The latest in competition and consumer law 13 min read
On 11 February 2022, the Commonwealth Director of Public Prosecutions (CDPP) announced that it had withdrawn all charges against Citigroup Global Markets Australia Pty Limited (Citigroup), Deutsche Bank Aktiengesellschaft (Deutsche Bank) and four current or former officers or employees of those corporations in relation to alleged cartel conduct. The charges were dropped following a determination by the CDPP that there were no longer reasonable prospects for success. This follows the CDPP's decision in October 2021 to drop all charges against ANZ Banking Group (ANZ) and its former group treasurer.
The CDPP's case against the banks, which was referred to the prosecutor after an investigation by the ACCC, arose out of the ANZ Share Placement in August 2015 for which JP Morgan Australia Pty Limited (JP Morgan), Deutsche Bank and Citigroup were the joint lead managers and underwriters. The underwriters acquired a significant volume of shares in the placement and it was alleged they reached an understanding about the volume of those shares they would sell each day.
JP Morgan was granted civil criminal immunity in May 2016 after requesting a 'first-in' marker from the ACCC on 29 August 2015.
Justice Wigney of the Federal Court had previously criticised the CDPP's management of the case, including labelling the 'situation concerning the state of the indictment as a complete shemozzle'. The case had been set down for jury trial in June 2022 for six months.
On 18 March 2022, the ACCC announced it was commencing proceedings against Meta for publishing scam advertisements on its social media platform, Facebook.
The advertisements contained links that took Facebook users to fake media articles. The articles contained false quotes from public figures, including NSW Premier Mike Baird and businessman Dick Smith, which gave the impression that these people had endorsed cryptocurrency and money-making schemes.
The ACCC alleges Meta engaged in false, misleading or deceptive conduct by publishing the advertisements which created the impression they were approved or endorsed by the people featured, when they were not. The ACCC argues that Meta is responsible for the scammers' conduct as the publisher of the material and that Meta aided and abetted or was knowingly concerned in the scammers' false or misleading conduct and representation.
The ACCC alleges this conduct was in breach of the Australian Consumer Law or the Australian Securities and Investments Commission Act. The ACCC is seeking penalties, costs and other orders against Meta. A spokesperson for Meta said it will defend the proceedings.
On 25 March 2022, the Federal Court made orders in respect of legal proceedings brought by the ACCC against Australasian Food Group Pty Ltd (AFG), trading as Peters Ice Cream, regarding a distribution agreement between AFG and national distributor PFD Food Services Pty Ltd that operated between 2014 – 2019. The distribution agreement provided that PFD would exclusively supply Peters' single serve ice cream products to petrol and convenience retailers in certain places around Australia.
The Federal Court found that this exclusive dealing had the likely effect of substantially lessening competition in the market for the supply by manufacturers of single service ice cream and frozen confectionary products.
The Federal Court has ordered that AFG pay a penalty of $12 million in respect of the contravention, being the penalty jointly proposed by AFG and the ACCC as appropriate.
The Federal Court also dismissed the 'purpose' and 'effect' allegations that had been made against AFG.
From 1 October 2022, online ticket resellers will be subject to new obligations under the Competition and Consumer (Australian Consumer Law—Electronic Ticket Resale Service) Information Standard 2022 which was registered on 1 April 2022.
These new obligations will apply to websites reselling tickets for admission to events hosted or located in Australia, including sporting events, festivals, cultural events, entertainment events such as concerts or theatre performances, arena events, and any other form of public performance, exhibition, display, or public gathering.
Ticket resale websites will be required to display the statement, 'This is a ticket resale service. You are not buying from a primary ticket provider.' They must also display the total price, excluding any delivery fee, that a consumer would reasonably be expected to pay for the ticket from the primary source authorised to first supply tickets to the event. These statements must be displayed continuously, prominently, unambiguously and legibly on the website.
On 28 February 2022, the ACCC announced that it's seeking feedback on potential measures to address harms to competition and consumers arising from the dominance of digital platforms. Harms identified by the ACCC include anti-competitive self-preferencing, excessive online tracking, use of dark patterns, online scams, harmful apps, fake reviews and consumer lock-in.
