1 November 2018
In Touch looks at what's been happening in Competition this fortnight, 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.
- Optus admits to misleading customers over Direct Carrier Billing
- Huge penalties and high merger clearance rates in FY2017-18
- Going once, twice… three infringement notices for excessive payment surcharges
- Pfizer successful once again
- Record $46 million penalty for Yazaki stands
- Green light for Cabcharge's acquisition of MTI
Optus has admitted to making false or misleading representations to consumers in contravention of the ASIC Act 2001 in relation to its 'Direct Carrier Billing' service. Optus has agreed to apply jointly with the ACCC to the Federal Court for declarations and an order that Optus pay a penalty of $10 million. The Direct Carrier Billing service allowed Optus customers to buy digital content such as ringtones, games and other content from third-party developers. Users were not required to enter payment details to verify their identity, meaning that customers were often unknowingly subscribing to expensive and unwanted content. Optus admitted that it:
- was aware from at least 2014 that customers were being billed for content that they did not want and had not agreed to purchase; and
- did not adequately inform customers that the Direct Carrier Billing service was a default account setting.
Optus has committed to compensating customers who were misled, with $31 million already refunded by Optus and third parties to approximately 240,000 Optus customers. Optus also agreed to cease offering its Direct Carrier Billing service. This proceeding comes after Telstra was ordered to pay $10 million in April 2018 for similar conduct in relation to its Premium Direct Billing service.
The ACCC has published its 2017-2018 Annual Report. The Report shows that the ACCC secured nearly $170 million in penalties in the 2017-2018 financial year, comprising around $120.1 million from competition law matters and $48.7 million from consumer law matters.
On merger control, the ACCC reported that around 90% of the 281 mergers it assessed were finalised during the pre-assessment stage, with 29 mergers progressing to public or confidential review. Of these 29 mergers:
- the ACCC cleared 17 unconditionally;
- the ACCC cleared one merger subject to a court enforceable undertaking;
- the ACCC opposed two mergers (one public, one confidential);
- seven merger reviews were discontinued or withdrawn; and
- two mergers involved the ACCC reviewing a request to vary an existing undertaking.
The Report also illustrates the increasing use of market studies and inquiries, with eight market studies and inquiries completed or progressed in the 2017-2018 financial year. This trend is likely to continue, with the ACCC announcing so far this financial year the commencement of a market study into the wine grape industry and an inquiry into foreign currency conversion services.
Lloyds Auctioneers and Valuers Pty Ltd has paid $37,800 in penalties after being issued three infringement notices by the ACCC for alleged excessive payment surcharge breaches. Lloyds Auctioneers conducts online and traditional auctions across a broad range of product categories.
The ACCC alleged that customers of Lloyds Auctioneers were incurring surcharges significantly above the cost of processing their payments. Customers were paying a 2.25% surcharge when making credit or debit card payments online for their purchases, which was up to 1.43% higher than the cost to Lloyds Auctioneers for processing these payments. The high value of some auction items meant that customers were sometimes paying hundreds of dollars more in surcharges than the cost to Lloyds Auctioneers for processing those payments.
This is the fifth time the ACCC has brought enforcement action against a trader for imposing excessive payment surcharges since the ban was introduced in September 2016 for large businesses and September 2017 for all other businesses.
The High Court has refused the ACCC special leave to appeal the decision of the Full Federal Court in ACCC v Pfizer. The ACCC alleged that Pfizer had misused its market power and engaged in exclusive dealing that had the purpose of substantially lessening competition. Pfizer was successful at first instance and again on appeal to the Full Federal Court.
The ACCC sought special leave to appeal the Full Federal Court's decision in the High Court. Special leave was refused, meaning that the decision of the Full Federal Court stands. In essence, the case turned on Pfizer's purpose, with all courts agreeing that Pfizer did not have a purpose of deterring or preventing competitive conduct.
Allens acted for Pfizer.
The High Court has refused Yazaki Corporation's application for special leave. Yazaki Corporation sought special leave to appeal the Full Federal Court's decision to increase the penalty imposed on it for engaging in cartel conduct to $46 million.
In 2015, Yazaki was found to have engaged in cartel conduct in connection with a tender issued by Toyota Motor Corporation for the supply of wire harnesses to be used in manufacturing Toyota Camrys. The Federal Court ordered that Yazaki pay a penalty of $9.5 million. Following an appeal by the ACCC, the Full Federal Court increased the penalty to $46 million. The refusal of special leave means that the $46 million penalty now stands, and it remains the highest penalty imposed for contraventions of the Competition and Consumer Act 2010.
The ACCC will not oppose Cabcharge Australia Ltd's proposed acquisition of Mobile Technologies International Pty Ltd. Cabcharge owns and operates taxi networks and provides taxi payment processing services, but does not have its own taxi dispatch system. MTI is the largest provider of taxi dispatch systems to taxi networks in Australia. The ACCC found that there was no horizontal overlap between Cabcharge and MTI.
The ACCC considered whether Cabcharge would have the ability or incentive to foreclose rival taxi networks, but found that there were alternative suppliers of taxi dispatch systems in Australia that would allow customers to switch. The ACCC considered whether Cabcharge would have the ability or incentive to access and use the data of its competitors, but found that the data would not give Cabcharge a competitive advantage or substantially lessen competition. The ACCC also considered whether the acquisition would allow Cabcharge to foreclose rival taxi dispatch systems and payment systems, by bundling the supply of the dispatch system with its payment terminal. The ACCC considered that this was unlikely because doing so would risk Cabcharge degrading its payment-processing business and because drivers often had multiple payment terminals in their vehicles.
- 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
- 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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