Australia: Overview

In summary

This chapter provides a summary of recent developments in Australian competition law and Australian Competition and Consumer Commission (ACCC) areas of focus for 2022. It also provides an overview of the key elements of Australian competition law, including the prohibitions on cartel conduct, misuse of market power and anticompetitive vertical arrangements as well as merger clearance processes and enforcement powers.

Discussion points

• Significant personnel changes at the ACCC, with new appointments in ACCC chair and commissioner roles commencing in March 2022
• ACCC advocacy regarding proposed reforms to the CCA’s merger provisions and review process that would make it more difficult for companies to obtain merger clearance
• A continuation of the ACCC’s firm stance on enforcing criminal cartel conduct provisions in the CCA, with a number of high-profile cases either under way or completed throughout the year
• An ongoing focus on digital markets
• Increased enforcement action in relation to vertical arrangements

Referenced in this article

• Australian Competition and Consumer Commission (ACCC)
• Competition and Consumer Act 2010 (Cth) (CCA)
• Federal Court of Australia
• Australian Competition Tribunal
• Commonwealth Director of Public Prosecutions (CDPP)
• Australian Federal Police (AFP)

Areas of focus in 2022

On 3 March 2022, the ACCC announced its enforcement priorities for the upcoming year.

With the covid-19 pandemic continuing to impact the Australian economy, the ACCC will place an emphasis on competition issues in global and domestic supply chains disrupted by the pandemic. This will involve cooperation with the ACCC’s counterpart competition authorities in the United States, United Kingdom, Canada and New Zealand to detect any attempts by businesses to use covid-19 conditions as a veil for cartel conduct. Consumer issues related to covid-19, including pricing practices in relation to the supply of rapid antigen tests, will also be a priority.

The ACCC will also focus on exclusive vertical arrangements by firms with market power that impact competition, in particular firms restricting access to bottleneck goods or services and thereby making it more difficult for new entrants to compete, and ‘most favoured nation clauses’ that prevent competitors from offering a better deal to consumers.

Promoting competition and investigating allegations of anticompetitive conduct in the financial services sector will also be an enforcement focus for the ACCC. As part of the rapid shift from cash to other payment types, the ACCC has indicated that it will focus enforcement on issues in relation to payment services.

As expected, the ACCC will continue to focus on digital platforms in 2022, in relation to both consumer and competition issues. The ACCC is considering whether there is a need for additional regulatory tools manage potential competition issues in respect of digital platforms. For instance, as discussed further below, the ACCC is advocating for changes to the merger ‘test’ to be applied to acquisitions by certain (larger) digital platforms.

Addressing non-compliance by businesses with consumer guarantees (including by law reform) and small business protections (particularly in the agriculture and franchising sectors) will continue to be ACCC priorities in 2022.

Amendments to the CCA

Key legislative changes in 2021 in respect of competition and consumer law included:

In February 2021, the Australian government introduced the News Media Bargaining Code, which provides a framework regarding payment for the publication of news content on digital platforms.

In June 2021, amendments to the CCA that establish a mandatory scheme requiring that motor vehicle service and repair information be made available for purchase by Australian repairers at a fair market price passed Parliament. These changes adopt recommendations from the ACCC’s new car retailing industry market study, and will come into effect from 1 July 2022.

• On 1 July 2021, the government’s amendments to the monetary threshold for the definition of ‘consumer’ under the Australian Consumer Law came into effect, increasing this threshold from A$40,000 to A$100,000. This change will significantly increase the number of transactions to which relevant consumer protections will apply.
• Proposed changes to the unfair contract terms regime have also been prepared with consultation completed on exposure draft legislation. Key proposed amendments include changes to the definition of a small business for the purposes of the small business unfair contracts regime, as well as the introduction of a new prohibition on entering into a contract containing an unfair contract term.
• The ACCC has also proposed significant amendments to Australia’s merger review regime, see below.

Continued focus on digital markets

The ACCC continues to be highly active in relation to competition and consumer issues relating to digital markets.

In February 2021, and following recommendations from the 2019 Digital Platforms Inquiry, the Australian government passed legislation introducing the News Media Bargaining Code, which provides a framework regarding payment for the publication of news content on digital platforms.

