INSIGHT

ACCC's PZ Cussons laundry detergent cartel appeal goes down the drain; ACCC Chair talks merger law reforms and digital platforms; and Kogan in court for misleading discount promotions.

By Jacqueline Downes
Consumer law

In brief

ACCC's PZ Cussons laundry detergent cartel appeal goes down the drain

The Full Court of the Federal Court of Australia has dismissed the ACCC's appeal against an earlier ruling of the Federal Court that found there was no cartel arrangement or understanding between PZ Cussons and two other suppliers of laundry detergents, Colgate-Palmolive and Unilever, to cease supplying any standard concentrate laundry detergents and simultaneously move to supplying ultra-concentrate laundry detergents.

In 2013, the ACCC first initiated proceedings against:

  • Colgate-Palmolive and PZ Cussons, alleging they entered into a cartel with a third laundry detergent supplier, Unilever, via direct communications, as well as indirectly via communications through an intermediary (initially the industry association and then a major customer, Woolworths); and
  • Woolworths and a former Colgate-Palmolive sales director (in his personal capacity), alleging they were knowingly concerned in the contraventions by Colgate-Palmolive, PZ Cussons and Unilever (the suppliers).

The ACCC's court action followed an immunity application by Unilever. The ACCC did not sue Unilever.

Colgate-Palmolive and Woolworths settled with the ACCC in 2016, paying pecuniary penalties of $18 million and $9 million respectively.

The ACCC's case against PZ Cussons was dismissed in a December 2017 decision by Justice Wigney of the Federal Court. The ACCC lodged its appeal in February 2018. In a unanimous decision of the Full Federal Court on 24 May 2019, the ACCC's appeal has also been dismissed. The court's reasons for judgment are currently confidential, but we expect the court to publish them after 4pm on 31 May 2019. We will provide you with a more detailed summary of the Full Court's decision in our next edition of In Touch.

Allens acted for PZ Cussons in successfully defending the first contested 'hub and spoke' cartel case brought by the ACCC. Please see our more detailed summary of the Federal Court's 2017 decision and its business implications in our Focus: Court finds PZ Cussons spotless in alleged laundry detergent cartel.

Full steam ahead for Pacific National's acquisition of intermodal terminal

The Federal Court has dismissed the ACCC's proceedings against Pacific National (PN) and Aurizon in relation to the sale of the Acacia Ridge intermodal terminal.

In 2017, Aurizon commenced a sales process for its interstate intermodal business, its Queensland intermodal business and the Acacia Ridge terminal. That sale process resulted in PN becoming the exclusive bidder for the Queensland intermodal business and the Acacia Ridge terminal, and Aurizon seeking to close its interstate intermodal business. In March 2018, the ACCC published a Statement of Issues raising concerns with Aurizon's proposed sale to PN, including that the transaction would make PN the monopoly intermodal provider in Queensland, and it would provide PN with the ability to restrict competing access to the Acacia Ridge Terminal (which is a key infrastructure asset).

In July 2018, the ACCC announced it would oppose the proposed acquisition and instituted proceedings in the Federal Court, seeking an injunction to prevent it proceeding and alleging PN and Aurizon had reached an understanding that would substantially lessen competition in the supply of intermodal and steel rail linehaul services.

However, the Federal Court has found the proposed acquisition did not raise substantial competition concerns, primarily due to a court-enforceable undertaking offered by PN on the last day of the trial. Specifically, the court found:

  • the ACCC failed to establish its case under section 45 of the Competition and Consumer Act 2010 (Cth) (the CCA) that the parties' arrangements would be likely to substantially lessen competition in the relevant markets; and
  • as a result of PN's court undertaking, the proposed acquisition would not breach the merger prohibition under s50 of the CCA.

The court undertaking prohibits PN from engaging in discriminating conduct against competitors when providing access to the Acacia Ridge Terminal. The ACCC remains of the view that this type of behavioural undertaking will not address competition concerns from the sale, and is considering its options following the Federal Court's decision.

Kogan in court for misleading discount promotions

The ACCC has commenced Federal Court proceedings against Kogan for allegedly making false and misleading advertisements in its discount promotions.

Kogan's promotions involved a June 2018 campaign that advertised 10 per cent discounts on certain online products when consumers used a particular discount code. The ACCC alleges the advertisements were false or misleading because Kogan increased the prices of more than 600 of these products immediately before the promotion – in most cases, by more than 10 per cent. Kogan is also alleged to have used statements such as '48 hours left!' and 'Ends midnight tonight!' to give consumers the impression there was limited time to get the benefit of the discount. The ACCC has taken enforcement action against Kogan in 2016 and 2009 for similar online retailing practices.

The ACCC has publicly released its statement of claim against Kogan.

