INSIGHT

In Touch: Energy industry granted interim authorisation and other developments

By Jacqueline Downes
ACCC Competition law Consumer law Infrastructure Technology Telecommunications

The latest in competition and consumer law 8 min read

All aboard: ACCC choo choo chooses to approve Aurizon's acquisition of One Rail

On 14 July 2022, the ACCC announced it will not oppose Aurizon's proposed acquisition of One Rail, subject to Aurizon's court-enforceable undertaking to divest One Rail's east coast business.

Aurizon and One Rail are two out of three suppliers of rail haulage services for coal in New South Wales and Queensland. The ACCC considered that without Aurizon's undertaking, which involves divesting One Rail's coal haulage operations in these states, either by way of a trade sale or demerging it as a new separate ASX-listed entity, the proposed acquisition would reduce the number of key competitors from three to two, resulting in higher prices or decreased service levels. The ACCC has, however, concluded that the divested business will act as an effective and long-term competitive constraint on Aurizon.

The ACCC also considered the impact of the acquisition in regional markets for the supply of rail haulage services for non-coal bulk commodities, despite the parties not currently competing in these markets. The ACCC was ultimately satisfied that the divested business would be a potential competitor to Aurizon in the future. Aurizon will also be constrained by existing bulk haulage competitors.

Following the acquisition, Aurizon will retain One Rail's bulk haulage operations and rail network assets in South Australia and the Northern Territory.

Telstra successfully Fetch(ed) entertainment offering

On 14 July 2022, the ACCC announced it will not oppose Telstra Corporation Ltd's (Telstra) proposed acquisition of 51.4% of Media Innovations Holdings Pty Ltd (Fetch TV).

Fetch TV supplies set-top-boxes to allow customers to watch movies and access both subscription and free-to-air television channels. It also supplies its set-top-boxes to broadband retailers such as Optus and iiNet, which offer Fetch TV as an add-on service to customers. Telstra offers customers Telstra TV, a television content service accessed via a set-top-box, with eligible retail broadband services.

The ACCC primarily focused on whether, post-acquisition, Telstra would have the ability and incentive to foreclose competing broadband retailers' access to Fetch TV. However, the ACCC concluded that Fetch TV was not critical or a 'must have' for Telstra's retail broadband competitors to compete effectively. In addition, several other broadband retailers, including those that offer Fetch TV, also supply other entertainment offerings or inclusions.

The ACCC also considered the potential overlap between Telstra, Fetch TV and Foxtel, given Telstra's 35% ownership of Foxtel. The ACCC concluded that all three businesses will continue to face competition from other technologies and differentiated services, such as smart TVs and hardware devices like gaming consoles.

Bank of Queensland paying for alleged Consumer Data Right breach

On 13 July 2022, the ACCC announced that the Bank of Queensland Ltd (BoQ) has paid a penalty of $133,200 after the ACCC issued an infringement notice regarding an alleged breach of the Consumer Data Right (CDR) Rules. This is the first time the ACCC has issued a fine for a CDR breach against a data holder.

The CDR is an economy-wide data sharing program that enables Australians to leverage the data businesses hold about them for their own benefit, providing individuals access to information and tools to enable them to compare products and make decisions about switching providers. While the CDR was rolled out to the major banks in July 2020, BoQ and other banking institutions were required to share data for financial products, including savings accounts, term deposits and credit cards by 1 July 2021. The ACCC alleges that BoQ did not meet this obligation, failing to make the required services available until 13 December 2021. In determining to issue the infringement notice, the ACCC considered the period of alleged non-compliance, the number of potentially impacted customers, the resourcing constraints faced by BoQ and the steps it took to limit the duration of its non-compliance.

This fine (which is not an admission of a contravention of the CDR Rules by BoQ) represents a hardening of the ACCC's position on enforcement of open banking obligations. This is consistent with the latest messaging by ACCC Chair Gina Cass-Gottlieb who, at the recent AFR Banking Summit, warned banks that the ACCC is prepared to take enforcement action if poor quality data is being fed into the CDR regime.

Energetic and authorised: cooperation in the electricity and gas market

Following our earlier In Touch Insight covering the ACCC's addendum to its latest Electricity Markets Inquiry report, on 1 July 2022 the ACCC granted interim authorisation for participants in the gas and electricity markets to work together to support Australia's energy supply and systems.

On 29 June 2022, the Australian Energy Market Operator (AEMO) filed an urgent application for interim authorisation to address the challenges facing the Australian energy industry, including reduced energy availability and soaring prices.

The interim authorisation, subject to conditions, allows AEMO and industry participants to enter into contracts, coordinate, and share information, personnel and equipment to ensure the safe, secure and reliable operation of energy systems. The interim authorisation aims to minimise the risk of energy outages and ensure the continued operation and integrity of the National Electricity Market.