In September 2021, the ACCC published the final report following the completion of its Ad Tech Market Inquiry. The report concluded that enforcement action under Australia’s existing competition laws is insufficient to address competition issues in the sector, and recommended that the ACCC be given powers to develop specific rules in response.

The ACCC continues to give further consideration to the need for broader regulatory changes to digital platforms markets as part of its ongoing 2020–2025 Digital Platform Services Inquiry. Pursuant to this Inquiry the ACCC is publishing twice-yearly interim reports, with a final report to be delivered in March 2025. Topics covered in interim reports to date include private messaging services (September 2020), competition and consumer issues associated with the distribution of mobile apps to smartphone users (March 2021) and the provision of web browsers and general search services to Australian consumers, including the effectiveness of choice screens in facilitating competition and improving consumer choice (September 2021). The next report will cover potential competition and consumer issues in the provision of general online retail marketplaces to consumers in Australia (March 2022). On 28 February 2022, the ACCC released its Discussion Paper for Updating Competition and Consumer Law for Digital Platform Services (Discussion Paper). The Discussion Paper marks the halfway point in the ACCC’s ongoing Digital Platforms Services Inquiry and comes nearly five years into its examination of competition and consumer issues in digital markets.

The Discussion Paper builds on and reflects the ACCC’s previous work in digital markets including its Digital Platforms Inquiry, Ad Tech Inquiry and several Interim Reports of its Digital Platform Services Inquiry. The rules the ACCC is considering are significant and, if enacted, will impact a range of digital markets, including search, social media, ad tech and apps.^[1]

Renewed focus on vertical arrangements

Over recent years, there has been a renewed enforcement emphasis on competition issues relating to vertical arrangements, with the ACCC commencing four RPM and exclusive dealing proceedings or other investigations across various sectors (discussed further below).

While a number of these cases are continuing to progress through the court system, this trend highlights the ACCC’s increased focus on ensuring efficiency and competition throughout the supply chain. Restrictions within a vertical supply chain can lead to higher prices, to the detriment of consumers.

ACCC personnel changes

Two significant changes to key ACCC personnel were announced in late 2021. The first of these was that Gilbert + Tobin partner Gina Cass-Gottlieb would be taking over from Rod Sims as ACCC chair from late March 2022. Rod Sims, an economist, has held the position for 11 years. Shortly prior to this, the government announced that Liza Carver of Herbert Smith Freehills had been appointed as ACCC enforcement commissioner for a five-year term, commencing 1 March 2022.

The ACCC Chairperson exercises significant influence over the direction and priorities of the ACCC. Gina Cass-Gottlieb’s appointment, following the long tenure of Rod Sims, may have a significant impact on the activities of the ACCC.

Mergers

The principal form of merger clearance in Australia is informal clearance, an administrative process whereby merger parties consult with the ACCC on whether the proposed acquisition is likely to have the effect of substantially lessening competition. The 2017 amendments to the CCA resulted in a fusion of what was an unused formal merger clearance process administered by the ACCC and a separate merger authorisation process before the Australian Competition Tribunal. Under the new regime, formal merger clearance and merger authorisation are considered in the first instance by the ACCC under a single process.

The legal prohibition

The CCA prohibits mergers and acquisitions that have the effect or likely effect of substantially lessening competition in any market in Australia.

The prohibition applies to direct and indirect acquisitions of shares or assets. Accordingly, the acquisition of a controlling interest or of a minority shareholding that does not confer control may be sufficient to attract competition law review. The ACCC Merger Guidelines encourage merger parties to notify the ACCC well in advance of completing a merger where:

• the products of the merger parties are either substitutes or complements; and
• the merged firm would have a post-merger market share of greater than 20 per cent in the relevant markets.

The ACCC does not have direct power to prevent a merger and instead must take enforcement action in the Federal Court. Where the ACCC considers that an acquisition contravenes the CCA, it can apply to the Federal Court for an injunction, divestiture orders and penalties. While uncommon, this occurred in 2021 in relation to Virtus Health’s proposed acquisition of Adora Fertility. The ACCC obtained an interim injunction in October 2021 preventing the parties from completing the proposed transaction until the Federal Court had determined the case on its merits (the transaction was ultimately abandoned by the parties prior to a hearing). Third parties, although they cannot apply for injunctions preventing a transaction, can apply for declarations and divestiture orders (including setting aside the acquisition in certain cases).