The ACCC's discussion paper sets out potential reforms and tools to form part of a possible new regulatory framework to promote competition and increase consumer welfare in digital platform services. The regulatory options include introducing legislative prohibitions and obligations, service-specific codes of practice, granting rule-making powers to a government authority, measures to promote competition following a finding of harm, and access to certain data for third parties. The ACCC is seeking feedback on 19 specific questions dealing with each of these options, including whether specific rules are needed for digital platform services, the types of 'fair-trading' obligations that might be required, and the need for reform to Australia's merger laws to specifically address anti-competitive acquisitions by digital platforms.
The ACCC's consultation will inform the recommendations to be made in the report due to be provided to the Treasurer by 30 September 2022. The upcoming fifth report will mark the halfway point of the Digital Platform Services Inquiry.
On 9 February 2022, the Treasury Laws Amendment (Enhancing Tax Integrity and Supporting Business Investment) Bill 2022 (the Bill) was introduced into Parliament with proposals that will substantially alter the unfair contract term regime (UCT) in the Australian Consumer Law (ACL) and the Australian Securities and Investment Commission Act (ASIC Act). In particular, the Bill gives the court power to impose significant pecuniary penalties on individuals and corporations for proposing, applying or relying on an unfair term.
The Bill also proposes to:
- remove the contract value threshold that previously had to be met for the contract to be captured by the ACL UCT regime;
- increase this threshold from $1 to $5 million under the ASIC Act; and
- cover contracts where at least one party employs fewer than 100 persons (previously 20 persons), or has an annual turnover of less than $10 million.
If passed, the commencement date will be 12 months following the Bill's assent. These changes will apply to contracts, made, renewed or varied, at or after the commencement date.
For the first time, the ACCC has published its findings from an ex post review of six past merger decisions (Report). The Report aims to inform and improve the regulator's approach to current merger reviews and decisions.
The ex post review examined six unopposed merger decisions in markets ranging from retail petrol to funeral directors. The decisions were selected for review according to the availability of relevant information, the unique issues they raised, their relevance to future ACCC investigations, and whether sufficient time had elapsed since the merger.
Some of the Report's key takeaways include:
- the removal of a vigorous and effective competitor can harm competition, even when market shares appear relatively low;
- some cleared mergers have resulted in significant price increases for segments of markets;
- merger parties and third parties routinely exaggerate the likelihood of new entry and expansion; and
- third parties are poor assessors of their own countervailing power to constrain a merged entity.
While the ACCC flagged that the ex post review was conducted 'independently' from its merger law reform proposals, it nonetheless concluded that some of the Report's findings are 'relevant' to the ongoing 'discussion about merger review processes'.
The ACCC indicated that it will undertake and publish further ex post reviews.
New Chair of the ACCC
On 21 March 2022, Gina Cass-Gottlieb commenced her term as Chair of the ACCC. Ms Cass-Gottlieb has taken over the role of her predecessor, Mr Rod Sims, who served as the Chair of the ACCC from 2011 to 2022.
On 18 February 2022, the ACCC announced that it will be joining the US Department of Justice and Federal Bureau of Investigation, Canadian Competition Bureau, NZ Commerce Commission, and UK Competition and Markets Authority in a collective working group called 'Five Eyes.' The five competition authorities will focus on cross-border illegal conduct, including collusion in global supply and distribution chains and will share intelligence to identify the behaviour and act.
Digital Platform Regulators Forum
On 11 March 2022, the ACCC, Australian Communications and Media Authority, Office of the Australian Information Commissioner, and Office of the eSafety Commissioner announced the formation of the Digital Platform Regulators Forum. The Forum seeks to increase cooperation and information sharing between digital platform regulators in pursuit of their collective interests, namely, addressing emerging consumer harms, encouraging innovation while balancing protections, and countering the market power of these large, complex and diverse multinational entities.
2022 Enforcement Priorities
On 3 March 2022, the ACCC announced its compliance and enforcement priorities for 2022-23. The priorities name 'green' claims, misleading conduct online, disruptions to supply chains, exclusive contracting, digital platforms and essential services as areas of focus. Further, the ACCC is also advocating for significant changes to the consumer law and the current merger regime. A comprehensive breakdown of these enforcement priorities can be found in Allens' Insight article, 'ACCC 2022/2023 enforcement priorities'.