Allens

Competition, Consumer & Regulatory

Increase text sizeDecrease text sizeDefault text size
In touch
 

Competition news

21 December 2015

 
Fiona Crosbie

Fiona Crosbie
Practice Leader, Competition
+61 2 9230 4383
Email Fiona

View CV

In Touch looks at what's been happening in Competition this month, and what it means for your business.

We hope you find this issue helpful. Please let us know if you would like us to investigate any competition news in the next month and, as always, get in touch.

Anti-competitive conduct: Yazaki found to have engaged in cartel conduct

The Federal Court has found that the Yazaki Corporation entered into a cartel agreement with Sumitomo Electric Industries involving an agreement to coordinate responses to request for quotations issued by Toyota Motor Corporation for wire harnesses. Yazaki's Australian subsidiary was also found to have made a cartel agreement in Australia.

Yazaki submitted that the ACCC's evidence was insufficient to establish an overarching cartel agreement amongst a broader group of motor vehicle manufacturers. This was because the evidence adduced by the ACCC did not go beyond RFQs issued from time to time by Toyota Motor Corporation or its subsidiaries or related companies. However, the court found that the evidence as a whole disclosed an overarching cartel agreement in relation to Toyota Motor Corporation.

This action follows similar enforcement action against Yazaki and other cartel participants by competition regulators in the US, Europe, Canada and Japan. Interestingly, the first immunity applicant was not the same in all the jurisdictions.

What this means

The proceedings highlight a trend towards increased cooperation between the ACCC and other enforcement agencies. This trend can be expected to continue given the recent memoranda of understanding entered into by the ACCC and other agencies. The proceedings also show how cartel investigations are becoming increasingly global. For example, the raids of a related company to Yazaki in Europe were conducted with the cooperation of US anti-trust authorities. The global nature of the proceedings also serves as a useful reminder for the need to consider the possibility of leniency applications across multiple jurisdictions.

If you would like more information on this issue, get in touch with Kon Stellios.

Mergers: ACCC will not oppose Shell's acquisition of BG

The ACCC has granted unconditional clearance to Royal Dutch Shell's A$98 billion takeover of BG Group plc. The deal is still subject to other regulatory approvals. The ACCC considered whether the proposed acquisition would reduce the supply of gas, or reduce competition to supply gas, to domestic customers by aligning Shell’s interest in Arrow Energy with BG’s LNG facilities in Queensland. The ACCC concluded that the proposed acquisition would be unlikely to substantially lessen competition in the wholesale natural gas market, in either Queensland or eastern Australia more broadly.

A key question was whether, in the absence of the proposed acquisition, BG and Arrow would both have excess gas above their LNG commitments and whether they would offer that gas to domestic customers. Uncertainty about the amount and timing of future gas supplies meant that the ACCC was not satisfied that Arrow and BG would be meaningful competitors in the domestic market in the absence of the acquisition.

What this means 

The eastern Australian gas industry will continue to be a focus for the ACCC. The ACCC's review of the Shell/BG was complex because it is simultaneously reviewing the state of competition and structure of the east Australian gas industry through its East Coast Gas Inquiry. The Inquiry is scheduled to be finalised with a report to the Minister in April 2016.

If you would like more information on this issue, get in touch with David Brewster.

Misleading or deceptive conduct: Infringement notices

The ACCC can issue infringement notices to parties it considers to have breached certain provisions of the Australian Consumer Law (ACL). Infringement notices specify a penalty payable in relation to the alleged contravention. By complying with an infringement notice, the person who received the notice becomes immune from proceedings by the ACCC but not third parties.

Recently, Cereal Partners Australia, Epharmacy Group and Arnott's Biscuits were all issued multiple infringement notices for allegedly making such false representations.


Cereal Partners manufactures and distributes Uncle Tobys' oats. The ACCC issued Cereal Partners with three infringement notices in relation to claims about the protein content of various oat products. The ACCC alleged that the dominant (and incorrect) impression created by the packaging and television advertising was that the relevant products were a significant source of protein. This alleged impression arose from the words 'natural source', 'naturally rich', 'protein' and 'superfood' in combination with each other, as well as by featuring the word 'protein' in large, bright text in a front-and-centre position on the packaging. A fine print disclaimer was not enough in the ACCC's view to undo the impact of the allegedly offending statements. Cereal Partners paid penalties of $32,400.

Epharmacy represented that customers would enjoy a discount off the recommended retail price if they purchased certain Healthy Care products from Epharmacy's websites. These claims, which included 'Don't Pay RRP $39.99' and 'Save $18.00', were made in circumstances where the products had never been offered for sale at the recommended retail price by any retailers. Epharmacy paid $32,400 in penalties.