As noted above, there is no mandatory requirement to notify the ACCC about a proposed merger or acquisition. However, because of the risk that the ACCC may take enforcement action, merging parties generally seek ACCC clearance where there is a potential that the merger raises competition law concerns. Even if the ACCC is not notified, it can investigate any merger that it considers may raise competition issues.

Clearance options

Following the 2017 changes to the CCA, the two main routes for obtaining regulatory certainty or comfort in relation to a proposed merger are informal merger clearance from the ACCC or merger authorisation. In addition to these options, merger parties themselves may seek a declaration from the Federal Court that their merger does not contravene the CCA. This approach is rarely used.

Informal clearance from the ACCC

This is a form of regulatory comfort letter in which the ACCC states that it does not propose to take any action in relation to the proposed merger. Informal clearance is not legally binding on the ACCC or third parties. However, it is overwhelmingly the most popular form of clearance for merger parties.

Merger authorisation from the ACCC

Alternatively, a statute-based clearance process is available that is binding on the ACCC and third parties on the basis that either:

• the merger will not (or is not likely to) substantially lessen competition; or
• the public benefits of the merger outweigh the public detriments.

Prior to the 2017 amendments, parties could opt to pursue formal merger clearance with the ACCC or make an application to the Australian Competition Tribunal (the Tribunal) for merger authorisation on public benefit grounds. While there were a number of applications to the Tribunal for merger authorisation, due to perceived procedural challenges, the formal merger process was never used and parties continued to rely on the informal merger process.

Since November 2017, when the new merger authorisation regime was implemented, there have been three applications for merger authorisation, all of which have been successful, with one cleared unconditionally and two cleared subject to conditions.

Are decisions of the ACCC appealable?

Informal clearance

There is no right of appeal in relation to the ACCC’s decision in an informal merger clearance process. If the ACCC chooses to oppose a proposed merger, the merger parties could offer an undertaking to attempt to address the ACCC’s concerns, defend any court proceedings initiated by the ACCC or institute court proceedings themselves, seeking a declaration that the proposed acquisition does not contravene the CCA. There are few examples of court proceedings following a decision by the ACCC not to grant informal merger clearance. Most recently, on 8 May 2019, the ACCC announced it would oppose the proposed merger between TPG Telecom Limited and Vodafone Hutchison Australia Pty Ltd. Not accepting the ACCC’s clearance decision, in early 2020, the parties successfully sought a declaration in the Federal Court that the merger will not substantially lessen competition.

Authorisation

Following the amendments to the CCA, the Tribunal acts as a merits review body of ACCC authorisation decisions. Both the ACCC and the Tribunal will be subject to strict time limits for making authorisation decisions.

Timing of processes

Informal clearance

According to the ACCC’s Informal Merger Review Process Guidelines, a Phase I review typically takes approximately six to 12 weeks after an initial pre-assessment stage, during which the ACCC confidentially considers whether, based on the information provided, a public review is required. The pre-assessment process itself typically takes around two to four weeks.

If a Statement of Issues is released at the end of Phase I, the timeline will be extended to allow a Phase II review (typically for a further six to 12 weeks).

Timelines are indicative and can be suspended or extended at any stage. Parties may request that the time frame be suspended for commercial reasons, or the ACCC may suspend the time frame if it is awaiting additional information from the parties.

Authorisation

Under the merger authorisation regime, the ACCC is required to make a decision within 90 days unless the applicant agrees to an extension. If appealed, the Tribunal is required to issue its determination on an authorisation application within 90–120 days of receiving a valid application. Each time period can be extended.

Undertakings

Merger parties can provide the ACCC with a court-enforceable undertaking to implement structural, behavioural or other measures that address the competition concerns identified by the ACCC. The Merger Guidelines indicate a preference for undertakings that include structural rather than behavioural remedies.

The ACCC will ordinarily consult the market on a proposed draft undertaking. The ACCC will not accept undertakings if it is not satisfied that they address its competition concerns.

Proposed reforms

In 2021, the ACCC proposed material changes to Australia’s merger control regime. Key aspects of the reforms included the following.

