging frequently benchmark local suppliers' pricing against the cost of imported product and used the threat of switching some or all of their value-added flexible packaging to imports to obtain price reductions from their incumbent supplier. Local manufacturers of flexible packaging also provide an important competitive constraint on large firms. Read the ACCC media release.

ACCC to consult on proposed undertaking from AGL – 19 Feb 2014

The ACCC has commenced market consultation on a proposed undertaking offered by AGL Energy Limited in relation to its proposed acquisition of the business and assets of Macquarie Generation.

On 6 February 2014, the ACCC published a Statement of Issues outlining its preliminary views that the proposed acquisition:

  • is likely to result in a substantial lessening of competition in the market for the retail supply of electricity in NSW as a result of reduced access to competitively priced and customised hedge contracts; and
  • may result in a substantial lessening of competition in one or more markets for the wholesale supply of electricity in NSW, Victoria and South Australia.

On 17 February 2014, AGL offered the ACCC a proposed undertaking addressing the ACCC's concerns in relation to the retail supply of electricity in NSW, but not in relation to the wholesale supply of electricity.

The ACCC now seeks views from market participants to assist its consideration of the proposed undertaking. Submissions are due by 25 February 2014. The ACCC intends to make its final decision on 4 March 2014. Read the ACCC media release.

Big spike in small business complaints – 7 Feb 2014

The ACCC has launched the latest Small business in focus report which outlines its work in the sector. The report highlights the ongoing activities of the ACCC to educate small business about their rights and responsibilities, and to take enforcement action where necessary, and notes the following:

  • During the second half of 2013, the ACCC received close to 3,600 complaints from small businesses, an 84 per cent increase from the first half of 2013. Enquiries from small businesses also increased dramatically. Franchising complaints rose slightly from 286 in the previous period to 309 this period, while franchising enquiries almost doubled.
  • Misleading conduct and false representations remained the biggest single issue for the small business and franchising sectors, with over 1,400 complaints received. Enquiries about the consumer guarantees were the second largest topic of concern.
  • The ACCC obtained several significant court judgments, including against Euro Solar and Worldwide Energy and Manufacturing, which were ordered to pay combined penalties of $125,000 for making false or misleading representations about the country of origin of their solar panels, and for publishing fake testimonials. This was the ACCC's first litigated outcome in relation to the specific prohibition against fake testimonials under the ACL.
  • Many small businesses were victims of scams, with over $700,000 reported lost through false billing scams.

Read the Small business in focus report and the ACCC media release.

Cases

Dominant message of advertisements dominates court's concerns

Telstra Corporation Ltd v Singtel Optus Pty Ltd [2014] VSC 35 (Justice Elliott, 18 February 2014)

Key issues

  • Consider your advertisement as a whole and the dominant message conveyed

Summary

The plaintiff, Telstra, sought orders preventing further broadcasting by Optus of an advertisement on free-to-air television and on its website, and remedial orders.

The advertisement contained both visual and audio content, predominantly consisting of a map of Australia with the words 'Optus 98.5%' and 'Telstra 99.3%'. These percentages were the percentage of the population covered rather than the geographical spread of coverage.

Telstra alleged the advertisement contained a number of false, misleading and deceptive representations misrepresenting Optus' geographic coverage, Telstra's geographic coverage and the comparative coverage of both Optus and Telstra.

The court held that when viewed as a whole, the advertisement was misleading and would be understood by the ordinary and reasonable person in the relevant class of consumers to relate to the geographic coverage rather than to the population. The parties were granted leave to make submissions as to the appropriate form of relief.

Source: AustLII