Rod Sims' speech on merger law reforms and digital platforms

In a speech to the Competition Law Conference on 25 May 2019, ACCC Chair Rod Sims spoke on competition law reform and merger control for digital platforms.

Mr Sims reinforced earlier statements regarding competition law's objectives, resisting international calls to broaden competition policy to capture issues such as consumer privacy and economic inequality. He cautioned against weakening the effectiveness of competition laws by making them overly broad, and noted the availability of other policy and legislative tools to address these concerns.

Mr Sims also spoke on the challenges of analysing the competitive effects of multi-sided platforms, and the capacity of current merger laws to adequately address these issues. Multi-sided platforms are intermediary platforms such as social media platforms, payment systems, media groups and online travel agents that provide opportunities for networks of distinct user groups to interact. Mr Sims noted the challenges in analysing these markets (including accounting for network effects), and emphasised the ACCC's focus on competitive outcomes, rather than technical market definition issues.

In addition, Mr Sims discussed whether Australia's existing merger controls provided adequate protections against large incumbents acquiring new entrants in order to stifle competition (citing the 2014 Facebook/Instagram merger as an example). He noted the ACCC's consideration of merger law reforms to address this issue as part of its Digital Platforms Inquiry. The ACCC is due to provide its final report in this inquiry on 30 June 2019.

Voltaren representations pain in the neck for GSK and Novartis

The Federal Court has accepted admissions by GlaxoSmithKline (GSK) and Novartis that they misled consumers in their marketing of Voltaren Osteo Gel and Voltaren Emulgel products. The claims concerned misleading conduct from January 2012 to March 2017.

GSK and Novartis were responsible for marketing Voltaren Osteo Gel and Voltaren Emulgel (either jointly or separately) during the relevant period. During this period, their marketing of Osteo Gel included representations that it was specifically formulated to treat osteoarthritis, and more effective than Emulgel in treating this condition, despite it effectively being the same product. While the two products had the same active ingredients, Osteo Gel was often sold at a higher retail price than Emulgel.

The Federal Court found that changes GSK made to the packaging of Voltaren Osteo Gel in March 2017 meant it no longer contravened the Australian Consumer Law. The sale of Voltaren Osteo Gel was discontinued in May 2018. A further hearing will be held to determine the penalties sought by the ACCC.

This is the second major enforcement action by the ACCC for this type of conduct, following its successful 2016 case against Reckitt Benckiser in relation to the Nurofen 'Specific Pain' products.

Updates in the NBN space

NBN Wholesale Market Indicators Report released

The ACCC has released its quarterly Wholesale Market Indicators Report in relation to the NBN.

More than 5.2 million households are now connected to the NBN, with higher-speed services now representing more than 58.4 per cent of those connections. The ACCC also noted the market shares of retail service providers remained stable for the quarter, with smaller retailers only increasing their share from 6.6 per cent to 6.8 per cent.

The ACCC continues to scrutinise the availability and pricing of entry-level plans, which it considers have a significant impact on consumers who only require a basic service.

No reporting rules for dark fibre and NBN aggregation service providers

The ACCC has indicated it will not require dark fibre and NBN wholesale aggregation service providers to regularly report pricing and supply data.

The ACCC commenced a public consultation on proposed record-keeping rules in February 2019. As part of this public consultation, it proposed rules that would have required providers of dark fibre and NBN wholesale aggregation services to record information about supply and pricing, and provide this to the ACCC on a quarterly basis.

However, the ACCC has noted recent developments in the market with the NBN rollout, including through the entry of more providers, a greater range of products and more NBN discounting flowing through to wholesale customers. These have largely addressed concerns for the time being, although the ACCC has indicated it will continue to monitor the market as the NBN rollout progresses.

Advice for fixed wireless broadband customers and retailer guidance

The ACCC has published consumer guidance for users of NBN fixed wireless, covering issues relating to broadband speed problems, fixed wireless congestion, and consumer rights in relation to claims made by internet service providers. The ACCC has also updated its industry guidance for retailers in relation to fixed-line broadband speed advertising.

APLNG's acquisition of coal seam gas approved

The ACCC has indicated it will not oppose Australia Pacific LNG's (APLNG) proposed acquisition of the Ironbark coal seam gas project from Origin Energy.

Ironbark is an undeveloped coal seam gas permit held by Origin that is located near Tara, Queensland, in the Surat Basin. The project is currently in the exploration and appraisal stage, with estimated reserves of approximately 129 petajoules, which represents around 0.34 per cent of total eastern Australian reserves. The ACCC considers that APLNG's proposed acquisition is unlikely to negatively impact domestic gas supply compared with another purchaser buying the project, the reasons including that Ironbark is a relatively small field that is expensive to develop, and geographically distant from the majority of domestic eastern gas users. The ACCC considered that in any alternative acquisition, it was unlikely that there would be a significantly different outcome for domestic gas users.