Introduction of a mandatory and suspensory merger review process with limited merits review

The ACCC has proposed the introduction of a formal mandatory and suspensory merger control regime that would replace all existing clearance processes, involving:

• mandatory notification to the ACCC of any merger above certain thresholds (currently unspecified). Mergers above such thresholds will be prohibited unless clearance has been granted;
• a reversal of the onus of proof in the test for clearance, which currently requires the ACCC to find that the transaction would have, or is likely to have, an anticompetitive effect; and
• opportunity for only limited merits review of ACCC decisions by the Australian Competition Tribunal, effectively removing the option for parties to approach the Federal Court for a declaration that a transaction will not contravene the CCA.

The informal clearance ‘pre-assessment’ process will continue for mergers below the mandatory notification thresholds; however, the ACCC will have the power to ‘call in’ transactions that are below the notification thresholds.

Substantive changes to the merger ‘test’

The CCA prohibits mergers and acquisitions that have the effect or likely effect of substantially lessening competition in any market in Australia. The ACCC is proposing three key changes to the existing test:

• updating the merger factors in section 50(3) of the CCA, including to add factors to address whether the acquisition may result in the loss of potential competitive rivalry or increase access to or control of data, technology or other significant assets;
• changing the definition of ‘likely’. The current test requires that the transaction is ‘likely’ to substantially lessen competition in the sense of a ‘real commercial likelihood’. The ACCC proposes changing ‘likely’ to mean ‘a possibility that is not remote’, being a substantially lower standard. The onus of proof would be reversed, meaning the applicant is required to prove that a transaction is not likely to substantially lessen competition; and
• including a deeming provision prohibiting firms that possess substantial market power from engaging in mergers or acquisitions that entrench, materially increase or materially extend positions of substantial market power.

Changes targeted at acquisitions by large digital platforms

The ACCC has proposed additional sector specific changes relating to digital platforms.

Under these reforms, a different test will be applied to acquisitions by certain digital platforms. Affected digital platforms will be specified in advance by the ACCC based on factors including the size and scope of services of the digital platform. The ACCC has not yet identified what this merger test will be or whether the ACCC’s determination will be reviewable; however, it has stated that the probability of competitive harm that needs to be established should be lower than that which applies for acquisitions in the economy more broadly.

While advocated by the ACCC, any changes would need to be adopted by government and introduced via legislation. It will be interesting to see whether this reform agenda is adopted by the new chairperson (in mid 2022).

Cartels

The CCA strictly prohibits any contract, arrangement or understanding (CAU) between competitors (or potential competitors) that has:

• the purpose or effect of fixing, controlling or maintaining prices; or
• the purpose of:
  • restricting output or acquisitions;
  • colluding in tender or rigging bids; or
  • sharing markets by allocating customers, suppliers, territories, product lines or areas of business.

The criminal offence requires proof that there was knowledge or belief that the CAU contained a cartel provision. Under the CCA, the offence applies to companies but individuals can be held liable, including criminally (eg, a person who attempts to contravene, or who aids, abets, counsels or procures, induces or is in any way ‘knowingly concerned’ in a contravention).

Parallel criminal and civil sanctions exist for making or giving effect to a cartel provision.

Criminal cartel proceedings

The ACCC is responsible for investigating cartel conduct and will refer serious cartel conduct to the Commonwealth Director of Public Prosecutions (CDPP), who is responsible for prosecuting offences under Commonwealth law.

The ACCC has entered into a memorandum of understanding (MOU) with the CDPP. Among other things, the MOU outlines factors that are indicative of serious cartel conduct. The ACCC and CDPP also work together in assessing applications for immunity from criminal proceedings.

Following the commencement of two new cartel proceedings by the ACCC in 2020 (one civil and one criminal), 2021 has seen the continuation of these matters as well as the completion of others.

Significantly, in the first contested criminal prosecution to take place under the CCA’s criminal cartel provisions (and the first to proceed to trial by jury), in June 2021 Country Care Group Pty Ltd, its CEO and a former employee were acquitted of criminal cartel offences. The charges related to alleged attempted price-fixing and bid-rigging involving the supply of assistive technology products used in rehabilitation and aged care.

