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.
- Roofing distributors hit with $5.5 million in exclusive dealing penalties
- TripAdvisor reviews cost Meriton $3 million
- Productivity Commission's Final Report into Competition in the Australian Financial System
- New 'Consumer Guarantee Direction' power for NSW Fair Trading
- Criminal charges laid against CFMMEU and official
- First 'excessive surcharge' proceedings commenced
The Federal Court has declared by consent that two of Australia's largest distributors of polycarbonate roofing engaged in exclusive dealing. The court ordered a $3.5 million penalty against Palram Australia, and a $2 million penalty against Ampelite Australia.
Around 2009, Oakmoore Pty Ltd (trading as EGR) commenced manufacturing polycarbonate roofing. The ACCC alleges that EGR threatened to supply this product directly to retail stores, in competition with Palram and Ampelite. Palram and Ampelite both admitted that:
- they reached separate agreements with EGR to acquire polycarbonate roofing from it on the condition that EGR did not supply the product directly to retail stores; and
- this conduct had the purpose of substantially lessening competition in the market.
In addition to the $5.5 million in penalties, the court ordered contributions towards the ACCC's costs, and that both companies establish compliance programs. Orders were also made against two individuals for being knowingly concerned in the conduct, including a $100,000 financial penalty for an Ampelite director, and a Palram director was disqualified from managing a corporation for three years.
Proceedings against EGR and its managing director are ongoing, with a hearing before the Federal Court scheduled for September.
The Federal Court has ordered Meriton to pay $3 million in penalties after it was found to have engaged in misleading or deceptive conduct in November 2017. The ACCC had submitted that a penalty of $20 million should be imposed, but the court noted that this was premised on there having been a larger number of contraventions than were found.
As we discussed in In Touch November 2017, Meriton was found to have manipulated the 'Review Express' service offered by TripAdvisor to minimise the number of negative reviews about its serviced apartments. Meriton staff were directed to 'mask' the email addresses of customers who they suspected would give negative reviews, to prevent the customer from receiving an email prompt to give a review on TripAdvisor.
The court noted the importance of corporations complying with the Australian Consumer Law when engaging with the internet or online sites, because so many consumers use these sources to gather information about products and services.
The Productivity Commission has released its Final Report into Competition in the Australian Financial System. The Commission found that the major banks, as a group, hold substantial market power and that the existing regulatory settings contribute to their structural advantages. It also found that banks exhibit substantial pricing power, and are able to pass on cost increases and set prices that maintain high levels of profitability, while losing minimal market share.
The Commission has made a number of recommendations, including:
- naming the ACCC as its preferred 'competition champion', to be tasked with promoting competition in the financial system. The ACCC would conduct a competition assessment of a proposed regulatory intervention and discuss it at a Council of Financial Regulators meeting before the intervention design is finalised. This would mean that the competition implications of interventions are considered before financial regulators make their decisions;
- in the context of home loans, reforming broker remuneration structures by banning trail commissions and imposing a best interest obligation on licensees that provide credit or credit services;
- banning card payment interchange fees; and
- increasing transparency within general insurance, including in insurance renewal notices.
The Report also noted that the introduction of the Consumer Data Right in the financial sector (ie Open Banking) would begin to reduce barriers to switching.
A Bill has passed through the NSW Parliament that will allow the state's Commissioner of Fair Trading to issue a 'consumer guarantee direction' against businesses for failing to comply with consumer guarantees.1 Under the new legislation, the Commissioner will have the power to direct a business to repair or replace a good, or provide a refund, in response to a consumer complaint involving low-cost goods (between $25 and $3000) within six months of purchase. Motor vehicles, motor vehicle component parts, solar batteries and second-hand goods are some of the goods excluded.
In order to make a direction, the Commissioner would need to be satisfied that:
- the business has failed to comply with a guarantee under sections 54–57 of the ACL; and
- it is 'fair and reasonable in all the circumstances' to make such a direction.
It is not yet clear what evidence a consumer will need in order to satisfy the Commissioner that a direction should be made, or if a direction will only be available if there is a 'major failure' to comply with a consumer guarantee. The reforms are intended to provide consumers with a lower-cost alternative to enforcing the consumer guarantees in a court or tribunal.
The Bill is awaiting assent, with a commencement date to be proclaimed, although the Government's announcement indicated it would be 1 January 2019.
Criminal charges have been laid against the Construction, Forestry, Maritime, Mining and Energy Union (the CFMMEU) and a CFMMEU official in relation to alleged cartel conduct. The charges include attempting to induce suppliers of steelfixing services and scaffolding services to reach cartel agreements. Steelfixing services involve installing and fixing reinforcement steel on construction sites. The charges relate to services provided to builders in the Australian Capital Territory in 2012–13.
The Commonwealth Director of Public Prosecutions is prosecuting the charges, with the first mention scheduled for 27 September 2018 in the ACT Magistrates Court.
The ACCC has instituted Federal Court proceedings against CLA Trading Pty Ltd (trading as Europcar) for allegedly imposing excessive payment surcharges on customers who purchased car rental services. This is the first court proceeding the ACCC has commenced under the new prohibition, which requires that card payment surcharges be no more than the amount it costs a business to process that payment type.
The ACCC is paying close attention to businesses that overcharge customers paying by credit or debit card. This proceeding follows infringement notices issued against Red Balloon Pty Ltd and Cruisin Motorhomes Pty Ltd, which were fined $43,200 and $12,600, respectively.
For more information, see our recent Client Update: ACCC brings first 'excessive surcharge' proceedings and our detailed discussion of the excessive surcharge regime introduced in 2016.
- Fair Trading Legislation Amendment (Consumer Guarantee Directions) Bill 2018 (NSW).
- Jacqueline DownesPartner, Practice Leader, Competition, Consumer & Regulatory,
Ph: +61 2 9230 4850
- Fiona CrosbieChairman,
Ph: +61 2 9230 4383
- Carolyn OddiePartner,
Ph: +61 2 9230 4203
- Kon StelliosPartner,
Ph: +61 2 9230 4897
- Ted HillPartner,
Ph: +61 3 9613 8588
- John HedgePartner,
Ph: +61 7 3334 3171
- Rosannah HealyPartner,
Ph: +61 3 9613 8421
- Robert WalkerPartner,
Ph: +61 3 9613 8879
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