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.

'Root & branch' review news

Given the high-profile nature of the competition policy 'root & branch' review, we will keep you updated on the review's progress and on particular aspects of the review in future editions of In touch. If you would like to discuss what the review will mean for you, or you want to consider preparing a submission, please let us know.

Review panel releases Issues Paper for 'root & branch' review

In the last edition of In touch, we reported that the Federal Government had released the final terms of reference for the 'root & branch' review of competition laws and announced the composition of the review panel.

On 14 April 2014, the review panel released the Issues Paper that sets out the terms of the review, including high-level questions and particular issues on which it seeks submissions and consultation with interested parties.

The panel has indicated it is keen to engage with all interested stakeholders and that submissions should not be limited to the issues or questions contained in the paper: 'we are keen to hear from all interested parties on any issues that affect the competitive process in the Australian economy' (at page iii).

The panel has also released a fact sheet, which sets out the following indicative timeline for the review:

  • May/June 2014 – consultation period.
  • 10 June 2014 – submissions close.
  • September 2014 – draft report released.
  • Oct/Nov 2014 – further consultation and submissions.
  • early 2015 – final report to be released.

Submissions can be formal or can be by way of direct response to key questions.

The Issues Paper, fact sheet, terms of reference and other relevant material can be found here. Read the Allens Client Update: Competition policy 'root and branch' review Issues paper released. For further background, please see our Client Update: Competition policy 'root and branch' review final terms of reference released and our Focus: Clear out the dead wood: a 'root and branch' review of competition law.

Additional significant news

Advertising and selling – Revised guidance from the ACCC

The ACCC has revised its Advertising and Selling Guide, which provides businesses and their advertising and selling agents with detailed, practical information about how the Australian Consumer Law (ACL) applies to their specific selling and promotional activities, in both the online environment and in traditional 'bricks and mortar' stores. The guide includes:

  • an overview of the key ACL requirements, including misleading or deceptive conduct, false or misleading claims, consumer guarantees, unfair contract terms and unsolicited consumer agreements;
  • examples of conduct likely to breach the ACL and practical tips for advertising and selling, including the use of advertising and other promotional techniques (eg, social media), and selling techniques (such as referral selling and online group buying);
  • guidance on premium and credence claims that require extra care;
  • pricing behaviours such as 'was/now' or 'strikethrough' pricing and component pricing; and
  • information on other anti-competitive behaviour such as resale price maintenance and cartel conduct.

Many of the examples of conduct given in the guide derive from recent ACCC enforcement action in this area. The guide also includes links to further information such as case law and summaries of relevant ACCC enforcement action. Read the ACCC media release.

'Made in Australia'

The ACCC has published a new guide, Country of origin claims and the Australian Consumer Law, to assist businesses to comply with the ACL when making 'country of origin' claims.

The guide:

  • provides a number of general principles about country of origin claims and examples to illustrate when businesses can say their goods are 'Made in', 'Product of' or 'Grown in' Australia;
  • includes advice on how a business can rely on the safe harbour defences in the ACL. This includes examples of how the safe harbour defences operate across a range of goods and a flowchart by which you can determine whether a safe harbour defence would apply to your country of origin claim; and
  • contains basic safeguards to help reduce the risk of claims breaching the ACL and a list of Frequently Asked Questions.

The guide was produced by the ACCC in consultation with an intergovernmental National Working Group chaired by the Department of Industry and Treasury, and including the Australian Customs and Border Protection Service, the Department of Agriculture, the Department of Health, the Department of Foreign Affairs and Trade, and Food Standards Australia New Zealand. Read the ACCC media release.

Cartel immunity and cooperation policy released for comment

The ACCC has released a draft revised Immunity and Cooperation Policy for Cartel Conduct and draft Frequently Asked Questions for public comment. The draft policy incorporates the following key changes identified during the consultation phase of the review:

  • utilising a letter of comfort from the Commonwealth DPP to streamline the processes of granting civil and criminal immunity;
  • clarifying the criteria for assessing a party's eligibility for immunity; and
  • including further detail on how cooperation by second and subsequent parties to a cartel will be assessed by the ACCC.

The ACCC invites submissions on the drafts by 7 May 2014. Read the ACCC media release.

ACCC news

Full Federal Court increases penalties where ACCC did not negotiate – 6 May 2014

The Full Federal Court has allowed an appeal by the ACCC, increasing the penalties that had been awarded at first instance. The court held that the judge had erred by discounting the penalties awarded because he considered that the ACCC should have been more proactive in responding to an invitation from the respondents to meet for discussions before commencing the proceedings. However, the Full Court did reduce the amount of costs that had been awarded to the ACCC, holding that the ACCC's failure to negotiate, while not relevant to the penalty, was to be criticised and warranted a reduction of 15 per cent in the costs order made in favour of the ACCC. Read the ACCC media release.