In addition, the following developments in the criminal cartel space took place in 2021-2022:

• On 11 February 2022, the CDPP dropped its long-running criminal cartel case against Citi, Deutsche Bank and several of their senior executives. The case had been running for four years but had suffered significant setbacks in the lead-up to its ultimate abandonment, with charges against ANZ and its former group treasurer dropped in October.
• After pleading guilty in June 2020, in February 2021 Norwegian shipping company Wallenius Wilhelmsen Ocean AS (WWO) was convicted of criminal cartel conduct and ordered to pay a fine of A$24 million. This makes WWO the third international shipping company in Australia to be convicted and fined in relation to this cartel, which concerned the shipping of vehicles to Australia between June 2011 and July 2012.
• In December 2020, Alkaloids of Australia Pty Ltd and its former export manager were charged with criminal cartel offences in relation to alleged arrangements to fix prices, restrict supply, allocate customers or geographical markets or rig bids for the supply of the active pharmaceutical ingredient SNBB to international manufacturers of certain medications. In October 2021, the former export manager pleaded guilty to the charges, with the company pleading guilty in November.
• In November 2021, Vina Money Transfer Pty Ltd and two of the five accused individuals advised prosecutors that they would plead guilty to criminal cartel charges laid in April 2019, which related to the fixing of foreign exchange rates on millions of dollars transferred between Australia and Vietnam. The hearing in relation to the remaining individuals is set to commence in early 2022.

Joint venture exception

The CCA contains a joint venture exception to cartel conduct. Where the exception applies, a cartel provision will only contravene the CCA if it has the purpose, effect or likely effect of substantially lessening competition.

The joint venture exemption will apply if:

• the cartel provision is for the purposes of the joint venture;
• the cartel provision is reasonably necessary for undertaking the joint venture; and
• the joint venture is for the production, supply or acquisition of goods or services.

Concerted practices

The 2017 amendments introduced a prohibition against concerted practices that have the purpose, effect or likely effect of substantially lessening competition. While the concept of concerted practices is familiar internationally, the concept is new to Australian law and proceedings are yet to be brought under the new legislation.

‘Concerted practice’ is not defined in the CCA but is intended to capture conduct that falls short of a CAU, which constitutes a form of cooperation between two or more companies or people with the proscribed purpose or likely effect. The Explanatory Memorandum (EM) for this prohibition referred to the European law on concerted practices as an example of what the law is intended to capture.

The EM provides some guidance as to the type of conduct that could be characterised as a concerted practice. It is not necessary for any of the parties to act in the same manner or market, or at the same time. A concerted practice may involve, but does not require:

• the formality or legally enforceable obligations of a contract;
• the express communication of an arrangement (it may be established in the absence of any direct contact); or
• the commitment of an understanding (it may be established even if none of the parties is obliged to act in a particular way).

It is not necessary for a concerted practice to have an anticompetitive provision as the focus is on the purpose, effect or likely effect of the practice itself.

The concept is not intended to capture innocent parallel conduct, such as where two firms determine prices independently but happen to charge similar prices for the same product, or public disclosure of pricing information that facilitates price comparison by consumers.

A concerted practice may arise from a single instance, rather than a course of conduct, and does not require that the practice is reciprocated or that the actions of other parties are altered in response. This raises questions about whether businesses that are unwitting recipients of information may be caught up in concerted practices.

The ACCC has not yet commenced proceedings with regard to a contravention of the concerted practices provision. However, the ACCC has publicly stated that bringing proceedings under this provision is a particular focus. While no proceedings have been commenced, the ACCC has accepted a court-enforceable undertaking relating to alleged concerted practices in the roofing industry. The conduct involved competitors allegedly sharing information regarding prices and pricing strategies on public Facebook groups.

Misuse of market power

The CCA prohibits corporations with a substantial degree of market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition:

• in a market where it has a substantial degree of power; or
• in any other market in which the corporation or a related corporation supplies, acquires or is likely to supply or acquire goods or services directly or indirectly.

A party may now seek authorisation for conduct that would otherwise contravene the misuse of market power prohibition on public benefit grounds.

What is the applicable test for market power?

The applicable test is whether a corporation has a ‘substantial degree of power in a market’. Market power is determined in part by the ability to act free from constraints by competitors, customers or suppliers in a market. Market power can be evidenced by factors such as:

• a corporation’s ability to raise prices without rivals taking away customers;
• whether a corporation is vertically integrated (although this is not on its own determinative);
• a corporation’s ability to set non-price terms and conditions; or
• the barriers to entry into the market by new entrants.

