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The ACCC releases its enforcement priorities for 2020; the Federal Court clears a merger between Vodafone Hutchison Australia and TPG Telecom; the ACCC starts an inquiry into the supply of digital advertising technology and agency services; and other developments.
The ACCC has released its enforcement priorities for 2020.
The key market sectors the ACCC will focus on this year include competition and consumer law issues in digital platforms and related services, essential services (particularly energy and telecommunications), small businesses, franchising, the funeral industry and the construction sector.
From a consumer enforcement standpoint, the ACCC indicated it will focus on:
- the enforcement of consumer guarantees, especially for motor vehicles and electrical and white goods;
- misleading conduct regarding the sale and promotion of food products, including health and nutritional claims, credence claims and country of origin labelling; and
- the continued rollout of the Consumer Data Right, with implementation for the banking sector scheduled for July 2020.
In competition enforcement, the ACCC outlined plans to streamline competition investigations and has foreshadowed the use of injunctions where it perceives anti-competitive behaviour. The ACCC also raised concerns about collusive behaviour in public procurement, and promoted the increased use of its whistleblower hotline to investigate anti-competitive conduct.
ACCC Chair Rod Sims also noted the ACCC will continue to advocate for the introduction of an unfair trading prohibition and reform to Australia's merger control laws.
Our detailed overview of the ACCC's 2020 enforcement priorities is available here.
The Federal Court has cleared a merger between Vodafone Hutchison Australia (Vodafone) and TPG Telecom (TPG). The proposed merger had been blocked by the ACCC in 2019.
VHA is one of Australia's three mobile network operators. TPG primarily focuses on fixed line services. The ACCC had opposed the merger because it considered that TPG would likely be a fourth competitor in mobile markets if the merger did not proceed. TPG had previously announced plans to enter this market in April 2017, but subsequently abandoned them following the Government's ban on using vendors it considered 'high risk' to Australia's 5G network. The ACCC considered that despite this, TPG would re-enliven its plans to enter the mobile market and become an innovative and disruptive competitor to Telstra, Optus and Vodafone.
Justice Middleton of the Federal Court recognised the need for swift resolution of contested mergers. In finding against the ACCC, Justice Middleton held the merger would not have the likely effect of substantially lessoning competition. The Federal Court accepted the evidence led by Vodafone and TPG that the merger would create efficiencies and would lead to a stronger competitor in the mobile market.
The Federal Government has directed the ACCC to conduct an inquiry into the supply of digital advertising technology and agency services (ACCC ad-tech inquiry). The inquiry forms part of the Federal Government's response to the ACCC's Digital Platforms Inquiry Final Report.
As part of the inquiry, the ACCC will examine competition and efficiency in markets for the supply of digital advertising technology and agency services, transparency in those markets, concentration of market power and the behaviour of suppliers.
The ACCC ad-tech inquiry will continue until August 2021 when it is required to provide its findings to the Treasurer. In March 2020 the ACCC will release an initial issues paper which will provide further information regarding the areas it will focus on. An interim report will be released in December 2020.
The ACCC is also conducting a longer, separate inquiry in digital platform services which will continue until 31 March 2025.
On 28 February 2020 the ACCC released for public comment a divestment undertaking offered by Asahi, in relation its proposed acquisition of Carlton United Breweries (CUB). CUB is currently owned by the multinational brewing company Anheuser Busch InBev SA/NV.
The ACCC raised concerns with Asahi's proposed acquisition of CUB in a statement of issues (SoI) published on 12 December 2019. The SoI set out the ACCC's preliminary concerns that the deal would likely result in a substantial lessening of competition in Australian cider markets, and may also substantially reduce competition in beer markets. The ACCC sees significant barriers to entry in these markets, including high capital requirements for establishing (or expanding) large enough breweries to compete with Asahi/CUB, high sunk costs and long lead times in building a successful brand, and difficulties in gaining access to on-premise taps.
The proposed undertaking involves the divestment of the Strongbow, Bonamy and Little Green cider brands and the Stella Artois and Beck’s beer brands to a purchaser(s) to be approved by the ACCC.
The ACCC has released a draft notice proposing to revoke a resale price maintenance (RPM) notification lodged by Weldclass Welding Products (Weldclass).
Under the RPM notification lodged on 4 October 2019, Weldclass proposed to amend its retailer agreements to set a minimum price for certain welding and plasma cutting machines. Weldclass claimed the relevant products are complex and require specialised advice. It argued that a minimum price is required to protect retailers' margins so they can provide a high level of service to customers, and to prevent 'free riding' by retailers who undercut high-service retailers.
The ACCC is concerned that Weldclass' proposed RPM will prevent price competition between retailers selling the relevant products. The ACCC also considers that although the relevant products are complex, they do not require more customer service than similar products on the market, and that free riding does not appear to be a significant problem at present. These factors distinguished Weldclass' notification from successful RPM submissions made by Tooltechnic in 2014 and 2018.
The ACCC is consulting on its draft revocation notice and has said it will issue a final decision on the matter in April 2020.
The ACCC has decided not to oppose two proposed mergers in the paper industries.
On 20 February the ACCC announced its decision not to block the proposed acquisition of Direct Paper by Spicers Limited (Spicers). Spicers' proposed acquisition would combine the second and third largest commercial printing paper suppliers in Australia. However, the ACCC found that the merged entity would still be constrained by other paper suppliers with a presence in the main overlap areas of Sydney and Melbourne, while in Brisbane (where there are fewer suppliers) the deal did not raise concerns as barriers to entry are low and printing customers can switch to supply from overseas mills.
On 27 February the ACCC also indicated it would not block the proposed acquisition of Orora Fibre (Orora) by Australian Paper. Australian Paper supplies paper packaging inputs such as kraft linerboard (used to make corrugated cardboard), while Orora is a paper packaging manufacturer and a customer of Australian Paper. The ACCC considered whether the proposed acquisition would result in Australian Paper reducing or restricting supply of kraft linerboard to rival packaging manufacturers post-acquisition. The ACCC found, however, that the key suppliers of kraft linerboard are likely to have excess production capacity and will continue to compete for packaging manufacturer customers. As with the Spicers / Direct Paper transaction, the ACCC also indicated that imports could play a role – as significant overseas mill capacity could fill any gap created by Australian Paper ceasing supply.