11 February 2019
In Touch looks at what's been happening in Competition, 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, get in touch.
- ACCC releases Consumer Data Right Rules Outline
- Thales-Gemalto acquisition advances with ACCC's support
- ACM collects order of $750,000 in penalties for misleading, harassing and coercing consumers
- Court imposes an 'Ultra' penalty on franchisor
- 'Lifetime' GPS navigation advertisements mislead consumers
- Another big ACL penalty – Optus fined $10 million
In late December, the ACCC released the Rules Outline for the new Consumer Data Right (the CDR). The Rules Outline sets out the ACCC's position on what should be included in the rules governing the CDR. It provides guidance to stakeholders, including designated data holders, potential data recipients and consumers, on what the rules will require of CDR participants. In developing the Rules Outline, the ACCC worked closely with Data61 to respond to stakeholder submissions on the CDR Rules Framework.
The Rules will be a key determinant of the data-sharing obligations in the sectors to which the CDR will apply (initially the banking sector, followed by the energy and telecommunications sectors). The ACCC has confirmed it will publish draft Rules for consultation in the first quarter of 2019, and will release final CDR Rules when the CDR Bill, which is expected to be introduced into Parliament this year, becomes law.
The ACCC announced that it would not oppose Thales S.A.'s proposed acquisition of Gemalto N.V., after accepting a court-enforceable divesture undertaking from Thales.
Both companies supply data security products, including enterprise encryption software and hardware security modules (HSM), in Australia. Of particular concern to the ACCC was the fact that Thales and Gemalto are each other's closest competitors in the supply of general purpose (GP) HSMs.
Following the ACCC's investigation into the HSM markets, the regulator expressed concerns that the acquisition would remove Gemalto as Thales's strongest competitor and may substantially lessen competition. To remedy the ACCC's concerns, Thales provided a court-enforceable undertaking to sell its global GP HSM business to an ACCC-approved purchaser. The undertaking is linked to the commitment Thales made to the European Commission to secure merger clearance from Brussels.
One of Australia's largest debt collection firms, ACM Group Ltd, has been ordered to pay $750,000 in penalties for its misleading, harassing, coercive and unconscionable pursuit of unpaid debts from two vulnerable consumers. The ACCC and ASIC are both responsible for consumer protection in the debt collection industry. ASIC delegated its powers to the ACCC to pursue this action.
The ACCC brought proceedings against ACM in the Federal Court on behalf of the two consumers: a care facility resident who had difficulty communicating after suffering multiple strokes, and a single parent with little income. The conduct in question involved making empty threats to litigate against both customers, despite ACM knowing that the customers had no means, or only limited means, to repay.
The ACCC had sought penalties in the amount of $1.1 million (the maximum available at the time) and around $550,000 for ACM's conduct towards the first and second customer respectively, reflecting the seriousness and severity of this conduct.
The Federal Court has imposed a $2.6 million penalty against Ultra Tune Australia Pty Ltd for breaching the Franchising Code of Conduct and the Australian Consumer Law.
Under the Code, Ultra Tune breached its obligation to act in good faith in its dealings with franchisees, and failed to prepare sufficiently detailed marketing fund statements in required timeframes. It also failed to provide these statements and audit reports to franchisees.
The franchisor also breached the ACL by making false and misleading representations to a prospective franchisee in relation to price, ongoing rent, age of the franchise and a non-refundable $33,000 deposit.
In handing down the judgment, Justice Bromwich noted Ultra Tune's attempts to mislead the ACCC and the court by relying on evidence of documents purportedly sent to the prospective franchisee.
Following the ACCC's suggestion that claims of 'lifetime' services by three manufacturers of GPS navigation products were potentially false, misleading or deceptive, TomTom ANZ Pty Ltd, MiTac Australia Pty Ltd and Garmin Australasia Pty Ltd have agreed to exclude such claims from the advertising of their products in future. This includes their marketing on websites, packaging and point-of-sale and in catalogues.
Concerns arose after the three manufacturers made claims regarding the 'lifetime' period of their products but retained the ability to unilaterally terminate a consumer's service in certain circumstances. The ACCC considered that these limitations were not appropriately communicated to consumers and were inconsistent with what consumers would understand 'lifetime' to mean.
In raising its concerns about these clauses, the ACCC emphasised that businesses must not use fine print or 'ill-defined, broad terms' to engage in misleading and deceptive conduct.
The ACCC's push for higher consumer law penalties has continued, with one of Australia's largest telecommunications providers being hit with a $10 million penalty for misleading customers over digital purchases. This action follows proceedings brought by the ACCC against Telstra for similar conduct. Telstra was also ordered to pay $10 million.
The conduct concerned Optus's third-party 'direct carrier billing' (DCB) service. Launched in 2012, the DCB service was a default setting on many customers' accounts, allowing them to purchase games, ringtones and other digital content. Optus earned commissions worth around $65.8 million through the service, with Optus customers spending about $195 million through it.
In October 2018, the ACCC commenced proceedings against Optus for making false or misleading representations. Optus admitted to misleading consumers by billing them for third party-produced content they mistakenly bought or subscribed to through the DCB service. Optus's conduct included not properly informing customers that the DCB service was a default setting on their accounts, and that they would be billed directly by Optus for any content purchased (even if customers did not realise they had made a purchase).
- 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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