‘Substantial’ is generally understood to mean ‘large or weighty’ or ‘considerable, solid or big’. A corporation may have substantial power in a market even if it does not control the market or have absolute freedom from constraint by the conduct of competitors, customers or suppliers.

There is no market share threshold above which a corporation will be presumed to have substantial market power. However, a high market share is often a factor that tends to indicate, along with the other factors listed above, that a corporation has substantial power in a market.

It is possible for two or more corporations to simultaneously have a substantial degree of power in the same market.

Vertical arrangements

The main provisions that govern specific vertical arrangements are the prohibitions against:

• exclusive dealing (including third-line forcing) where they have the purpose, effect or likely effect of substantially lessening competition; and
• RPM, which is strictly prohibited.

The prohibition on RPM does not apply to:

• genuine recommended resale prices;
• genuine maximum resale prices; and
• a refusal to supply loss-leading sellers.

The CCA contains notification and authorisation processes that will provide legal immunity for exclusive dealing and RPM. A notification process for RPM was introduced following the 2017 amendments. Prior to this, authorisation was the only way to obtain legal protection for RPM conduct. Authorisation will continue to be available, so businesses proposing to engage in RPM now have a choice of lodging a notification or seeking authorisation. Compared to authorisation, notification is a simpler and more timely process. The ACCC may grant authorisation for RPM if satisfied the relevant conduct will provide a net public benefit.

ACCC proceedings alleging contraventions of the exclusive dealing and RPM prohibitions have historically been rare. However, the period from late 2020 through 2021 was marked by a renewed enforcement emphasis in this space, with the ACCC commencing four RPM and exclusive dealing proceedings or other investigations across various sectors, as detailed below.

• In October 2020, the ACCC brought proceedings against FE Sports, alleging it had engaged in RPM by prohibiting dealers from advertising or promoting certain brands or products online for less than the recommended retail price, in the period between February 2017 and June 2019. In March 2021, FE Sports was ordered to pay a A$350,000 penalty for this misconduct.
• The ACCC commenced proceedings in November 2020 against Australasian Food Group Pty Ltd, trading as Peter Ice Cream (Peters), alleging it engaged in exclusive dealing by way of conduct that hindered or prevented competition for the supply of single-wrapped ice creams to petrol and convenience retailers. The hearing of this matter is scheduled to commence in March 2022.
• In September 2021, Nero Bathrooms International Pty Ltd admitted to withholding supply of its products from a retailer when the retailer failed to raise its advertised prices – conduct likely to constitute RPM. The ACCC accepted a court-enforceable undertaking from Nero in which it committed to advising all Nero retailers that they are free to set their own prices, and to ensure staff receive compliance training on their CCA obligations.
• Federal Court proceedings were brought against Techtronic Industries Australia Pty Limited in November 2021 for RPM in relation to the wholesale supply of Milwaukee brand power tools, hand tools and accessories, whereby agreements with dealers restricted the sale of the products below a specified minimum price. These proceedings are ongoing.

Public enforcement

The ACCC is the principal regulatory body charged with enforcement of Australian competition laws. In respect of any criminal contraventions, the ACCC will work closely with the CDPP and Australian Federal Police (AFP).

A competition investigation typically commences with an information-gathering phase where the ACCC seeks to obtain information relating to suspected contraventions of the CCA.

There is no set timetable governing the period in which the ACCC must complete an investigation or decide to bring court proceedings. However, the ACCC must bring any civil action for damages, pecuniary penalties or other remedial orders within six years of the contravention. Criminal prosecution of cartel provisions is not subject to any statutory limitation period.

ACCC investigatory powers

Voluntary and compulsory production powers

In the first instance, and outside of cartel investigations, the ACCC will usually consider whether it is appropriate to gather relevant information, documents and evidence on a voluntary basis.

However, where the ACCC has reason to believe that a person or corporation is capable of furnishing information, producing documents or giving evidence that relates to a possible contravention, it may issue a section 155 notice to the relevant person or corporation that compels them to provide relevant information or documents. Privileged documents do not need to be provided to the ACCC.

