3 April 2019
In Touch looks at what's been happening in the Australian competition, consumer and regulatory world, 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 and, as always, feel free to get in touch with our team.
- Electricity industry developments – Senate Committee gives green light to energy divestment bill and ACCC issues first electricity monitoring report
- Consumer Data Right draft rules released
- ACCC finds competition still a trademark of IP service markets
- ACCC opens Pandora's box on consumer guarantees
- ACCC proceeding against Click Energy sparks fine
- ACCC books STA Travel for representations with baggage
Electricity industry developments – Senate Committee gives green light to energy divestment bill and ACCC issues first electricity monitoring report
The Senate Economics Legislation Committee has released its report into the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018 (Cth), commonly referred to as the 'big stick divestment bill'.
The Bill forms part of the Federal Government's response to the ACCC's 2018 Retail Electricity Pricing Inquiry, and would amend the Competition and Consumer Act 2010 (Cth) to prohibit certain conduct in the electricity retail, contract and wholesale markets, while also providing a suite of remedies that the ACCC could seek if a corporation were to engage in such conduct. The most serious, and controversial, remedy would allow the ACCC to apply to the Federal Court for an order that a corporation divest certain assets that form part of its electricity business.
Many industry participants have raised concerns about the Bill, particularly in relation to the clarity of the prohibited conduct provisions and the appropriateness of the court-ordered divestiture remedy.
The Bill does not have bipartisan support, and, in December 2018, the Government abandoned efforts to pass it until after the upcoming election.
On 29 March 2019, the ACCC issued its first report in relation to the new electricity monitoring inquiry, with future reports to be published at least every six months. The inquiry will see the ACCC monitor the behaviour of industry participants, as well as the implementation of the 56 recommendations it made in its June 2018 Final Report into Retail Electricity Pricing.
The ACCC's first report notes that there have not been any significant changes in market conditions since the June 2018 report was released. It also notes that it is still difficult for consumers to ascertain what the best electricity deal is, with large discounts being offered on some plans that have higher rates than other plans. However, the ACCC welcomed the adoption by the Government of recommendations for a default offer, common reference bill and reforms to conditional discounts as a means to reduce prices for consumers.
The ACCC remains plugged into the electricity market and we await its next report, likely to be released in late September 2019.
The ACCC has published the draft rules for the Consumer Data Right (the CDR) for consultation. The release of the draft rules follows extensive consultation conducted on the draft rules framework in late 2018. The CDR aims to make it easier for consumers to obtain access to their data and transfer that data to service providers chosen by the consumer. The first sector in which the CDR is to be rolled out is the banking sector, followed by the energy and telecommunications sectors. Ultimately, the CDR is intended to be rolled out across the economy on a sector-by-sector basis.
The draft rules set out the details of how the CDR will be implemented. They govern how data requests may be made, the obligations of data holders, safeguards around the disclosure of data, the criteria for and method of accreditation for participants in the CDR regime, and the development of technical and security standards for data transfer. The ACCC has indicated that it does not intend to address all potential issues in the first version of the rules, but instead seeks to make rules on matters essential to the commencement of the CDR in the banking sector. The ACCC is still considering a number of outstanding issues, including which rules will be accompanied by a civil penalty.
The ACCC assessed the bids individually, but arrived at the same conclusion for each. It gave the most attention to the market for supply of patent services to corporate customers, as only IP firms of a certain size are capable of handling the volume and complexity of patent filings for such customers. If IPH acquired Xenith, the new IPH-Xenith entity would have a 40 per cent share of the market, while a QANTM-Xenith entity would have 30 per cent.
The ACCC ultimately found that a merged entity would still face sufficient competition from alternative large and medium suppliers in this market, including the unsuccessful bidder.
Jewellery retailer Pandora has provided a court enforceable undertaking to the ACCC to review its consumer rights policies and staff training, having acknowledged that it was likely to have contravened the Australian Consumer Law (the ACL) by making misleading representations to consumers about their consumer guarantee rights.
According to complaints received by the ACCC, staff at Pandora told customers that it did not provide refunds for faulty products and/or that its warranty system overrode consumer guarantee protections under the ACL. Pandora's website also failed to properly inform consumers as to their rights in relation to warranties against defects, and did not include the required mandatory text stating that 'consumers are entitled to a replacement or repair, and in some cases refund, if their goods are faulty' (which must be included when providing a warranty against defects).
Pandora is one of six companies in the past six months that have entered into enforceable undertakings with the ACCC for potentially misleading customers about their consumer guarantee rights and ability to obtain refunds.
The Federal Court has made consent orders requiring Click Energy to pay a penalty of $900,000 for false or misleading conduct for several representations made between October 2017 and March 2018.
Click Energy represented to consumers that they could get discounts of between 7 and 29 per cent by paying their bills on time. The representations were misleading because they were calculated by reference to Click Energy's market offer rates, which were higher than its standing offer rates that were available to all consumers. Click Energy also misled consumers by claiming that they could save between $84 and $946 if they switched to Click Energy from another provider. However, those savings were not, in fact, related to switching providers but, rather, reflected savings that an existing Click Energy customer would get if they paid their bill on time. Further, Click Energy did not disclose that discounts given to customers who paid their bills on time were subject to conditions. Those conditions included that the discount would only be applied as a credit on a subsequent bill and that there was no benefit for paying a final bill on time.
In addition to the pecuniary penalty, the orders require Click Energy to send corrective notices to affected customers, implement a consumer law compliance program and pay $50,000 towards the ACCC costs.
The ACCC has instituted proceedings in the Federal Court against STA Travel, alleging that it has engaged in misleading or deceptive conduct in relation to its MultiFLEX Pass.
STA Travel's MultiFLEX Pass is marketed as an add-on product that allows customers to change the date of their flight after purchase without paying any fees or charges. MultiFLEX Passes are sold at different levels that allow one, three or unlimited changes for $49, $99 or $149 respectively. It is claimed that STA Travel nonetheless charged customers commissions and other fees for date changes, on top of the difference in airfare costs.
The ACCC has also alleged that the sale of MultiFLEX Passes has generated $12 million revenue since 2011, and that additional commissions and fees totalled more than $1 million.
- Jacqueline DownesPartner, Practice Group 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
- Felicity McMahonManaging Associate,
Ph: +61 2 9230 5242
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