Australia: ACCC

For a market economy to work as it should, businesses need to operate within boundaries of acceptable and fair behaviour towards their customers, competitors and suppliers. Those boundaries are set out in the Competition and Consumer Act 2010 (the Act). The work of the Australian Competition and Consumer Commission (ACCC) in enforcing the Act plays a crucial role in making markets work for the long-term interests of Australian consumers.

In 2013 the ACCC’s competition priorities will be:

• increasing our focus on cartel investigations in a wide range of sectors;
• completing a number of other investigations into anti- competitive behaviour, particularly in concentrated markets;
• dealing with a range of important mergers and acquisitions, particularly in transport and utilities, but also more broadly in a fast-changing economic landscape;
• settling the regulatory arrangements for the National Broadband Network;
• reinvigorating the debate into the effective regulation of monopolies; and
• engaging internationally, particularly in our own region.

In 2012, the ACCC continued its vigilance against cartels. One of the most significant competition investigations to date has been the ACCC’s air cargo investigation. The penalties ordered by the Federal Court for contraventions arising from arrangements to impose fuel surcharges, rather than allowing competition to set the price, are approaching A$100 million. Further court hearings will take place in 2013.

Over the next year, the ACCC will look to build on education initiatives aimed at deepening the understanding among business people about what cartel conduct is and how the ACCC’s immunity policy operates. In 2012, the ACCC released a short fiction film, The Marker, which demonstrates the devastating effect that cartels can have on participants.

We continue to receive regular immunity applications for cartel conduct, and our intelligence-gathering activities and international cooperation are also yielding important results. We have around 15 in-depth investigations under way in a range of sectors and expect to conclude some of these investigations in 2013. In 2012, the ACCC has worked towards ensuring competitive conduct within the law, particularly in relation to how dominant firms behave towards other firms in the supply chain. More recently, this has included inquiries about business-to-business supply chain practices in the supermarket sector, and aspects of these investigations should conclude in 2013. Another arm of our competitive conduct work has been in reviewing the pricing and promotional practices between firms to ensure it is not to the detriment of competition. Inquiries under way include the ‘shopper docket’ discounting for petrol in the retail fuel market. The ACCC is also working to assess and ensure that information sharing in the retail petrol industry is not for anti-competitive purposes. The outcomes of some of these investigations in 2013 will have important implications for competitive conduct between companies and will set the boundaries of how companies can behave.

In general, we have a range of investigations under way to review arrangements that lessen competition and misuse market power (dominance). While time-consuming and uncertain, we hope to conclude more cases in 2013.

In 2012, the ACCC continued to have a very active role in reviewing merger and acquisition activities across a variety of sectors. In the aviation industry, the ACCC is examining proposed acquisitions as well as the merits of joint venture agreements and alliances between both international and domestic airlines. In 2013, it is also expected that there will be a number of merger reviews by the ACCC involving major infrastructure such as ports and electricity generators, as well as an increased focus on acquisitions by the major supermarket chains.

More generally, the fast-changing economic landscape will see continuing merger and acquisition activity in the manufacturing and media sectors, among others.

Ensuring effective regulation of monopolies remains a key area of the ACCC’s work agenda in 2013. Australia is rolling out a national fibre optic broadband network, known as the National Broadband Network (NBN), to replace an ageing wholesale network predominantly owned by the Telstra Corporation. There has been extensive work in laying the foundations for the transition and implementation of the NBN. This has included the ACCC’s approval of Telstra’s Structural Separation Undertaking and migration plan that put in place arrangements for the migration of its services from its fixed-line access networks to the NBN. The key element of this was the arrangement for equivalent and effective access by its competitors to Telstra’s wholesale services. The ACCC also commenced consultation on the NBN’s proposed Special Access Undertaking. This will be the essential regulatory underpinning of the operation of the NBN. Settling this will be a key priority for the ACCC in 2013.

The ACCC has moved to invigorate the debate on the effective regulation of monopolies. In 2013 there will be a review of Part IIIA of the Act which sets out the National Access Regime for access to monopoly infrastructure. Part IIIA, which was drafted nearly 20 years ago, has produced mixed outcomes. A public debate on the quality of the law, and its results, is already apparent. Separately, 2012 saw considerable improvements in the regulation of Australia’s national energy markets and 2013 will see considerable focus on the effective implementation of these reforms.

More broadly, the ACCC has made international engagement a high-level objective. The ACCC has a substantial role to play as a regulatory agency in the Asia-Pacific region, both in carrying out our domestic responsibilities in Australia, as a major Asia-Pacific economy, and also in contributing to competition regulation in the region. We are looking to work closely to share information and build partnerships across the region. The ACCC will also strengthen our relationships in the region through its newly attained membership of the East Asia Top Level Official’s Meeting on Competition Policy.