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In touch
 

Competition news

May 2017

 
Jacqueline Downes

Jacqueline Downes
Practice Leader, Competition
+61 2 9230 4850
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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 – MAY 2017

  • The budget – a win for the ACCC – the Government announced in its Budget that penalties for breaching consumer law will be increased to align with competition law penalties from 1 July 2018. The Government also announced a number of measures that focus on competition in the financial services sector, beginning with an inquiry by the Productivity Commission. Read our summary of the financial sector measures here.
  • Changes ahead for Australia's competition law – The Government has put forward its Misuse of Market Power Bill (which has already passed the House of Representatives) and the Competition Policy Bill (which seeks to implement the Harper reforms). If passed, these Bills will make significant changes to Australian competition laws. Read our analysis of the Government's proposed amendments here.
  • Australian Consumer Law in for a shake-up – Consumer Affairs Australia and New Zealand has recommended a range of changes to the ACL in its final report, including in relation to consumers guarantees, penalties and unfair trading. Read our report on Consumer Affairs' proposed reforms and the implications for your business here.
  • ACCC to take action on B2B unfair contract terms – The ACCC has announced it is conducting investigations into unfair contract terms in a range of industries following the introduction of the B2B unfair contract terms laws and has said it will be taking enforcement action this year. Read the ACCC's release here.
 

Authorisations: ACCC denies authorisation for banks to collectively bargain with and boycott Apple on Apple Pay

The ACCC denied authorisation to the CBA, Westpac, NAB, and Bendigo and Adelaide Bank to collectively bargain with Apple and collectively boycott Apple Pay.

The banks had sought authorisation to negotiate with Apple on two key issues:

  • access to the Near-Field Communication (NFC) controller in iPhones, which would have enabled the banks to offer their own integrated digital wallets to iPhone customers in competition with Apple’s digital wallet without using Apple Pay; and
  • the banks' ability to pass on to customers Apple's fees for use of the digital wallet.

The ACCC accepted that Apple providing the banks access to the iPhone NFC controller was likely to increase competition in mobile payment services, as it would enable the banks to better compete with Apple Pay.

However, the ACCC considered this was outweighed by the distortions to and reductions in competition that could result from the banks' proposed conduct. The ACCC was concerned about the effect the conduct would have on:

  • future innovations in digital wallets and mobile payments technology. The ACCC stated this technology is in its infancy and authorising the banks' proposed conduct could direct the development of emerging markets to the use of NFC controllers, hampering the development of alternative innovations in relation to mobile payments;
  • competition between the banks in the supply of mobile payment services. The ACCC stated that multi-user digital wallets (such as Apple Wallet) could increase competition between the banks by making it easier for consumers to switch card providers and limit any 'lock in' effect that bank digital wallets may cause; and
  • competition between mobile operating systems, in particular Apple and Android. 

Consumer protection: ACCC brings action against Apple

The ACCC has sued Apple for false, misleading or deceptive representations about consumers' rights under the ACL. Apple allegedly represented to consumers with faulty products that they were not entitled to a free remedy if their Apple device had previously been repaired by third party, 'unauthorised' repairers. The ACCC says the fact a consumer obtained repairs from a third party does not, by itself, extinguish a consumer’s right to a remedy for non-compliance with the consumer guarantees under the ACL.

The ACCC is seeking pecuniary penalties, compliance program orders, injunctions, declarations, corrective notices, and costs.

Misleading and unconscionable conduct: ACCC institutes proceedings against Murray Goulburn

The ACCC has brought proceedings against Murray Goulburn in relation to representations the milk processor made to farmers. The representations concerned the farmgate milk prices Murray Goulburn expected to pay farmers during the 2015-16 financial year.

The ACCC alleges:

  • Murray Goulburn misled farmers by representing it had a reasonable basis for setting and maintaining its forecast milk prices for the 2015-16 financial year; and
  • Murray Goulburn's conduct towards the farmers was unconscionable, including because Murray Goulburn knew its forecasts were overstated and unachievable and knew that farmers were making decisions in reliance on these forecasts.

The ACCC is not seeking a pecuniary penalty against the company because the ACCC is concerned that any penalty imposed could directly impact on the affected farmers. However, the ACCC is seeking penalties and disqualification orders against the company's former MD and CFO.

The ACCC is continuing its broader inquiry into the competitiveness, trading practices and transparency of the Australian dairy industry.

Anti-competitive conduct: ACCC alleges private hospital misused market power

The ACCC alleges Ramsay Health Care misused market power and engaged in exclusive dealing in its dealings with surgeons at its Coffs Harbour private health care facilities.

According to the ACCC, Ramsay operates the only private hospital and day surgery facilities in the Coffs Harbour region. The ACCC claims Ramsay sought to prevent a group of Coffs Harbour surgeons opening a competing private day surgery by threatening those surgeons with substantially reduced or withdrawn access to Ramsay's operating theatres.

Cartels: Yazaki incurs penalties for engaging in collusive conduct

The Federal Court has imposed penalties totalling $9.5 million on Japanese company Yazaki for engaging in cartel conduct in the supply of wire harnesses to Toyota in Australia.

In 2015, the court held that Yazaki had coordinated with a competitor quotes to Toyota for the supply of wire harnesses used in the manufacture of Toyota Camrys in Australia. Read our summary of the significance of the decision against Yazaki for international companies and the extraterritorial reach of Australia's competition laws here.

In determining the penalty amounts, the court took into account the seriousness of Yazaki's conduct, referring to it as 'deliberate, sophisticated and devious'. The court also rejected Yazaki's submission that the contravening conduct had a limited connection to Australia. Rather, the court noted that Yazaki's conduct affected 'substantial financial transactions between substantial corporations in Australia, one of which provided goods to members of the Australian public'.

Yazaki was also required to pay 85 per cent of the ACCC's costs of the proceeding.

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