INSIGHT

Federal Court hangs up on ACCC over TPG pre-payments; ACCC calls for more claret-y between winemakers and growers; and Viva/Liberty deal gets green light

By Jacqueline Downes
Consumer law Infrastructure Technology Telecommunications

7 min read

Court hangs up on ACCC over TPG pre-payments

The Federal Court has dismissed the ACCC's case against TPG for making alleged false or misleading representations to its customers and including an unfair term in its customer contracts.

The ACCC first instituted the proceedings against TPG in December 2018, in relation to some of TPG's personal mobile, home telephone and internet plans. The plans required customers to make a pre-payment of at least $20 to cover potential usage outside of their plans, such as excess data usage and phone calls to '1300' numbers. When a customer's prepaid balance fell below $10, TPG directly debited customers to return the balance to $20. Customers who cancelled their plan were unable to use the balance, which resulted in TPG retaining at least $10 of the pre-payment on cancellation.

The court found that:

  • TPG had not made false or misleading statements about the 'pre-payments', on the basis that reasonable or ordinary consumers would take the time to read the terms and conditions relating to the pre-payment before entering into a contract with TPG; and
  • the term in TPG's contracts that allowed it to keep prepaid funds of exiting customers was not unfair, as:
    • the term did not create a significant imbalance between TPG and its customers; and
    • there was no unfair detriment created by the term, as it was just one term in the relevant contracts, which also offered low prices and certainty to consumers.

The ACCC has indicated that it is closely considering the decision, and that it will continue to take action against telco businesses where it considers they are making misleading claims about their services.

ACCC calls for more claret-y in relationship between winemakers and growers

On 24 September 2019, the ACCC released the final report of its Wine Grape market study. The market study was launched in September 2018 and focused on Australia's warm climate grape growing regions.

The final report makes 10 recommendations directed at improving efficiency and fairness of wine grape markets in these regions. These include:

  • that all winemakers phase out long-term payment periods in contracts with growers, and that large winemakers make payment within 30 days of grape delivery;
  • that all winemakers review their standard form contracts with growers, to ensure they do not include terms likely to be unfair; and
  • significant changes to the way grape prices are reported. Currently, winemakers announce their indicative prices in December, after most grape growers have signed contracts. The ACCC has recommended that all major winemakers be required to publicly report their actual prices paid at the completion of each season, to inform growers' decisions about which winemakers to supply in the coming season.

Other recommendations relate to the development and adoption of standards and voluntary industry codes of conduct, as well as public reporting of market trends by growers' representative organisations.

The ACCC has indicated that it will examine the industry's progress in adopting the recommendations in 12–18 months and, if little progress is made, will consider recommending a mandatory code for the sector.

Viva/Liberty deal gets green light

On 10 October 2019, the ACCC announced that it will not oppose Viva Energy Australia's proposed acquisition of the remaining 50% interest in Liberty Oil's wholesale business.

Viva and Liberty are both wholesalers and retailers of fuel products. The acquisition will result in Viva owning all of Liberty's wholesale business, while Viva's interest in Liberty's retail business will remain at 50%.

The ACCC considered the effect of the proposed acquisition on the wholesale supply of fuel products, finding that the acquisition would be unlikely to substantially lessen competition, as the threat of alternative wholesale suppliers and brands would constrain Viva's wholesale prices and supply terms.

The ACCC also considered the effect of the proposed acquisition on the market for retail supply of fuel products in metropolitan Adelaide and Melbourne, and in local areas across the country, finding that:

  • in Adelaide, the acquisition would be unlikely to result in price increases, as the share of Liberty-branded sites is relatively low and the majority of these branded sites are dealer sites, for which Liberty does not set the prices;
  • in Melbourne, the acquisition would be unlikely to have a significant impact, as Liberty has a very small share of retail sites; and
  • in local areas where Liberty and Viva both have retail sites, sufficient competition would remain in most of these areas post-acquisition.

Bromic in the hot seat for RPM

The ACCC has accepted a court enforceable undertaking from Bromic Pty Ltd (a national distributor of outdoor heating products) that admitted to having engaged in resale price maintenance when it introduced a 'minimum advertising price' policy.

The policy, introduced in late January 2018, required retailers not to advertise Bromic-branded products at prices cheaper than those determined by Bromic. Retailers that did not comply faced potential sanctions under a 'three strokes' policy. Although Bromic ceased referring to and enforcing the policy after April 2018, it failed to inform retailers that the policy was no longer applicable.

The undertaking requires Bromic to advise retailers that the policy is no longer in effect, and to ensure Bromic executives and staff receive training on the requirements of the Competition and Consumer Act 2010 (Cth), including resale price maintenance.

ACCC wheys in on Saputo/Lion dairy deal

On 26 September 2019, the ACCC announced that it would not oppose the proposed acquisition of Lion Dairy and Drinks' Tasmanian cheese business by Saputo Dairy Australia.

Saputo has an existing milk powder processing plant in Smithton, Tasmania. Under the proposed acquisition, it would acquire Lion's cheese processing plants in Burnie and King Island, and Lion's cheese brands, including South Cape, King Island Dairy and Tasmanian Heritage.

The ACCC's investigation primarily focused on the impact of the acquisition on competition for the acquisition of raw milk, as the deal would combine the processing plants of the second and third biggest raw milk buyers in Tasmania. Following consultation with farmers and other interested parties, the ACCC found that pressure from remaining milk processors would keep price and non-price terms competitive. However, the ACCC did note that any further concentration of dairy processors in the future would cause significant concern.

The ACCC also examined the impact of the proposed acquisition on the supply of cheese in Australia, again finding it would be unlikely to substantially lessen competition. With Lion's brands focusing on premium speciality cheeses and Saputo's focusing on everyday cheeses, the combined Saputo-Lion would face continued competition from domestic cheese producers, supermarket private labels and cheese importers.

Ashley & Martin takes haircut after unfair contract terms finding

The Federal Court has ordered Ashley & Martin to refund money to customers affected by unfair contract terms in its 'Personal RealGROWTH Program.'

This order comes following the court's earlier finding that, across three standard form contracts, more than 25,000 customers between June 2014 and June 2017 were affected by Ashley & Martin's unfair contract terms.

The court found that consumers were typically signed up to hair loss medical treatments before receiving medical advice. Ashley & Martin's standard contracts contained a term requiring consumers to pay 100% of the total price even if they wished to terminate after receiving medical advice. This meant consumers were required to choose between losing hundreds of dollars or risking developing side effects.

Consumers are eligible for a refund if they entered the program before receiving medical advice and had:

  • asked to terminate their contract;
  • had terminated their contract; or
  • developed side effects as a result of the treatment.

Ashley & Martin was ordered to contact all consumers who are eligible for a refund, as well as pay the ACCC's legal costs.