Arnott's attracted ACCC attention with claims that its Shapes Light & Crispy product contained 75 per cent less saturated fat than original Shapes. In reality, the Light & Crispy line only contained 60 per cent less saturated fat. In addition to paying $51,000 in penalties, Arnott's made a court enforceable undertaking that it will not engage in similar conduct for three years and is set to publish corrective advertising in a national food magazine and on its website.

What this means

The ACCC is stepping up its use of infringement notices for conduct that it believes amounts to contraventions of the ACL. The penalties sought under these infringements notices appear to be on the increase. The highest amount payable under a single infringement notice is $108,000, but as the ACCC can issue an infringement notice for each contravention of an infringement notice provision, the total penalties may exceed $108,000.

If you would like more information on this issue, get in touch with Jacqueline Downes.

Misleading or deceptive conduct: 'Drip pricing' practices

ACCC brought proceedings against Virgin and Jetstar in the Federal Court for alleged breaches of the ACL. The ACCC alleged that Jetstar and Virgin had advertised and promoted airfares at a headline price without adequately disclosing that potential customers would be required to pay a booking or service fee if they paid for flights using one or more popularly used payment methods (including widely accepted debit and credit cards). The ACCC argued that although it was possible to avoid paying these fees (for example, by using POLi or an airline-branded credit card), the failure to disclose the fee at the outset of the transaction amounted to misleading or deceptive conduct. The conduct engaged in by Jetstar and Virgin differed slightly, but involved representations about airfare prices made on their websites, mobile sites and in email advertisements to potential customers.

The ACCC argued that the alleged progressive disclosure of pricing information during the booking process emphasised the most attractive feature of the promotion (the advertised headline price), while de-emphasising the existence of the booking and service fee. The ACCC claimed that this amounted to misleading or deceptive conduct. The Federal Court confirmed that this applies to potential fees, even where consumers may be able to avoid them, for example, by using one payment method instead of another.

What this means

Whilst the Federal Court affirmed that a company's failure to disclose adequately booking and service fees during online transactions may contravene the ACL, what constitutes 'adequate disclosure' varies depending on context. As a general rule, earlier disclosure is better.

If you would like more information on this issue, get in touch with Fiona Crosbie.

Misleading or deceptive conduct: Nurofen specific pain products

In proceedings brought against Reckitt Benckiser (Australia), the ACCC alleged that Reckitt Benckiser had made misleading representations on the packaging of each Nurofen Specific Pain product and on the Nurofen website that each product was formulated to treat a specific type of pain when in fact each product contained the same active ingredient. Reckitt Benckiser admitted that it had contravened the ACL and the Federal Court made orders to prohibit Reckitt Benckiser from selling the Nurofen Specific Pain products and ordered the publication of a corrective notice on the Nurofen website. A date for a penalty hearing has not yet been fixed.

What this means 

The proceedings demonstrate the ACCC's continuing commitment to truth in advertising and consumer issues, particularly in the health and medical sectors.

If you would like more information on this issue, get in touch with Carolyn Oddie.

Investigations & enforcement: Significant High Court decision on settlement of regulatory proceedings

The High Court recently held that parties and regulators are permitted to put before the court an agreed position as to the value of a penalty reached as part of a settlement agreement. Read more in our Client Update: Significant High Court decision on settlement of regulatory proceedings.

 

If you would like more information on this issue, get in touch with Fiona Crosbie.

The Government's response to the Harper Review

On 24 November 2015, the Federal Government released its much anticipated response to the Harper Review of Australian competition law and policy. As expected, the Government will accept the majority of recommendations. The key proposals accepted by the Government include:

  • repealing the current price signalling laws and replacing with a prohibition on concerted practices that substantially lessen competition;
  • simplifying the cartel provisions, including broadening the joint venture exemption; and
  • combining the formal merger review process with the authorisation process, with the ACCC as the first instance decision maker.

In response to other recommendations from the Harper Review, the Government reserved its view or indicated that it would not adopt the recommendation. Most significantly, the Government has not decided whether to accept the recommendation that s46 be amended to introduce an effects test. The Government has now released a further discussion paper, with submissions due in mid-February.

What this means 

Read more…the Government's Response fact sheet and the Government's Response.

If you would like more information on this issue, get in touch with David Brewster or Fiona Crosbie.

For further information, please contact:

Share or Save for later

What are these?

 

To save this publication on your smartphone or
tablet for off-line reading (eg on a plane flight),
we recommend Pocket.

 

 

You can leave a comment on this publication below. Please note, we are not able to provide specific legal advice in this forum. If you would like advice relating to this topic, contact one of the authors directly. Please do not include links to websites or your comment may not be published.

Comment Box is loading comments...