The ACCC can also compel individuals named in a section 155 notice to appear before the ACCC to give oral evidence in relation to a possible contravention.

Dawn raids

The ACCC has the power to conduct dawn raids in circumstances where a search warrant is issued. While dawn raids were historically less common in Australia compared with some other jurisdictions, the ACCC had begun using them with increased frequency prior to the onset of the pandemic. The ACCC must apply to a magistrate for a search warrant. A search warrant will only be granted where the ACCC can satisfy the magistrate that the ACCC has reasonable grounds for suspecting there is evidence on a premises that is relevant to a contravention of the CCA.

A search warrant gives the ACCC wide-ranging powers, including the power to copy or seize documents or electronic equipment, operate electronic equipment on a premises, and take photographs or video recordings. The ACCC can also require that individuals answer questions or produce documents that may provide evidence in relation to a contravention.

Cartel investigation powers

As noted above, the ACCC and the AFP may conduct a joint investigation in relation to suspected criminal cartel conduct.

If the ACCC becomes aware of ongoing cartel conduct that could constitute a criminal offence, it may notify the AFP, which may obtain one or more of the following warrants:

• telephone interception warrant;
• stored communication warrant (voicemail and emails);
• surveillance device warrants; and
• telecommunications data collation.

Immunity and cooperation policies

Consistent with other jurisdictions, the ACCC maintains immunity and cooperation policies as a key component of its compliance and enforcement arsenal. The Immunity Policy only applies to cartel conduct, whereas the Cooperation Policy extends to any matter that may involve a contravention of the CCA.

Immunity and Cooperation Policy

The Immunity and Cooperation Policy provides for the granting of immunity from civil cartel proceedings by the ACCC to the first eligible cartel participant to report involvement in a cartel, subject to satisfying the criteria outlined below.

An application for immunity can only be made by a single person or corporation. However, where a corporation is granted immunity, this may be extended to related corporate bodies, and to current and former directors, officers and employees of the corporation in certain circumstances. The Immunity and Cooperation Policy was updated on 1 October 2019 and now requires applicants seeking immunity to enter into a cooperation agreement early in the immunity process, which clearly sets out the steps required for conditional civil and criminal immunity under the policy.

An immunity applicant must satisfy the following criteria to receive immunity:

• the party must admit that their conduct may contravene the cartel provisions of the CCA;
• the party must be the first party to apply for immunity in respect of the cartel;
• the party must not have coerced others to participate in the cartel;
• the party must have ceased involvement in the cartel;
• any admissions made by a corporation must be a ‘truly corporate act’ (rather than isolated confessions of individual representatives);
• the party must provide full disclosure and cooperation with the ACCC’s investigation and any ensuing court proceedings;
• the party has entered into a cooperation agreement; and
• the party has maintained, and agrees to maintain, confidentiality regarding its status as an immunity application, details of the investigation and any ensuring civil or criminal proceedings.

For criminal cartel conduct, the ACCC will make recommendations to the CDPP about whether immunity from criminal prosecution should be granted. While the CDPP exercises independent discretion, it is unlikely to refuse immunity from criminal prosecution if the ACCC has granted immunity from civil prosecution.

When a person or entity is not eligible for ‘first-in’ immunity from cartel proceedings, the ACCC recognises individual and corporate cooperation in both civil and criminal cartel investigations.

The ACCC will identify cooperation to the court in any proceedings by way of submissions to the court. Cooperation is ordinarily a mitigating factor relevant to determining penalties. While the ACCC may make penalty recommendations on the basis of cooperation, ultimately penalties are a matter for the court.

Cooperation Policy

The ACCC’s Cooperation Policy sets out possible leniency measures that the ACCC may adopt when dealing with entities that cooperate with ACCC investigations.

The ACCC is most likely to consider adopting leniency in respect of a corporation or individual that:

• comes forward with valuable and important evidence of a contravention of the CCA of which the ACCC is otherwise unaware or has insufficient evidence to initiate proceedings;
• provides the ACCC with full and frank disclosure, including all relevant documentary evidence available to it;
• cooperates fully with the ACCC’s investigation and any ensuing litigation; and
• has not compelled or induced any other person or corporation to take part in the contravening conduct and was not a ringleader or originator of that conduct.

