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Further ACCC authorisations letting businesses work together during the pandemic; ACCC releases interim report in Home Loans Price Inquiry and fuel industry report; updates on the Consumer Data Right during the pandemic; Ventia cleared to acquire Broadspectrum; and mandatory Code of Conduct for relationships between digital platforms and media companies forthcoming.
Since 20 March 2020, the ACCC has granted 21 urgent interim authorisations across a range of industries allowing businesses to collaborate in response to the COVID-19 pandemic. Businesses considering industry solutions to COVID-19 related challenges should seek advice as to whether ACCC authorisation is required. A summary of the newest authorisations is set out below.
- On 20 April 2020, the scope of an interim authorisation granted to the Australian Energy Market Operator Limited (AEMO) on 3 April was expanded. The earlier authorisation had allowed gas and electricity industry participants to coordinate on urgent matters such as repairs and maintenance, sharing essential personnel and inputs, deferring non-essential works and managing system stability. The expanded authorisation now allows electricity market participants to share information about the operation of critical facilities and any risk to their continued operation, and to engage in other coordinated conduct for the purposes of ensuring ongoing energy supplies, provided it is notified to the ACCC. Allens is acting for AEMO in relation to the authorisation.
- On 17 April 2020, private hospitals in the Northern Territory and South Australia were granted separate interim authorisations to cooperate with state health agencies, public hospitals and each other in response to the pandemic. These follow earlier authorisations granted to private hospitals in Victoria and Queensland. Examples of authorised conduct include discussing expected capacity and demand for health services, jointly procuring and distributing medical equipment and supplies, and sharing staff.
- On 14 April 2020, the ACCC granted interim authorisation to the Financial Services Council and its members, allowing those life insurers to coordinate to ensure that frontline healthcare workers are not excluded from coverage due to actual or potential exposure to COVID-19. In particular, the authorisation allows for commitments that COVID-19 exposure cannot be used as a reason to decline life insurance coverage to a frontline health worker, or to apply risk exclusions or higher premiums to new policies. The authorisation does not include coordination on pricing, and only applies to new insurance policies.
- On 24 April 2020, the Minerals Council of Australia and a group of almost 300 mining industry associations and companies were granted interim authorisation to coordinate their sourcing, purchase and distribution of health and safety equipment, consumables such as fuels and explosives, logistics and equipment maintenance. Notably, the authorisation allows the parties to coordinate on the supply of Personal Protective Equipment (PPE) for mining purposes, given the heightened demand for PPE during the pandemic.
- On 22 April 2020, the Australian Retailers Association (ARA) and its current and future members were granted interim authorisation to collectively bargain with retail landlords in relation to rent relief during the pandemic. The authorisation also allows the ARA and its members to share information relevant to rent relief negotiations, although it does not allow individual tenants to share information about their rent amount or previously-granted rent incentives. The authorisation also references the National Cabinet Mandatory Code of Conduct that sets out good faith leasing principles applicable between landlords and small and medium shopping centre tenants. The authorisation follows an earlier authorisation granted to the Shopping Centre Council of Australia and Scentre Group to develop an industry plan to help small business retail tenants.
- On 24 April 2020, 7-Eleven and its franchisees were granted interim authorisation to discuss potential temporary store closures or reduced trading hours in light of reduced customer demand during the pandemic. The authorisation allows 7-Eleven to offer its franchisees ex-gratia payments or pro-rata adjustments to franchisees' minimum guaranteed income, in return for those franchisees' temporary closures or reduction in their trading hours. The relevant Franchising and Oil Codes of Conduct continue to apply, and the measures are not compulsory.
The ACCC has released its interim report in its Home Loans Price Inquiry. The Inquiry follows on from the Residential Mortgage Price Inquiry, completed in November 2018. The interim report focuses on home loan pricing decisions by the four major banks, including the extent to which reductions in the cash rate are passed on. The ACCC's key findings include the following:
- consistent with the Residential Mortgages Price Inquiry, the ACCC considers there remains a lack of pricing transparency in home loans arising from high levels of discretionary discounting off headline variable rates; and
- although the ACCC acknowledges that average interest rates fell during 2019, it is concerned that new home loan customers receive better pricing (through higher discounts) than existing customers.
The final report, expected by 30 November 2020, will focus on impediments to customer switching, and will set out the ACCC's recommendations.
Breaking news: mandatory Code of Conduct for relationships between digital platforms and media companies forthcoming
On 20 April 2020, the Federal Treasurer, the Hon Josh Frydenberg MP, directed the ACCC to develop a mandatory Code of Conduct to address 'bargaining power imbalances between digital platforms and media companies'. The direction stems from the ACCC's Digital Platforms Inquiry Final Report published in June 2019 and the Government's subsequent direction to the ACCC to develop a voluntary Code of Conduct on this particular matter. The Treasurer's press release states that negotiations between the ACCC and relevant digital platforms towards a voluntary Code had been 'limited', and that the COVID-19 pandemic has exacerbated the pressure on the Australian media industry. Accordingly, the Government has instructed the ACCC to develop a mandatory Code addressing commercial arrangements between digital platforms and news media companies, including:
- data sharing arrangements;
- ranking and display of news content;
- monetisation and revenue-sharing arrangements in relation to news; and
- enforcement, including penalties and binding dispute resolution mechanisms.
The ACCC will release a draft Code for consultation before the end of July 2020, with a goal of finalising the Code 'soon thereafter'.
The ACCC has released its first report under a direction from the Treasurer to monitor the prices, costs and profits relating to petroleum products in Australia. The report analyses financial data from 11 companies (refiners, wholesalers, supermarkets and large independent retailers) from 2002/03 to the end of 2017/18 and finds that profits across the industry have significantly increased during that time. In particular, the ACCC concludes that sales of premium unleaded petrol have driven an increase in net retailer profit, as have retailers' convenience retail operations. In publishing the report, ACCC Chair Rod Sims encouraged retailers to pass on the recent drop in the crude oil price to motorists.
Merger review infrastructure still in place during pandemic: Ventia cleared to acquire Broadspectrum
The ACCC announced on 23 April 2020 that it will not oppose Ventia's acquisition of Ferrovial Services Australia (Broadspectrum). Both Ventia and Broadspectrum currently provide infrastructure services across a range of industries, including design and construction, operation and maintenance, and facilities management services. The ACCC found that the acquisition was unlikely to substantially lessen competition in any market, because:
- the parties offered differentiated services, primarily in different industries; and
- to the extent there was overlap between the parties' services, the merged entity would continue to face competition from both industry-specialised providers and larger diversified infrastructure services providers.
Businesses looking to approach the ACCC in respect of mergers and acquisitions should note that while the ACCC is continuing to review mergers, it has indicated it may extend review timeframes (or conduct urgent reviews) where necessary due to the pandemic.
The ACCC announced on 24 April 2020 that non-major banks, building societies and credit unions have been granted a temporary three-month exemption to the obligation under the Consumer Data Right to share product reference data. Product reference data is information about rates, fees and features of banking products which can be used by third-party entities (eg comparison websites) to compare products. The exemption also applies to non-primary brand products offered by the major banks, although the major banks have otherwise been subject to this data sharing obligation since July 2019. In granting the exemption, the ACCC acknowledged the stress faced by the banking industry during the COVID-19 pandemic, although it also encouraged entities subject to the exemption to share the relevant data voluntarily if they are able.
The ACCC has also published a revised draft of the Consumer Data Right Rules, which is open for consultation until 8 May 2020. The amendments to the Draft Rules are minor.