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ACCC grants further authorisations to allow businesses to work together during pandemic; competition in the hot seat to drive economic recovery, says ACCC Chair Rod Sims; ACCC calls on 1300 Australia to remove alleged unfair contract terms; this is not a drill: concerns over power tool distributor's plans to set minimum prices; ACCC's COVID-19 Taskforce succeeding in early interventions; and ACCC gives CBH's Paddock Planner App the all clear.
Since 20 March 2020, the ACCC has granted 16 authorisations across a range of industries, allowing businesses to collaborate in response to the COVID-19 pandemic. A summary of the authorisations granted most recently is set out below.
The decisions underscore the ACCC's willingness to continue granting urgent authorisations to allow businesses to collaborate during the pandemic. Businesses considering industry solutions to COVID-19-related challenges should seek advice as to whether ACCC authorisation is required.
- On 26 March 2020, the ACCC granted Regional Express interim authorisation to coordinate flight schedules with Qantas Airways and Virgin Australia in relation to 10 key regional flight routes during the pandemic. The airlines are now also able to share revenue from providing services on the newly shared routes.
- On 8 April 2020, members of the Australian Securitisation Forum (the ASF) were granted interim authorisation to coordinate on the administration of the Federal Government's $15 billion Structured Finance Support Fund (SFSF). The authorisation allows ASF members to discuss and provide their views on how the Australian Office of Financial Management should administer the SFSF.
- On 30 March 2020, the ACCC granted the Australian Banking Association (the ABA) interim authorisation to cooperate in providing loan relief packages and services to individuals and businesses affected by COVID-19. The ABA has provided the ACCC with details of a business relief package for commercial property landlords, whereby banks defer the principal and interest payments for loans (up to $10 million), provided landlords do not terminate the leases or evict tenants. Additionally, banks are now able to collaborate to ensure customers can access particular services, like counter services.
Gas and electricity
- On 3 April 2020, the Australian Energy Market Operator Limited (AEMO) was granted interim authorisation by the ACCC to allow gas and electricity industry participants to work together on energy supply during the pandemic. The interim authorisation allows industry participants to coordinate initially on the most urgent matters, such as repairs and maintenance, sharing essential personnel and inputs, deferring non-essential works and managing system stability. The ACCC is continuing to consider other proposed coordinated conduct and will make a further interim decision. Allens is acting for AEMO in relation to the authorisation.
- On 7 April 2020, private hospitals in Victoria and Queensland were granted separate authorisations to cooperate with state health agencies, public hospitals and each other in response to the pandemic. Examples of authorised conduct are discussing demand and resources, sharing and procuring resources together, allocating patients between hospitals and sharing personnel.
- On 3 April 2020, the ACCC granted conditional interim authorisation for medicine manufacturers to coordinate on the supply of essential medicines during the pandemic. Members of Medicines Australia and the Generic and Biosimilar Medicines Association may work together to identify and mitigate shortages or supply chain problems to ensure the supply of essential medicines and supplies. The authorisation is subject to a condition, which requires the bodies to provide regular updates to the ACCC.
- On 31 March 2020, the National Pharmaceutical Services Association was granted interim authorisation to enable medicine wholesalers to cooperate in distributing essential medication and pharmacy products. The ACCC recognised the national interest in the accessibility of vital medicines during the pandemic but warned that regulatory oversight on coordination will continue.
- On 25 March 2020, the ACCC granted the Medical Technology Association of Australia interim authorisation to allow its members, and other groups, including suppliers and distributors of medical equipment, to share information, coordinate orders and supply requests and tender together to supply medical equipment.
- On 14 April 2020, the ACCC granted interim authorisation allowing the Financial Services Council and its members to coordinate to ensure that frontline healthcare workers are not excluded from life insurance coverage due to exposure to COVID-19. The authorisation allows the parties to agree not to use exposure to COVID-19 as a reason to decline life insurance coverage, charge higher premiums or apply pandemic risk exclusions.
- On 8 April 2020, the ACCC granted conditional interim authorisation for members of Private Healthcare Australia and Members Health Fund Alliance to work together. Members will cooperate to provide financial relief to policy holders during the pandemic, and to broaden coverage to include treatment for COVID-19 and alternative services such as tele-health.
- On 2 April 2020, the ACCC granted insurance companies and brokers interim authorisation to work together to institute relief measures for particular small businesses suffering hardship as a result of COVID-19. The relief measures include allowing eligible business customers to defer their insurance premium payments for up to six months and the refund of unused premiums for cancelled policies.
- On 3 April 2020, the ACCC granted the Australian Institute of Petroleum and major oil refiners interim authorisation to discuss and enact measures to ensure fuel supplies remain available during the COVID-19 pandemic and after the economic shutdown concludes.
- On 3 April 2020, the Shopping Centre Council of Australia Limited and Scentre Group were granted interim authorisation to develop a plan to help small-business tenants. Such plans may include reduced or deferred rent and other payments, waived interest payments and extended leases.
- On 1 April 2020, the ACCC granted NBN Co and five retail telecommunications service providers interim authorisation to coordinate to ensure that Australia's networks remain operational and provide customer support in response to COVID-19. The Minister for Communications, Cyber Safety and the Arts directed NBN Co to form a special working group. This group comprises Australia's five largest service providers: Telstra, Optus, Vodafone Hutchison, TPG and Vocus. The group will share information, coordinate strategies to manage congestion and take other steps to address the demand caused by the COVID-19 pandemic.
