INSIGHT

Federal Court imposes $34.5 million penalty on shipping cartel participant; ACCC commences inquiry into Murray Darling basin; and Europcar fined for excessive card surcharges

By Ted Hill
Competition law Consumer law Technology

8 min read

Shipping company K-Line docked $34.5 million for cartel conduct

The largest criminal fine ever awarded under the Competition and Consumer Act 2010 (Cth) (the CCA) has been imposed on global shipping company Kawasaki Kisen Kaisha Ltd (K-Line). In August 2019, the Federal Court found K-Line engaged in a cartel with other shipping companies to fix prices for the transportation of cars, trucks and buses from the US, Asia and various European countries to Australia between 2009 and 2012. The court ordered K-Line to pay a fine of $34.5 million.

In determining the penalty (which could be a maximum of $100 million, based on 10% of K-Line's annual turnover of its Australian business in the 12 months before the offence), the court allowed a 28% discount, due to K-Line's contrition, including its early guilty plea and cooperative approach. The decision follows the conviction of another cartel participant, which was fined $25 million in August 2017 – see our Insight: First successful prosecution under Australian criminal cartel conduct provisions. The ACCC's investigation of other cartel participants is ongoing.

Federal Government opens floodgates for ACCC inquiry into Murray Darling Basin

The ACCC has commenced a price inquiry into markets for tradeable water rights in the Murray-Darling Basin. The ACCC is increasingly undertaking price inquiries and market studies, having commenced more than 10 inquiries and studies since 2016.

The ACCC is conducting the price inquiry under section 95H(1) CCA following a direction of the Treasurer, who announced the inquiry and set out its terms of reference on 7 August. The ACCC will investigate a number of matters in relation to tradeable water markets generally (rather than focusing on conduct of a particular person or persons), including:

  • market trends since 2012 (including demand for water, changes in the location where water is used, the quantity of water traded, water availability, water users and their communities, development of new trading products, and the number of participants and sectors participating in the water markets);
  • barriers to entry, expansion and exit, including transaction costs;
  • the role and practices of water participants; and
  • the availability to the public of information about water market activities and tradeable water holding rights, as well as the timeliness, accuracy and completeness of that information.

The ACCC has stated it will consult widely with industry participants and engage closely with other regulatory bodies. It is due to publish its interim report by 31 May and final report by 30 November 2020.

Federal Court puts the brakes on Europcar card surcharges

The Federal Court has ordered Europcar to pay $350,000 in penalties for charging excessive credit and debit card payment surcharges to customers who used Visa and Mastercard cards. The court also ordered Europcar to provide refunds to the relevant customers and pay a proportion of the ACCC's legal costs.

The court found that Europcar's surcharges were in contravention of the ban on excessive surcharges under s55B CCA. The excessive payment surcharges prohibition provides that businesses should only pass on to customers what it costs them to process a payment. For example, if the cost of acceptance for Visa credit is 1%, a business can only add a surcharge of 1% for customers who pay by Visa credit card. While the court found that the surcharge for each customer was relatively small, being around $1, there were more than 60,000 affected customers and the charges quickly added up to a considerable amount.

This is the first litigation the ACCC has commenced under the excessive surcharging provisions that were introduced in 2016, although it has previously issued infringement notices. Further information can be found in our Excessive Payment Surcharge Reforms.

Qantas' stake in Alliance Airlines a potential flight risk

On 1 August 2019, the ACCC released a statement of issues raising preliminary competition concerns about Qantas Airways Limited's acquisition of a 19.9% interest in Alliance Aviation Services Ltd, which occurred in February 2019. The acquisition would allegedly make Qantas Alliance Aviation's biggest single shareholder.

Qantas did not seek informal merger clearance from the ACCC before acquiring the stake in Alliance Aviation. In its statement of issues, the ACCC set out its preliminary views, including that the acquisition has, or is likely to have, the effect of substantially lessening competition in markets for the supply of:

  • fly-in fly-out charter airline services, mainly in Queensland, the Northern Territory and Western Australia); and
  • regular passenger transport services on routes serviced by Alliance Airlines aircraft, being between Brisbane and each of Bundaberg and Gladstone.

Qantas has provided an undertaking that it will not acquire any further interest in Alliance until the ACCC's investigation is completed. Should the ACCC decide after conducting market enquiries that it still has competition concerns, it may institute proceedings in the Federal Court, seeking orders for the divestiture of the acquisition, a declaration that the transaction is void and/or pecuniary penalties for the conduct.

HealthEngine accused of doctoring patient data and reviews

On 7 August 2019, the ACCC instituted proceedings in the Federal Court against HealthEngine Pty Ltd , an online health booking platform. HealthEngine provides a booking system for patients, and publishes a directory listing more than 70,000 health practices and practitioners. Through the website, patients can search for and book appointments with health practitioners. Until June 2018, patients could also access reviews from other patients about the quality and services of practitioners.

The ACCC claims that between March 2015 and March 2018, HealthEngine manipulated the patient reviews it published, and misrepresented to consumers why it did not publish a rating for some health practices. The ACCC also alleges that, from April 2014 to June 2018, HealthEngine gave information such as names, phone numbers, email addresses, and date of birth of more than 135,000 patients to private health insurance brokers for a fee. This was allegedly done without adequate disclosure to patients.

The proceedings demonstrate the ACCC's current focus on the activities of digital platform operators. The ACCC's Chairman, Rod Sims, commented that 'Issues of transparency and adequate disclosure when digital platforms collect and use consumer data is one of the top priorities at the ACCC'.

Water filter business undertakes to clean up its advertising material

Water filter cartridge business Saipol Technologies Pty Ltd, which supplies cartridges to businesses and institutions such as hospitals and universities (and not domestic customers), has acknowledged that it is likely to have breached the Australian Consumer Law by making certain false or misleading representations in its promotional material about the quality of its products.

In response to the ACCC's investigation into its conduct, Saipol amended its advertising material and provided to the ACCC a court enforceable undertaking, in which it commits to review all of its promotional and advertising material and put an ACL compliance program in place. The ACCC accepted the undertaking, commenting that 'This is a reminder to all businesses that claims about the quality or grade of a product should be accurate'.