Conditions attached to the authorisation include:

  • AEMO must record and report regularly on any measures taken, or agreements reached, between participants; and
  • the ACCC must be able to attend any meetings that are held during the authorisation period.

AEMO sought, and was granted, authorisation for nine months to help address potential energy supply shortfalls over the current winter through to the end of the peak summer period. The ACCC is expected to make a final determination by October/November 2022.

The interim authorisation grant follows the ACCC's announcement on 20 June 2022 that it, in conjunction with the Australian Energy Regulator, will be investigating the withdrawal of electricity supply during June. The ACCC is expected to issue its report later this month.

Ultra Tune marching to the wrong beat: ACCC commences action

On 28 June 2022, the ACCC brought proceedings against Ultra Tune Australia Pty Ltd (Ultra Tune) alleging that:

  • Ultra Tune breached court orders which restrained it from contravening parts of the Franchising Code of Conduct; and
  • failed to comply with the requirements of a court-ordered compliance program.

In 2019, Ultra Tune was found to have contravened the Australian Consumer Law (ACL) and the Franchising Code, and was ordered to provide disclosure documents and marketing fund statements to franchisees in compliance with the Franchising Code. The ACCC alleged that between 2019 and 2021, while the court orders were in effect, Ultra Tune failed to both update its disclosure document and prepare marketing fund statements within the required timeframe. The ACCC maintains that the impact of the late preparation of these documents meant franchisees were denied the opportunity to see, in a timely manner, how their contributions to the market fund were being used.

Further, the 2019 court orders also required Ultra Tune to implement a compliance program to ensure no further contraventions of the ACL or Franchising Code. Under the compliance program, a compliance officer was to provide quarterly reports on the ongoing effectiveness of the program to the company. The ACCC alleges that for three quarters between April and December 2021, Ultra Tune's compliance officer failed to provide these reports.

ACCC tells industry to button up on battery safety and information standards take effect

As of 22 June 2022, businesses supplying button batteries or products must comply with the mandatory button battery safety and information standard (Standard).

Under the new Standard, all levels of the supply chain for the supply of button batteries or products must:

  • have secure battery compartments to prevent child access;
  • be supplied in child-resistant packaging;
  • contain additional warnings and emergency advice on the batteries, packaging and instructions; and
  • ensure compliance testing has been undertaken before being put to market.

The ACCC has put businesses on notice that breaches of the Standard and unsafe or non-compliant products will carry serious penalties. Supplying goods that fail to comply with the Standard is likely a contravention of the ACL and exposes a business or individual to potential enforcement action by the ACCC.

New life for Liverpool Partners after its proposed acquisition of fertility services business not opposed

On 23 June 2022, the ACCC announced it will not oppose Liverpool Partners' proposed acquisition of Genea Limited. Both Genea and Liverpool Partners (through its recent acquisition of Adora Fertility Pty Ltd) supply fertility services, including In Vitro Fertilisation (or IVF), in Perth, Sydney and Melbourne.

The ACCC concluded that the acquisition would not substantially lessen competition in markets for the supply of fertility services, as Adora and Genea are not each other's closest competitors since they offer different services to different customer segments. In particular, Adora primarily offers low-cost fertility services, while Genea offers more costly full service treatments. The ACCC also concluded that low-cost and full service providers will continue to impose a competitive constraint on both Adora and Genea.

The ACCC did signal, however, that it will continue to monitor future acquisitions in the fertility services industry given the industry's recent period of consolidation.

Virgin Australia flying high as the ACCC proposes to authorise codeshare arrangements

On 8 July 2022, the ACCC issued a draft determination proposing to grant Virgin Australia authorisation to enter into codeshare pricing arrangements with various international airlines for five years.

This follows the ACCC's decision in May 2022 to grant interim authorisation allowing Virgin Australia to enter into codeshare pricing arrangements with United Airlines. Virgin Australia has since requested interim authorisation to enter into similar arrangements with Qatar Airways and Singapore Airlines, and is considering doing so with a number of other international airlines.

Under the arrangements, the international carriers will set fares for long-haul flights between Australia and various regions, including the USA, Europe, Asia, the Middle East and Africa. Virgin Australia will market and resell these airfares to consumers.

The ACCC's preliminary assessment concluded that there was no competitive overlap between Virgin Australia and its international partners. While Virgin Australia currently operates a network of domestic flight services and short-haul international flights to Fiji and Indonesia, it does not operate any long-haul international services. In fact, the ACCC considers that Virgin Australia lacks the necessary aircraft to operate such services in the future. The ACCC also considered that other airlines, such as Qantas, will impose a competitive constraint on Virgin Australia and its partners on these international routes.

The ACCC has invited submissions on the draft determination by 29 July 2022.