22 March 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.
- ACCC advocates for new law to ban sale of unsafe goods
- Country Care cartel case set down for hearing in Federal Court
- ACCC considers the future of regulation for natural gas in Australia
- Labor proposes to ban 'price parity clauses' on travel booking sites
- Internet provider ordered to pay $250,000 for misleading conduct
- Parliamentary Committee recommends giving ACCC powers to police franchising
ACCC Chairman Rod Sims has advocated for the Government to adopt a 'General Safety Provision', which would oblige companies to take reasonable steps to avoid supplying unsafe goods.
The ACCC has estimated the annual cost of injury and death caused by unsafe goods is at least $5 billion. The European Union, Singapore, the United Kingdom and Malaysia all have laws prohibiting the sale of unsafe products, but Australia does not have an equivalent prohibition.
Mr Sims announced the move in a speech to the National Consumer Congress, saying a General Safety Prohibition would provide consumers with greater confidence that the goods they buy are safe, as well as ensuring businesses that deliberately supply cheap but unsafe products do not derive a financial benefit.
The ACCC confirmed its intention to pursue laws on unsafe goods in its Product Safety Priorities for 2019, and said it will focus on ensuring the effectiveness of the Takata airbags recall, improving the safety of quad bikes, button batteries, products sold online and addressing consumer safety hazards associated with interconnected and smart devices. For further information in relation to the ACCC's 2019 safety focus, see Allens' publication Getting its priorities straight – ACCC's 2019 product safety priorities.
The Country Care Group Pty Ltd, its Managing Director and a former employee have all been committed to stand trial in the Federal Court of Australia on the criminal cartel charges laid against them. The charges relate to alleged collusion with competitors in 2014 for tenders to supply rehabilitation and aged care products (such as wheelchairs, walking frames, beds and mattresses), and an alleged attempt to enter a cartel agreement with a number of other healthcare equipment companies.
This is both the first case in which an Australian corporation has been the subject of criminal cartel proceedings, and the first time individuals were pursued for criminal cartel conduct. The trial has been set down for the Federal Court at a date yet to be determined.
The ACCC addressed the future of regulation for natural gas in Australia and the state of the East Coast gas market at the 7th Australian Domestic Gas Outlook Conference in Sydney.
The ACCC described the current state of the East Coast gas market as a 'crisis', urging gas suppliers to provide price relief to the manufacturing sector and calling for more investment in gas development and infrastructure to help lower gas prices in the medium to long term.
The ACCC confirmed that its focus until the end of its Gas Inquiry 2017-2020 will be on promoting transparency to reduce the opacity of pricing in the market, monitoring progress of reforms and monitoring the operation of the market, including by reviewing the costs and margins of the three largest gas retailers.
Opposition spokesman, Andrew Leigh, announced that Labor proposes to ban price parity clauses imposed on hotels by travel booking sites, and that it will direct the ACCC to investigate the use of such clauses in other industries and across other platforms.
Price parity clauses (also known as 'most favoured nation' clauses or MFNs), between hotels and travel booking sites require hotels to offer their best price through the relevant online travel booking site. Labor says it intends to follow other nations, such as Germany, Belgium and Italy, and completely ban price parity clauses in the hotel industry.
The Federal Court has ordered internet provider, Activ8me, to pay a penalty of $250,000, refund setup fees and allow affected customers to exit or switch plans at no cost, after it admitted to making a number of false or misleading representations.
Activ8me admitted that from June to November 2018 it made a number of false or misleading claims in respect of the price, inclusion of 'unlimited' data, speed, set-up fees and total minimum costs of various packages for its internet services.
In addition to paying a financial penalty for its 'blatantly wrong' conduct, Activ8me was ordered to issue corrective notices to each affected customer and implement a compliance program.
The Parliamentary Joint Committee on Corporations and Financial Services has completed its inquiry into the operation and effectiveness of the Franchising Code of Conduct. The Committee's report sets out 71 wide-ranging recommendations, including calling for civil pecuniary penalties and infringement notices for breaches of the Franchising Code, recommending that the unfair contract terms regime should apply to all franchise agreements, recommending increased disclosure of supply arrangements and pricing for franchisors and advocating for more options for dispute resolution.
The Committee also made a number of recommendations in relation to the ACCC, calling for it to be given an intervention power to identify and take action in relation to the marketing and sales activities of franchisors who have a record of systemic 'churning and burning' – whereby franchisors repeatedly sell or re-sell unprofitable stores to generate profit from upfront fees.
Other recommendations relating to the ACCC include that it develop a FranchiseSmart website along the lines of the Australian Securities and Investments Commission MoneySmart service, maintain a public register of franchise systems, and receive greater resources to police illegal unfair contract terms in the franchising sector. For further information in relation to the Committee's report, see Allens' publication Fairness in Franchising Report: what you need to know.
- 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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