Penalties

Civil pecuniary penalties apply to contraventions of the competition prohibitions of the CCA. The maximum civil penalty per contravention is:

• for companies, the greater of A$10 million, three times the value of the benefit obtained that is reasonably attributable to the contravention or (where benefits cannot be determined) 10 per cent of the annual turnover connected with Australia of the company and related bodies corporate; and
• for individuals, up to A$500,000.

For companies, the same maximum penalties apply in respect of a criminal cartel contravention.

An individual convicted of a criminal cartel offence can face up to 10 years’ imprisonment and a fine of up to A$444,000. It is illegal for corporations to indemnify officers, employees or agents in respect of penalties and legal costs.

Other non-pecuniary penalties include declarations, injunctions, community service orders, adverse publicity orders and disqualification of a person from managing corporations.

Penalties in Australia have not generally been anywhere near the statutory maximum. The ACCC has been seeking larger penalties and its approach appears to be resonating with the court. For example, in the Nippon Yusen Kabushiki Kaisha criminal cartel decision, the maximum penalty that could have been imposed was A$100 million. The court concluded that the appro-private penalty would have been A$50 million, which would have been the largest penalty ever in Australia, but ordered a A$25 million penalty that included a 50 per cent discount for the early plea, past and future assistance, and cooperation and contrition on the part of Nippon Yusen Kabushiki Kaisha.

The highest fines imposed under the CCA include:

• December 2021: the Federal Court ordered A$153 million in penalties against the Australian Institute of Professional Education (AIPE) for breaching the Australian Consumer Law (Schedule 2, CCA). This followed declarations that the AIPE had engaged in a system of unconscionable conduct and misleading and deceptive conduct when enrolling customers into online diploma courses, including by telling vulnerable and disadvantaged customers that their courses were free.
• December 2019: the Federal Court ordered Volkswagen AG to pay A$125 million in penalties for breaching the Australian Consumer Law by making false representations about compliance with Australian diesel emissions standards. In April 2021, Volkswagen’s appeal against this penalty was dismissed by the Full Federal Court, and in November 2021 the High Court refused special leave to appeal the penalty decision.
• August 2019: the Federal Court ordered Japanese shipping company K-Line to pay a fine of A$34.5 million for engaging in criminal cartel conduct. This is the largest ever criminal fine imposed under the CCA, although it is lower than the A$46 million civil penalty issued to Yazaki Corporation in 2018 in relation to its involvement in cartel conduct.

International aspects

Extra-territorial application of CCA

Conduct occurring wholly outside Australia may come within the jurisdiction of the CCA if the contravening entity is:

• an Australian citizen;
• a person ordinarily resident in Australia;
• a body corporate incorporated in Australia; or
• a body corporate carrying on business in Australia.

What will amount to ‘carrying on business’ in Australia has been the subject of extensive judicial interpretation. It is possible that a foreign corporation operating in Australia through a wholly owned subsidiary may be considered to ‘carry on business’ in Australia. Similarly, supplying goods or services to distributors in Australia (including from overseas), or supplying or acquiring intellectual property rights in Australia, may also amount to ‘carrying on business’ in Australia.

In addition, specific provisions within the CCA require a territorial nexus to Australia. In particular, competition-tested prohibitions (ie, prohibitions that require there to be a purpose, effect or likely effect of substantially lessening competition in a market) require the affected market to be a market in Australia. Furthermore, the cartel prohibitions only apply to the extent that two parties to a contract, arrangement or understanding compete in relation to the supply or acquisition of goods or services in Australia, or between Australian and places outside Australia.

ACCC cooperation with competition authorities in other jurisdictions

The ACCC has signed cooperation agreements with a number of countries or other bodies, including the United States, Taiwan, Papua New Guinea, New Zealand, Canada, Fiji, South Korea, the United Kingdom, the OECD, the European Commission, India, China, Japan and the Philippines. The agreements deal with mutual assistance and coordination of enforcement activities.

The ACCC is also a member of the International Competition Network, which focuses on addressing antitrust enforcement and policy issues of common concern to its members worldwide.

In addition, the CCA enables the ACCC to disclose ‘protected cartel information’ (provided by successful immunity applicants) to overseas competition authorities.

Notes