The latest in competition and consumer law 6 min read
On 9 May, the ACCC updated its guidance for the Dairy Code of Conduct ahead of the new dairy season and the upcoming 1 June deadline for dairy processors to publish their new milk supply agreements. The Dairy Code regulates the conduct of dairy farmers and requires that processors only acquire raw milk from dairy farmers under a milk supply agreement.
The updated guidance addresses the ACCC's observations of processors' compliance since the Code has been in operation and practical issues identified by the dairy industry during this time. In particular, the guidance provides greater detail on the requirement that milk supply agreements consist of a single document written in plain English, arrangements for cooperatives and collective bargaining groups, what constitutes a 'material breach' under the Code, and the requirement to publish dispute reports.
The ACCC has published a processor checklist, summarising processors' key obligations under the Code.
The ACCC has also announced that it is shifting its focus from education and engagement to enforcement of the Dairy Code, given it has been in operation for nearly two full seasons. Processors who do not comply with the Code face the risk of enforcement, which includes financial penalties for breach or the issuing of an infringement notice.
On 4 May 2022, ACCC Chair Ms Gina Cass-Gottlieb delivered the keynote address at the International Chamber of Commerce / International Bar Association Pre-International Competition Network Forum in Berlin. Ms Cass-Gottlieb spoke of the need for strong collaboration between competition regulators internationally.
A focus of Ms Cass-Gottlieb's speech was the increase in complex global mergers and the need for cooperation among regulators across the globe. Cooperation among regulators has led to more efficient investigations and reduced the regulatory burden on businesses. Although each competition regulator will have an individual approach to resolving the issues that arise in merger investigations, she was adamant that support between global authorities is necessary to ensure effectiveness as a regulator.
The speech also identifies a trend in which some global merger parties focus their clearance efforts on a particular jurisdiction, seemingly marking time until they secure clearance in that key jurisdiction. According to Ms Cass-Gottlieb, this approach merely slows down the entire merger process. A full copy of the Chair's speech can be found here.
In its draft authorisation determination, the ACCC proposes to deny authorisation for the terms of a settlement and licence agreement between Celgene and generic drug companies Juno and Natco. The ACCC's final determination is due to be issued at the end of May or in June.
Juno, Natco and Celgene sought authorisation from the ACCC to enter into a licence agreement, as part of a settlement of Federal Court proceedings relating to allegations of invalid patents and patent infringements. The licence agreement allows Juno and Natco to supply generic versions of the patented active ingredients before the relevant patents were set to expire. The agreement, however, was subject to ACCC authorisation.
The ACCC may only grant authorisation where it is satisfied that the proposed conduct is likely to result in a benefit to the public that would outweigh the likely public detriment. In the ACCC's draft determination, based on the information before it, the regulator was not satisfied the agreement would result in a public benefit. The ACCC noted that the agreement could result in public detriment by distorting competition between generic manufacturers, by allowing Juno and Natco to supply the generic version of the patented drug ahead of other generic manufacturers.
To learn more, see our Insight: ACCC delivers bitter pill on patent settlement.
The ACCC has granted interim authorisation for a proposed codeshare pricing arrangement between Virgin Australia and United Airlines.
Currently, Virgin Australia predominantly operates domestic flights and operates only limited short-haul international flights. United Airlines operates long-haul flights between Australia, the United States and beyond. Under the proposed arrangement, both Virgin Australia and United Airlines will place their code on the flight services operated by the other, facilitating the expansion of each airline's network across the Pacific. Under the interim authorisation, United Airlines may set the fares at which Virgin Australia sells flights operated by United Airlines.
The ACCC's preliminary view is that the proposed arrangement is unlikely to substantially lessen competition. There is currently no overlap between the routes operated by Virgin Australia and United Airlines, and other competing airlines will continue to operate on these routes. Further, Virgin Australia is unlikely to be able to operate its own long-haul international services in the short term.
Having granted interim authorisation, the ACCC is seeking feedback on the substantive authorisation application, covering Virgin Australia's proposed codeshare pricing arrangements with other partner carriers.
In February 2022, the ACCC issued two infringement notices to online clothing label and retailer A&S Labels Pty Ltd (trading as Tiger Mist), for allegedly misleading consumers about their return rights. Between November 2021 and February 2022, Tiger Mist made statements on its website that consumers could only return faulty items if the product was returned in its original packaging within 30 days of receiving the order, contrary to the consumer guarantees in the Australian Consumer Law. Tiger Mist has paid penalties of $26,640 and amended its website to address the ACCC's concerns.
The ACCC's action against Tiger Mist is consistent with its 2022/23 enforcement priority regarding the enforcement of consumer guarantees. While failing to apply the consumer guarantees does not, of itself, attract a penalty, the ACCC can take enforcement action in relation to the misleading statement made by a company in relation to the operation of the consumer guarantees. The ACCC has previously used this approach with other retailers, to ensure the consumer guarantees are not misrepresented to consumers.
The Full Federal Court has dismissed Viagogo's appeal of the Federal Court's finding that it made misleading claims on its website. Viagogo is an online platform for the resale of tickets to various events, including for live music and sports.
The Full Federal Court upheld the finding that Viagogo falsely represented it was the official seller of tickets, rather than operating a ticket resale site, and that it drew customers in with a headline price, failing to disclose the substantial additional fees charged. Consumers only became aware of such fees late in the booking process when they were already invested in attending the event.
The Full Federal Court upheld the $7 million penalty imposed by the Federal Court for breaching the Australian Consumer Law, and previous orders in relation to a compliance program, publication orders and an injunction. As the conduct occurred under the previous Australian Consumer Law penalty regime, the maximum penalty for each of Viagogo's contraventions was $1.1 million. The Australian Consumer Law penalties have since increased and align with the penalties for breaches of Part IV of the Competition and Consumer Act 2010 (Cth).