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Competition, Consumer & Regulatory

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In touch
 

Competition news

May 2018

 
Jacqueline Downes

Jacqueline Downes
Partner, Practice Leader, Competition
+61 2 9230 4850
Email Jacqueline

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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.

Court rejects ACCC allegations against Pfizer

On 25 May 2018, the Full Federal Court found against the ACCC and in favour of Pfizer.

Pfizer, in 2011, established a supply model that involved supplying community pharmacies directly, in lieu of doing so through wholesalers. Pfizer made offers to community pharmacies as to the terms on which it would supply Lipitor and its generic version, 'Atorvastatin Pfizer', on expiry of the atorvastatin patent. This offer, among other things, tied rebates to the quantity of these products purchased by the pharmacy.

The ACCC alleged that Pfizer used its market power for an anti-competitive purpose (section 46) and engaged in exclusive dealing conduct for the purpose of substantially lessening competition in the atorvastatin market (s47).

The case turned on the question of Pfizer's purpose. The trial judge found that Pfizer's purpose in seeking to ensure a significant number of community pharmacies took up its offers was to allow it to compete in the atorvastatin market post patent expiry. In essence, the trial judge found that Pfizer was seeking to protect its own commercial position. The Full Federal Court agreed.

Allens acted for Pfizer at trial and on appeal.

Federal Government's support for increased data access

On 1 May 2018, the Federal Government released its response to the Productivity Commission's report on Data Availability and Use.

The response confirmed the Government's commitment to adopting a systems-wide approach to implementing an open data agenda.

Access to data by consumers and new entrants is an area of focus for the ACCC, and for competition and consumer law regulators globally. Data access is seen as a means of increasing competition, by empowering consumers to make informed choices, and by giving incumbent competitors and new entrants the opportunity to develop new products and services.

The key elements of the Federal Government's response are:

  • the introduction of a Consumer Data Right, which will allow consumers to access data (including transaction, usage, and product data), so that they can direct the transfer of that data from one business to another;
  • the establishment of the position of National Data Commissioner, who will oversee a data sharing and release framework; and
  • the creation of a new legislative framework and governance arrangements to support data use across the economy.

Please see our Focus: Federal Government's bold vision for data availability and use for our detailed discussion of the Government's response.

Optus fined $1.5 million for NBN-related representations

On 23 May 2018, the Federal Court ordered Optus to pay a penalty of $1.5 million for making misleading representations to around 14,000 customers. The representations related to customers' transition from Optus' HFC Network to the National Broadband Network, specifically that:

  • Optus had the right to cancel customers' services if they did not move to the NBN; and
  • customers would need to acquire services using the NBN from Optus in order to receive home telephone and internet services.

The court also ordered that Optus implement an upgraded complaints handling system for consumer law complaints for three years.

Since the ACCC commenced its investigation, Optus has paid $833,000 in compensation to affected customers.

Record penalty imposed

On 16 May 2018, the Full Federal Court ordered Japanese company Yazaki to pay $46 million for attempted cartel conduct in connection with a tender for the supply of wire harnesses used in manufacturing of Toyota Camrys. This is the highest penalty ever handed down for a contravention of the Competition and Consumer Act 2010 (Cth). The penalty was an increase from the original $9.5 million imposed on Yazaki by the trial judge.

The Full Federal Court found that Yazaki and its Australian subsidiary had taken five steps in reaching a cartel agreement and giving effect to it. Each of the five steps was treated as a separate contravention giving rise to a penalty, assessed between $8 million and $14 million for each contravention. In determining the appropriate penalty, the Full Federal Court sought to achieve general and specific deterrence.

Please see our Focus: Federal Court imposes highest penalty to date for our detailed discussion of the case.

HP undertakes to compensate consumers

On 3 May 2018, printer manufacturer HP gave a court enforceable undertaking to the ACCC to compensate customers who purchased certain HP printers. The printers in question had been installed with technology that meant non-HP ink cartridges could not be used in those printers.

When customers used a non-HP cartridge in the affected printers, the printers would reject the cartridge and display an error message indicating the cartridge had been damaged, when this was not the case. The technology was not disclosed to customers when they purchased the printers, and other customers unknowingly installed the technology by downloading a firmware update from HP.

To address the ACCC's concerns, HP will offer $50 in compensation to customers who own an affected printer and can show that they used a non-HP ink cartridge, will amend its marketing materials for printers that use the restrictive technology, and make available a firmware update that will disable the restrictive technology for all inkjet printers manufactured before 1 December 2016.

Cattle and beef market study update – ACCC reports poor progress

On 4 May 2018, the ACCC released an update report on its cattle and beef market study. It found that participants in the cattle and beef supply chain have not acted on many of the 15 recommendations made to improve transparency and efficiency in relation to processor prices, non-auction sales, pricing grids and saleyard auctions.

The ACCC noted that cattle market conditions have improved since the market study, which might explain why there has been less pressure to implement change. However, it also observed that there is a degree of resistance to the market study's recommendations among national industry bodies that represent producers' interests. The ACCC attributed as a possible cause the fact that the value of market transparency is not well understood or does not suit the interests of certain industry participants.

The ACCC will engage with the Federal and state governments to push for the implementation of the market study's recommendations.

For further information, please contact:

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