ACCC takes action against Coles – 5 May 2014

The ACCC has commenced proceedings against Coles Supermarkets Australia Pty Ltd and Grocery Holdings Pty Ltd alleging both engaged in unconscionable conduct in relation to dealings with certain of its suppliers in connection with its Active Retail Collaboration program. Read the ACCC media release.

ACCC takes action against Actrol Parts Pty Ltd – 30 Apr 2014

The ACCC has instituted proceedings in the Federal Court of Australia against Actrol Parts Pty Ltd, a wholesaler of refrigerant gas, alleging it made false or misleading representations and engaged in misleading or deceptive conduct in contravention of the ACL. Read the ACCC media release.

The ACCC has also released its latest report on carbon monitoring. Read the ACCC media release.

ACCC acts on beer labelling – 29 Apr 2014

The ACCC has accepted a court enforceable undertaking from Carlton & United Breweries (CUB) in relation to the ACCC's concerns that it represented that Byron Bay Pale Lager was brewed by a small brewer in Byron Bay, when in fact the beer was brewed by CUB (under licence) at its brewery in Warnervale, 630km from Byron Bay. CUB has also paid two Infringement Notices to the value of $20,400 for this conduct. Read the ACCC media release.

Cardcall pays for alleged misleading phonecard advertising – 29 Apr 2014

Cardcall Pty Ltd has paid penalties totalling $20,400 following the issue of two infringement notices by the ACCC in relation to advertisements for Cardcall's prepaid phonecard services, which the ACCC believed contained false or misleading representations about the price of the phonecard services.

Cardcall is Australia's market leader in prepaid calling cards, with a national distribution network of more than 30,000 retailers. In 2013, Cardcall advertised the price of making a phone call to local and overseas destinations on its website and posters for its 'Hot' phonecard. The advertised prices did not reflect certain terms and conditions that applied to Cardcall's phonecard services, including flag fall fees, service fees and other surcharges. The terms and conditions, which were not prominently displayed, made it highly unlikely that consumers would pay the advertised price per minute through ordinary use of the relevant phonecard. Read the ACCC media release.

ACCC finalises inquiry into regulation of fixed line telecommunications services – 17 Apr 2014

The ACCC has released its final report into the regulation of six fixed line telecommunications services, namely the unconditioned local loop service, line sharing service, wholesale line rental service, local carriage service, fixed originating access service and fixed terminating access service. The current declarations expire on 31 July 2014 and the ACCC has decided to extend the regulation of these services until 2019. Fixed line services enable retail telecommunications service providers to use Telstra's copper network and other fixed line infrastructure to provide a range of retail fixed line telephone and broadband services to Australian consumers in competition with Telstra.

In July 2013, the ACCC commenced a public inquiry into the making of new final access determinations (FADs) for the regulated fixed line services and the wholesale ADSL service (FAD Inquiry). The determination would set out the terms and conditions, including price, for these services that would apply in circumstances where access seekers were unable to reach agreement with the access provider. The ACCC will not, however, be in a position to make the new FADs before the existing FADs expire on 30 June 2014. The ACCC has therefore extended the current fixed line and wholesale ADSL FADs until it makes new FADs.

In relation to the existing FADs, the ACCC has also commenced a short inquiry into varying these FADs, which it anticipates completing in June 2014. The ACCC will release a discussion paper around mid-2014, which will be followed by a draft FAD for further industry consultation. Read the ACCC media release.

Tiny Tots will make refunds after unsolicited photography sales – 17 Apr 2014

Tiny Tots Images Photography Pty Ltd has given the ACCC a court-enforceable undertaking after breaching the ACL in the provision of photographic services.

Tiny Tots had entered into approximately 1400 unsolicited consumer agreements for photographic services with customers across Australia. These services were mainly provided to customers living in remote and rural locations, including Indigenous communities, via 'pop up shops'. Consumers were misled when they were told that they had no cooling-off rights, were not informed about how they could terminate the agreement nor provided with the required contact details for Tiny Tots. In the undertaking, Tiny Tots has agreed to offer refunds to certain customers residing in remote and rural communities, and establish and implement a trade practices compliance program including cross-cultural training for staff when providing services to Indigenous customers. Read the ACCC media release.

ACCC re-authorises collective bargaining by Queensland lottery agents – 16 Apr 2014

The ACCC has authorised Lottery Agents Queensland (LAQ) to continue to negotiate on behalf of its members. The 10-year authorisation covers collective negotiations with Golden Casket Lottery Corporation and other potential future Queensland lottery providers.

LAQ represents more than 1000 agents in Queensland. At present, Golden Casket is the only licensed lottery provider in Queensland. Golden Caskets exclusive licence expires in 2016 and LAQ sought authorisation to collectively bargain with any organisation granted a licence from 2016. Read the ACCC media release.

