In Touch: ACCC appeals NSW Ports case; ACCC commences proceedings against Lactalis; and other developments

The latest in competition and consumer law 6 min read

ACCC appeals Federal Court's decision in NSW Ports competition case

The ACCC has appealed the Federal Court's decision to dismiss its proceedings against NSW Ports Operations (NSW Ports) and its subsidiaries Port Botany and Port Kembla.

The proceedings concern various Port Commitment Deeds, entered into as part of the privatisation of Port Botany and Port Kembla by the NSW Government in 2013, for a term of 50 years. Certain provisions of those deeds (Compensation Provisions) required the State of NSW to compensate the operators of Port Botany and Port Kembla if container traffic at the Port of Newcastle exceeded a specified cap. Another 50-year deed, signed in 2014 when the Port of Newcastle was privatised, required the Port of Newcastle to reimburse the State of NSW for any compensation paid to operators of Port Botany and Port Kembla.

The ACCC is appealing the Court's finding that the Compensation Provisions did not have the purpose or effect of substantially lessening competition. In particular, the ACCC believes that the primary judge erred in concluding that:

• The 50-year term of the Port Commitment Deeds was not relevant when assessing whether they have an anti-competitive effect, since the development of a container terminal at the Port of Newcastle was unlikely when the agreements were made;
• At the time the Compensation Provisions were made, there was no meaningful prospect that State policy would change in the future to favour the development of a container terminal at the Port of Newcastle; and
• In entering into the Compensation Provisions, the State's purpose was to ensure it could get full value for the sale of the existing container port monopoly of Port Botany, and NSW Ports' purpose was to ensure it retained the full extent of that monopoly. However, those purposes were not anti-competitive.

Finally, the ACCC is appealing the Court's decision that the competition legislation did not apply because the State of NSW was not carrying on a business when it entered into the Port Commitment Deeds, as well as the findings that NSW Ports benefited from derivative Crown immunity.

ACCC udderly unhappy with alleged breaches of Dairy Code

The ACCC commenced proceedings against Lactalis on 26 July 2021 for alleged breaches of the Dairy Code of Conduct (the Dairy Code). The Dairy Code commenced on 1 January 2020, introducing mandatory requirements for milk processors in their dealings with dairy farmers. This is the first time the ACCC has brought proceedings for breaches of the Dairy Code.

The ACCC alleges that Lactalis failed to:

• make its milk supply agreements publicly available by the required deadline;
• provide genuine non-exclusive milk supply agreements by requiring farmers to supply 90% of their monthly production to Lactalis; and
• comply with the requirement to provide farmers with a single contractual document.

The ACCC alleges this conduct had the effect of reducing transparency of the terms and conditions of Lactalis' milk supply agreements during the limited timeframe farmers had to decide which milk processors to supply.

The ACCC is seeking orders including penalties, declarations, injunctions, corrective advertising and costs.

ACCC reauthorises restrictions on marketing of infant formula

On 27 July 2021, the ACCC reauthorised the Marketing in Australia of Infant Formula: Manufacturers and Importers Agreement (the MAIF Agreement) between numerous infant formula manufacturers and importers. The MAIF Agreement prohibits infant formula manufacturers and importers from advertising and promoting infant formula directly to the public.

The MAIF Agreement has been authorised by the ACCC since 1992, and its latest re-authorisation extends the authorisation to 31 August 2024.The purpose of the MAIF Agreement is to promote breastfeeding rates that offer significant public health benefits, as well as to prevent risks associated with marketing products designed for infants.

ACCC to not oppose Are Media's acquisition of Ovato Retail Distribution

The ACCC announced on 29 July 2021 that it will not oppose Are Media's proposed acquisition of Ovato Retail Distribution. Are Media is Australia’s largest magazine publisher, of titles such as The Australian Women’s Weekly, New Idea and Gourmet Traveller. Ovato is Australia’s largest distributor of magazines to retailers (including newsagents, supermarkets and convenience stores).

The focus of the ACCC's review was whether, post-transaction, sales by rival magazine publishers would be adversely affected by not having access to competitive distribution services. It decided not to oppose the deal, on the basis that Are Media would not be incentivised to favour distribution of its own publications over those of other publishers. The ACCC found that the decline in magazine circulation and high fixed costs in distribution would incentivise Are Media to maximise the volume of magazines it distributes.

The ACCC also considered whether rival publishers face a competitive disadvantage due to Are Media accessing data about competing publishers' sales in the Ovato system. It concluded that since similar market information is publicly available, any benefit from the data is unlikely to give Are Media a significant competitive advantage.

Vina Money Transfers pleads not guilty in response to criminal cartel charges

In April 2019, the Commonwealth Director of Public Prosecutions (the CDPP) brought criminal cartel charges against foreign exchange company Vina Money and five related individuals (including the three owners of Vina Money and two employees of a competing business). The CDPP alleges that Vina Money entered into an agreement with forex business Hong Vina and a third company, Hai Ha, to fix the exchange rate between the Australian dollar and the Vietnamese dong. Hong Vina and Hai Ha have not been charged, with Hai Ha having secured immunity.

On 28 July 2021, Vina Money and the five related individuals entered not guilty pleas in the Melbourne Magistrates' Court. Proceedings will commence in the Federal Court of Australia on 17 August 2021. These proceedings are the third criminal cartel proceedings that will face a trial by jury in the Federal Court since the introduction of criminal cartel offences in 2009.

Parliamentary Joint Committee takes a bite out of Apple Pay

On 27 July 2021, the Parliamentary Joint Committee on Corporations and Financial Services held a public hearing as part of its review of mobile payment and digital wallet financial services. The hearings highlighted a growing concern over big tech's role in payments, particularly in relation to Apple's control over access to its near-field communication technology.

A clear theme from appearances at the inquiry is that current regulation does not effectively cover the role of big tech in the payments system. The Committee also focused on the fact that mobile payments were not included in the terms of reference for the ACCC's inquiry into digital platforms. During its appearance, the ACCC noted concerns regarding the role of gatekeepers and self-preferencing behaviour.