On 30 March 2020, ACCC Chair Rod Sims spoke at the AFR Banking & Wealth Summit Crisis Briefing (via webcast) on the topic 'Will competition survive the current crisis?'. In his speech, Mr Sims stated that competition would survive the COVID-19 pandemic and highlighted the role that competition would play in getting the economy running again.
In particular, Mr Sims:
- noted that immediate, sensible and temporary measures were required to support the economy, and that the ACCC would play a part in those measures in two key ways:
- first, by prioritising the assessment and grant of authorisations, allowing competitors to coordinate their responses to the pandemic. Mr Sims acknowledged that 'at a time of crisis…where there is a common enemy to fight for the nation's survival', such coordination is efficient and carries little to no downside; and
- second, by establishing the ACCC's COVID-19 taskforce, which has been tasked with intervening in COVID-related consumer law issues, including price gouging. Mr Sims stated that while price gouging was not illegal (except in circumstances where consumers are misled, eg a claim to the effect that a product has properties justifying a higher price when it does not), the ACCC has been looking into allegations of price gouging and will 'apply pressure' to companies with inappropriate pricing;
- stressed that, during the crisis, the long-term competitive structures of the economy should be preserved. To this end, Mr Sims stated that the ACCC would not be taking a different or more lenient approach in assessments and would be continuing to advance law reforms;
- stated that fintechs could bring much-needed competition to the financial services industry, and, as such, the ACCC would work with newer businesses to understand the challenges they faced and 'take them into account as the crisis unfolds'; and
- flagged that the ACCC has had discussions with banks and other stakeholders about the impact that COVID-19 may have on the introduction of the Consumer Data Right regime (due to launch on 1 July 2020).
On 27 March 2020, following ACCC concerns that some of its contract terms may be unfair, 1300 Australia undertook to amend its existing and future contracts with various small businesses and to refund excessive termination fees.
The ACCC was concerned about a number of terms in 1300 Australia's standard form contracts, including terms whereby 1300 Australia could:
- renew a contract without notifying the customer;
- charge unspecified penalties for late payments; and
- charge significant termination fees, including up to 92.5% of the total contract fees if the small business cancelled the contract early.
1300 Australia has undertaken, among other things, to ensure that:
- customers receive 30 days' notice before their contract is renewed;
- late payment penalties do not exceed $25; and
- termination fees are limited to the equivalent of three months of fees under the contract.
Stanley Black & Decker (SBD), an importer and wholesaler of power tools, lodged a RPM notification with the ACCC in October 2019, in which it proposed to amend its trading agreements to require distributors and dealers not to advertise certain power tools below a price specified by SBD. In its notification to the ACCC, SBD submitted that this amendment was required to prevent aggressive pricing behaviour on its products, which led to low margins and dealers deciding to stop carrying the products.
On 27 March 2020, the ACCC released a draft notice proposing to revoke SBD's notification. The ACCC expressed concerns that SBD's proposed conduct was likely to result in public detriments by reducing price competition and increasing prices for the relevant products. The potential for public benefit (that retailers would receive a higher margin for SBD products and thus sell a wider range of products, increasing consumer choice) was considered to be insufficient to outweigh the possible detriment.
The ACCC expects to make a final decision on the matter in May, after reviewing submissions from interested parties.
On 8 April 2020, ACCC Chair Rod Sims spoke at the Gartner CEO Forum on how the ACCC is managing the impacts of COVID-19 disruption on consumers and businesses.
Mr Sims highlighted the work being done by the ACCC's COVID-19 Taskforce, which focuses on early intervention by engaging directly with businesses and relevant government agencies, and consumers. Mr Sims reported the following cases of successful early interventions:
- investigating consumer complaints regarding cancelled travel and accommodation services, including where businesses had charged 'change fees' for cancelled flights, relied upon recently amended terms and conditions to assess refunds, and given incorrect advice regarding refunds;
- contacting subscription-based service providers (ie gyms, food delivery and pay TV) to recommend that businesses cease charging unnecessary fees and provide refunds for failure to provide services;
- investigating product claims that represent to consumers that a product or service prevents COVID-19; and
- recommending that private health insurers provide remedies for services that are limited or cannot be provided due to the COVID-19 restrictions.
In relation to complaints regarding price gouging, Mr Sims stated that the ACCC had seen a large number of complaints regarding 'excessive pricing' around personal protective equipment and some grocery items. Mr Sims clarified that the ACCC has no role in setting prices, but stated that it would investigate should the excessive pricing be unconscionable (eg where the product is critical to health or safety) or if a business makes misleading claims about the reason for price increases. In particular, the ACCC has engaged with online platforms to discuss mechanisms to prevent sales of products at excessive prices and is continuing to monitor this area.
Mr Sims also noted the interim authorisations granted in the past three weeks allowing firms to cooperate to ensure the economy can function, and to provide essential goods and services during the pandemic.
On 8 April 2020, ACCC announced that its investigation into Cooperative Bulk Handling Ltd's (CBH) promotion of its Paddock Planner App has concluded without any findings of breaches of competition or consumer laws.
The Paddock Planner App collects data from growers regarding their paddocks, crops and expected yields. CBH offered growers a discount on grain receival fees if farmers submitted their crop estimates for the 2019–20 harvest to the app. ACCC investigated whether CBH:
- misled growers about the extent of data required to be uploaded to obtain the discount;
- misled growers about the use of data and who the data would be shared with; and
- would be able to disadvantage its competitors by having access to data that was not otherwise available to its competitors.
The investigation was concluded due to a number of factors, including because growers only needed to upload information regarding the grain that they intended to deliver and store with CBH, growers had full control over who accessed the data they uploaded to the app, and the use of the app was not compulsory.