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 interesting and 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.
Interesting Competition facts – September 2016
- Harper exposure draft released: exposure draft legislation and explanatory material giving effect to some of the key reforms proposed by the Harper Review were released on 5 September 2016 (read our analysis of the main issues). The ACCC has also released framework guidelines covering the misuse of market power and concerted practices.
- Check your cars: following high-profile overseas investigations, the ACCC is taking Volkswagen to court over its diesel vehicle emission claims. The ACCC alleges the car company engaged in misleading or deceptive conduct by covertly installing 'defeat' software that caused vehicles to produce lower nitrogen oxide emissions in laboratory conditions compared to normal on-road conditions.
- Check your homes: an increasing number of product recalls, particularly in the car and grocery sectors, has prompted the ACCC's development of a new national product safety website.
- Check your wallet: ACCC Chairman Rod Sims has indicated that the upcoming Productivity Commission review of banking competition should investigate the nature and extent of credit card competition. The ACCC's new enforcement powers on excessive payment surcharges commenced on 1 September 2016.
- Access: Privatisation of public assets
- Authorisations: Big banks' collective bargaining application denied interim authorisation
- Market studies: ACCC launches probe into communications sector
- Investigations & enforcement: Updated s155 Guidelines
ACCC Chairman Rod Sims is now 'almost at the point of opposing privatisation' because 'governments are more explicitly privatising to maximise proceeds' at the expense of consumers and competition. Mr Sims cautioned that monopolies under private control need to be subject to appropriate regulation if users and consumers are to avoid paying more than they should in subsequent years. He noted that, without effective regulation, users may reduce investment in response to higher prices causing inefficiencies.
Mr Sims has indicated that the minimum level of intervention needed is a 'negotiate/ arbitrate' approach, which enables access seekers to obtain binding independent dispute resolution if they are unable to reach an agreement with the monopoly asset owner. In keeping with this approach, Mr Sims recently wrote to the Western Australian Government calling for regulation of port fees during the privatisation process of the Utah Point export berth. You can read more about Mr Sims' views in the ACCC's media release.
What this means
- Bidders, owners and financiers of assets that exhibit monopoly characteristics (eg ports, electricity networks, rail, airports) should be mindful of the possibility of increased regulation post-privatisation and should also be prepared for increased scrutiny by the ACCC in relation to the suitability of potential acquirers.
If you would like more information on this issue, get in touch with John Hedge.
CBA, Westpac, NAB, and Bendigo and Adelaide Bank have been denied interim authorisation by the ACCC to participate in collective negotiation activities with Apple and other third-party mobile wallet providers regarding the terms and conditions of using digital wallets on iPhones and other mobile devices. Unlike the other major banks, ANZ has already reached an agreement with Apple to use its digital wallet, Apple Pay.
In denying interim authorisation, the ACCC noted that it would need to engage in further market consultation. It expressed concern that 'the proposed conduct has the potential for continuing impacts on competition, even if any arrangements reached are later unwound' and did not find compelling reasons for the urgency of the application. The entire authorisation process usually takes up to six months, including the release of a draft decision for comment before making a final decision. The ACCC anticipates that it will release a draft decision in November 2016.
A similar situation arose in relation to the ihail application, where the ACCC denied interim authorisation to the taxi industry to launch a mobile phone booking app ('ihail'), due to the potential negative impacts on competition in the rapidly evolving market for mobile booking services. However, the ACCC ultimately granted conditional authorisation to ihail after further investigation.
What this means
- Persuasive reasons in support of the grant of interim authorisation must be clearly spelt out if the ACCC is to take immediate action.
- The ACCC may be reluctant to approve applications for interim authorisation that concern complex and rapidly-evolving markets before it can complete its full review process.
If you would like more information on this issue, get in touch with Carolyn Oddie.
Never far from the ACCC's mind, the communications sector will be the next focus of the ACCC's voracious appetite for market studies. As part of his annual address to the Law Council, ACCC Chairman Rod Sims stated that market studies are now part of 'business as usual' for the ACCC and can be an 'important safety valve enabling the credible concerns of stakeholders to be examined' even where there is no clear breach of competition law. The ACCC has recently launched studies into the beef cattle sector and new car retailing, and has concluded market studies into the east coast gas market and petrol prices in Darwin and Launceston.
The ACCC's next market study will be a comprehensive and wide-ranging study into the communications sector, in light of the significant changes driven by technological developments, product innovation and changing consumer preferences, and will cover the following key issues:
- the changing structure of communications markets at a wholesale level, and retail level;
- the rapid expansion of services provided 'over the top' which bypass traditional distribution and are delivered over the internet, such as communications apps like Skype; and
- the ever-increasing demand for bandwidth and data, which can be attributed to the growth of streaming music and video content services such as Netflix and Stan.
What this means
- Your business / industry sector may be next on the ACCC's hit list. The ACCC has indicated it may launch its next market study into the dairy industry.
- You will need to consider the approach and strategy your organisation adopts – market studies are not only an opportunity for the ACCC to learn about a particular industry sector but also an opportunity for market participants to draw attention to particular issues or concerns.
If you would like more information on this issue, get in touch with Kon Stellios.
Adding to its recent publications streak, the ACCC has updated its guidelines on the use of its compulsory information-gathering powers under s155 of the Competition and Consumer Act 2010. The key updates include:
- Recognition of the 'digital burden': the ACCC recognises that digital technology has increased the number of documents that a recipient must review when responding to a s155 notice. On the other hand, it also notes that technology may allow for searching to be partly automated and therefore conducted more efficiently.
- Enhanced consultation with recipients: where appropriate, consultation with the recipient before a s155 notice is issued may take place so as to better understand the recipient's document management system and digital environment. The ACCC considers that such consultation can lead to efficiencies by enabling the ACCC to craft more appropriately targeted s155 notices. Pre-notice consultation is most likely to occur with a third party who is not the subject of the investigation, or in certain merger reviews.
The ACCC has also published a basic guide to its s155 powers for individuals and small businesses, which includes FAQs and example s155 notices.
What this means
- If faced with a s155 notice, it is important to determine the burden it will impose (in time and cost), and engage with the ACCC on these issues early.
If you would like more information on this issue, get in touch with Jacqueline Downes.
- Fiona CrosbieChairman,
Ph: +61 2 9230 4383
- Jacqueline DownesPartner, Practice Leader, Competition, Consumer & Regulatory,
Ph: +61 2 9230 4850
- John HedgePartner,
Ph: +61 7 3334 3171
- Ted HillPartner,
Ph: +61 3 9613 8588
- Carolyn OddiePartner,
Ph: +61 2 9230 4203
- Kon StelliosPartner,
Ph: +61 2 9230 4897
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