16 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.
- The ACCC Chair goes down to the wire on Australia's 5G rollout
- Nine Entertainment/Fairfax Media merger receives green light from the ACCC
- Hearing aid advertisements mislead pensioners
- Ugg boot retailer fined for alleged false country of origin representations
- Scams awareness initiative introduced to protect Indigenous communities
- Captain Cook College pursued for systemic unconscionable conduct
On 30 October 2018, ACCC Chair Rod Sims gave a speech on competition issues and the 5G spectrum. 5G is the next generation mobile technology designed to increase the speed and responsiveness of wireless networks, and commercial deployment of 5G networks may occur in FY 2019/2020.
In his address, Mr Sims emphasised the importance of creating a competitive environment to drive investment in the Australian mobile market.
According to Mr Sims, as population density increases in urban areas, it is plausible that requests by operators to share networks will also increase. He warned that while network-sharing would likely result in some competition benefits (eg reducing maintenance costs and, hence, barriers to entry), there are also challenges (eg difficulties in differentiating services for consumers). The ACCC will scrutinise requests to share networks, he said.
In relation to the allocation of spectrum space, Mr Sims spoke about the upcoming auction for frequency bands on the 5G spectrum, which will commence in late November 2018. He highlighted the importance of promoting competition in downstream markets that rely on spectrum, rather than just competition in spectrum allocation.
On 8 November 2018, the ACCC announced that it would not oppose the merger between Nine Entertainment and Fairfax Media.
After considering more than 1000 submissions, the ACCC concluded that the merger was not likely to substantially lessen competition in any market. In its analysis, the regulator was particularly concerned with the likely impact of the merger on the creation and provision of Australian news content (current affairs and investigative journalism). These effects were considered on a national basis, as well as in relation to regional news.
The competition regulator identified limited overlaps between the media companies' news operations, since Nine's television programs target a mass market audience, and Fairfax's publications provide more in-depth coverage aimed at subscription audiences. While the parties both provide online news services, the ACCC found that new entrants (including The Guardian, The Daily Mail and BuzzFeed) would be likely to constrain the merged entity.
The ACCC also considered the likely effects of the merger in relation to the supply of advertising opportunities, the creation and provision of non-news content, and the acquisition of content. The regulator was satisfied that the merged entity would continue to face competition in these areas. In particular, the ACCC Chair, Rod Sims, noted that advertising revenues have been shifting to online media and that Fairfax's revenues have halved in the last five years.
Oticon Australia Pty Ltd and Sonic Innovations Pty Ltd have admitted that their newspaper advertisements for hearing aids offered to pensioners under the Australian Government Hearing Services Program contained three false and misleading or deceptive representations. The advertisements represented that:
- pensioners had to book free hearing tests at a hearing clinic by a certain deadline to obtain a free hearing aid (when there was no such deadline under the Australian Government Hearing Services Program);
- the hearing aids came with wireless technology that allowed users to connect their hearing aids to their televisions, mobiles or other digital devices at no extra cost (when, in fact, this cost extra); and
- users of the free hearing aids would no longer miss any conversations, when this was dependent on a person's individual circumstances and the nature of their hearing impairment.
The Federal Court ordered Oticon and Sonic to pay penalties of $2.5 million in total. The retailers were also ordered to offer refunds for certain accessories sold to customers with their free hearing devices during a specified period of time. ACCC Commissioner Sarah Court said that the conduct was 'unacceptable particularly because it targeted vulnerable pensioners'.
The case reflects the ACCC's compliance and enforcement priorities, one of which is conduct that affects vulnerable and disadvantaged consumers.
Ozwear Connection has paid penalties of $25,200 for alleged false country of origin representations made regarding its 'Classic Ugg' footwear range. The ACCC issued Ozwear with two infringement notices after it claimed on its website that its 'Classic Ugg' range was made using 'the best materials in Australia' and that Ozwear was '100% Aussie owned'. At certain times, the footwear range also marketed its products with an Australia-shaped green and gold tag, which stated 'this exclusive premium label is uniquely Australian owned brand for authentic Australian Ugg boots'. The ACCC was of the view that these representations created the false impression that the 'Classic Ugg' range was made in Australia. In fact, the 'Classic Ugg' range was manufactured in China. The ACCC warned that misleading claims or representations about a product's country of origin would continue to attract its scrutiny and enforcement action.
The ACCC has launched a new initiative called 'Too good to be true' aimed at helping Indigenous communities identify and avoid scams. The awareness campaign was prompted by a rise in scams targeting Indigenous communities, and the National Indigenous Consumer Strategy (NICS) will oversee the campaign. Members of the NICS include the ACCC, ASIC, state consumer affairs agencies and the Indigenous Consumer Assistance Network. In 2018 alone, there have been more than 1800 reports of scams reported to the ACCC's Scamwatch website from people identifying as Indigenous, and losses of almost $3 million. The most commonly reported scams against vulnerable Australians include phishing, unexpected prize and lottery scams and identity theft. The ACCC currently offers free ‘do-not-knock’ stickers and signs to help limit scams conducted through door-to-door salespersons. This new initiative expands the ACCC's approach and seeks to improve awareness of consumer rights within Aboriginal communities.
The ACCC has commenced proceedings against Captain Cook College for systemic unconscionable conduct, following seven other actions the regulator has brought against other VET-FEE HELP providers. The conduct in issue relates to the removal of consumer safeguards from the college's online enrolment and withdrawal processes, in an attempt to increase payments received from the Commonwealth. The ACCC estimates that there are approximately 5500 affected consumers, with a VET FEE-HELP debt totalling more than $60 million. Approximately 98 per cent of those 5500 consumers have failed to complete the course they were enrolled in, and around 86 per cent have never even logged into their online course. The ACCC is seeking a range of remedies, including orders requiring the implementation of a consumer law compliance program, and orders disqualifying the former CEO and COO from managing corporations. The proceedings against Captain Cook College serve as a reminder that the ACCC will respond to allegations of systemic unconscionable conduct, and pursue remedies against both corporations and individuals for breaches of the Australian Consumer Law.
The proceedings follow a Full Court of the Federal Court of Australia decision that overturned a first instance finding of systemic unconscionability by Unique International College. In that decision, the Full Court provided guidance on the types of evidence that need to be adduced to prove a system of unconscionable conduct. Read more in our Focus: Federal Court reverses systemic unconscionability finding against vocational education provider.
- 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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