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ASX-listed AP Eagers Limited (AP Eagers) has secured the first merger authorisation from the ACCC under the new laws in relation to its proposed acquisition of ASX-listed Automotive Holdings Group Limited (AHG) (the Proposed Acquisition). AP Eagers is Australia's second largest car dealership group, with operations in NSW, Queensland, Victoria, South Australia, the Northern Territory and Tasmania. AHG is Australia's largest car dealership group, with operations in NSW, Queensland, Victoria and Western Australia. The authorisation was granted on the condition that AP Eagers divest its Newcastle and Hunter Valley dealerships, pursuant to an undertaking given to the ACCC. AP Eagers gave the undertaking in order to obtain authorisation even though it did not believe the transaction substantially lessened competition. This is the first time the formal merger authorisation process has been used since it was introduced following the Harper Reforms in November 2017.
The reforms combined the previously unused formal merger clearance process with the process of applying to the Australian Competition Tribunal (ACT) for merger authorisation. Accordingly, applications for authorisation may now only be lodged with the ACCC. Interested parties may appeal to the ACT for a limited merits review of the determination. Before the Harper reforms, merger authorisation could only be granted if the parties could demonstrate public benefits. A merger authorisation application may now be approved if either:
- there is no substantial lessening of competition; or
- the public benefits outweigh any detriment to the public.
This is the first-ever authorisation of a merger on the basis of no substantial lessening of competition.
Under the merger authorisation process, after a valid application is lodged the ACCC has 90 days to consider the application. The ACCC issued its determination to conditionally authorise the Proposed Acquisition just short of the 90 day period.
Allens advised AP Eagers on securing its conditional merger authorisation for the Proposed Acquisition. More detail on AP Eagers' conditional merger authorisation can be found here.
On 26 July the Federal Government released the ACCC's Final Report from its Digital Platforms Inquiry, which assesses the impacts of digital platforms (particularly Google and Facebook) on competition in media and advertising markets. The Final Report includes findings that Google and Facebook have substantial market power, that this market power can negatively impact competition in media and advertising markets, and that significant bargaining and regulatory imbalances exist between news media outlets and digital platforms. In addition, the ACCC has identified a number of consumer and privacy-related concerns arising from the way consumer data is collected and handled.
The Final Report contains 23 recommendations to address these issues. These are wide-ranging and, if implemented, have the potential to affect much of Australia's economy. Certain of the recommendations involve legislative amendments, including:
- amendments to the Australian Consumer Law to prohibit unfair contract terms and make their use subject to civil pecuniary penalties;
- introducing a new prohibition on certain 'unfair trading practices'; and
- amending Australia's merger control laws to explicitly consider data and technology assets when determining if a merger may substantially lessen competition.
More detail on the competition, consumer and copyright issues can be found in our Insight: ACCC calls for significant reforms in Digital Platforms Inquiry Final Report - Part 1 and we examine the privacy and data protection issues in our Insight: ACCC calls for significant reforms in Digital Platforms Inquiry Final Report (Part II): A platform for sweeping privacy reform.
On 11 July the ACCC granted interim authorisation to the Australian Banking Association to make certain changes to the Banking Code of Practice, following recommendations by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The interim authorisation allows the banks to:
- agree not to charge default interest on loans secured by agricultural land in drought or natural disaster declared areas; and
- agree not to charge dishonour fees or overdrawn fees or allow informal overdrafts on basic bank accounts.
The ACCC did not grant interim authorisation in relation to the proposed amendment to the Banking Code that would define the minimum features of a basic bank account. Given some concerns raised by consumer groups, the ACCC considered that further consultation and consideration were required before interim authorisation could be granted for this proposed amendment.
The ACCC's decision concerns interim authorisation only. It will issue a draft determination more broadly on the authorisation application in August / September 2019, and a final determination in October / November 2019.
On 24 May the ACCC lost its 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. The case represented the first contested 'hub-and-spoke' cartel case brought by the ACCC. PZ Cussons denied any wrongdoing.
The ACCC has not filed an application for special leave to appeal the Full Federal Court's decision to the High Court, meaning the Full Federal Court's decision stands. The Full Federal Court dismissed each ground of appeal raised by the ACCC, finding that the trial judge did not err in concluding that the transition to ultra concentrates had been driven by Woolworths and Coles (rather than as a result of an alleged cartel between the suppliers).
We expect the ACCC to prosecute further 'hub and spoke' cartels, as well as cases involving the exchange of information between competitors and/or via intermediaries, to test the ambit of the prohibition on concerted practices that was introduced in November 2017. The concerted practices prohibition was not relevant in the PZ Cussons case. Please see our more detailed summary of the Federal Court's decision and its business implications in our Insight: Court finds PZ Cussons spotless in alleged laundry detergent cartel.
Allens acted for PZ Cussons in this matter.
ACCC Commissioner Mick Keogh recently addressed the Australian Wine Industry Technical Conference, and expressed concerns about the scarce availability of natural resources (principally land and water) and the impact it is having on the Australian wine industry. Mr Keogh said that grape growers need to utilise water more efficiently, and increase their capital investment in improved grape varieties, irrigation and water monitoring technology; however, such investment is not likely until growers have increased confidence that the market is operating fairly and there is strong competition throughout the supply chain.
Mr Keogh's concerns follow the launch in September 2018 of the ACCC's market study into the Australian wine grape sector, which was prompted by a significant number of complaints received over the years from wine growers. The purpose of the ACCC's study is to identify market failures and/or trade practices that hinder the functioning of competitive markets in the viticulture sector.
Mr Keogh summarised a number of the key findings from the ACCC's interim report, released on 3 June, including:
- the significant imbalance in bargaining power between winemakers and growers, which has resulted in growers accepting contracts with sub-optimal terms, and with limited ability to resolve disputes; and
- the lack of price transparency in the market, which is hindering its effective operation.
The ACCC is still seeking feedback from industry on its interim report, and plans to release its final report in September 2019. The wine industry market study forms part of the ACCC's 2019 enforcement priorities, and is one of a number of market studies and inquiries currently being undertaken by the ACCC, including the digital platforms inquiry, foreign currency services inquiry and the Northern Australia insurance inquiry. A summary of the ACCC's enforcement priorities can be found in our Insight: ACCC 2019 Enforcement Priorities.
The revised Telecommunications Consumer Protections (TCP) Code (the TCP Code) commenced on 1 August. The TCP Code sets out a number of consumer safeguards that seek to ensure telecommunications providers sell their products in a fair, transparent, responsible and accurate manner; address complaints regarding third party charges on bills; and provide consumers with relevant information in relation to billing, products, pricing, terms and conditions and contracts.
The TCP code is enforced by the Australian Communications and Media Authority (the ACMA) and complements the general consumer protection measures in the Australian Consumer Law.
Changes to the TCP Code include:
- new credit assessment provisions that require telecommunications providers to assess the capacity of certain customers to pay for contracts greater than $1000 (including new customers, as well as those who have moved from a pre-paid service to a post-paid service);
- stricter obligations on telecommunications providers to ensure selling practices are fair and transparent; and
- clearer rights for consumer access to records relating to their telecommunications contracts.
ACMA chair Nerida O'Loughlin stated that compliance with the Code is a priority for the ACMA in reducing consumer harm, and that it will be monitoring and investigating non-compliance and testing the effectiveness of the new rules. Ms O’Loughlin also warned that repeat non-compliance with the TCP Code could lead to significant consequences, with telecommunications providers potentially facing penalties of up to $10 million for failing to comply with directions from the ACMA.