ACCC has mixed results regarding supermarket fuel shopper docket offers – 14 Apr 2014

The Federal Court has dismissed the ACCC's allegations against Coles that Coles' bundled discount offers breached an undertaking Coles had given to the ACCC. The Federal Court has found that Woolworths breached an undertaking provided to the ACCC by a fuel discount offer made until 9 March 2014 that was conditional on Woolworths supermarket purchases. However, the Federal Court dismissed the ACCC's allegations against Woolworths that the more recent offers of bundled discounts by Woolworths breached their undertakings to the ACCC. Read the ACCC media release.

Court finds SensaSlim misled franchisees about Peter Foster's involvement – 9 Apr 2014

The Federal Court has found SensaSlim Australia Pty Ltd (in liquidation) engaged in misleading or deceptive conduct by failing to disclose Peter Foster's involvement in the SensaSlim franchise system in its franchise disclosure document. The court also found that SensaSlim made false representations about the role of SensaSlim's officers, Peter OBrien and Michael Boyle, the worldwide clinical trial of the SensaSlim Solution and the earning potential of SensaSlim franchises. Mr Foster, Mr OBrien and Mr Boyle were found to be knowingly concerned in, and party to, some of SensaSlim's contraventions. There will be a separate hearing to determine the relief to be ordered by the court. The ACCC seeks declarations, injunctions, penalties, compensation orders, disqualification orders and costs. Read the ACCC media release.

ACCC proposes to strengthen energy door-to-door sales code – 8 Apr 2014

The ACCC proposes to reauthorise an industry code of practice for face-to-face sales undertaken by electricity and gas retailers.

Energy Assured Limited was formed by energy retailers to develop and manage the code, which applies when energy products are sold through house visits and, in the proposed new version of the code, in other face-to-face settings such as at kiosks at shopping centres. The code was first authorised by the ACCC in 2011, and is aimed at ensuring better standards in face-to-face energy sales through the training and accreditation of sales agents, as well as self-regulating the conduct of face-to-face sales agents and energy retailers in their dealings with consumers. Read the ACCC media release.

Cases

Energy Australia to pay for misleading door-to-door sales practices

ACCC v Energy Australia Pty Ltd [2014] FCA 336 (Justice Middleton, 4 April 2014)

Key issues

  • The court can impose significantly higher penalties where the respondent does not cooperate and is subsequently found liable in a contested trial.
  • Taking the initiative to cease conduct can also be a factor for the court to consider.

Summary

The ACCC commenced proceedings against Energy Australia Pty Ltd, Smart Pty Ltd, Aegis Direct and Australian Sales and Promotions Pty Ltd (ASAP) (the last three of which are marketing companies that Energy Australia used to train its sales representatives) seeking penalties, declarations and other relief in relation to unlawful door-to-door sales practices.

The respondents admitted various instances of misleading or deceptive conduct and false and misleading representations. By consent, the court ordered the following pecuniary penalties:

  • Energy Australia – $1.2 million;
  • Smart – $40,000;
  • Aegis Direct – $200,000; and
  • ASAP – $50,000.

The court noted that significantly higher penalties would have been imposed had the respondents not cooperated with the ACCC and liability been established following a contested trial. The court also noted that the fact that Energy Australia was the first from the industry to cease door-to-door sales (which lead has been followed by other energy companies) should be taken into account. Finally, the court ordered the respondents to establish and maintain compliance programs, made various publication orders, and ordered the respondents to pay $45,000 towards the ACCC's costs. Read the ACCC media release.

Source: AustLII

Startel ordered to pay $320,000 for misleading customers

ACCC v Startel Communication Co Pty Ltd [2014] FCA 352 (Justice Collier, 8 April 2014)

Key issues

  • The court can be innovative in making remedial orders, including making community service orders for the publication of educational information.

Summary

In July 2013, the ACCC commenced proceedings against Startel, a mobile services provider, for breaches of the ACL for conduct occurring between January 2011 and November 2012. The conduct related to unsolicited consumer agreements entered into by Startel with customers for mobile services, and, for some customers, mobile services bundled with a handset.

Startel admitted the contravening conduct, which consisted of misleading customers in relation to:

  • the length of the cooling-off period within which they were entitled to cancel the agreement (2588 occasions); and
  • their termination rights and purported obligation to return mobile handsets on termination (2133 occasions).

The court considered that Startel's conduct was serious, there were numerous contraventions, and the conduct occurred over a long period of time. The court made the orders that the parties had agreed to in the form of declarations, injunctions and non-punitive orders, including ordering Startel to implement a compliance program and to publish an internet page providing educational information about consumers' rights under the ACL in relation to unsolicited consumer agreement provisions. Finally, the court ordered pecuniary penalties totalling $320,000 plus costs. Read the ACCC media release.

Source: AustLII