This is an Insight article, written by a selected partner as part of GCR's co-published content. Read more on Insight
2014 is shaping up as a milestone year for competition and consumer law in Australia. It is 40 years since the introduction of the Trade Practices Act 1974, now known as the Competition and Consumer Act 2010. The Australian government has also indicated its intention to have a root and branch review of Australia’s competition laws. The review is an opportunity to ensure the laws we enforce are appropriate and continue to enhance the welfare of Australians.
The Australian Competition and Consumer Commission (ACCC) has made a strong statement in naming cartel conduct, anti-competitive agreements and misuse of market power as perennial enforcement and compliance priorities. The harm to consumer welfare and the detriment to the competitive process means we will always assess these types of conduct as a priority, regardless of the sector in which it occurs.
In the past year or so, the ACCC has been involved in (at the time of writing) seven competition court cases. Two of these have been finalised; court proceedings continue in the remaining five.
Koyo Australia Pty Ltd was ordered, by consent, to pay a $2 million penalty for cartel conduct in the supply of ball bearings for use in motor vehicles, household and electrical items and other machinery. Meanwhile, following admissions, Viscas Corporation was ordered to pay a $1.35 million penalty for cartel conduct in the supply of land cables. Proceedings against other alleged participants are continuing.
Four of the remaining court cases also involve alleged cartel conduct: one in the supply of liquid petroleum gas cylinders for forklifts; another in the supply of wire harnesses to Toyota Motor Corporation and its related entities in Australia; and the third concerning the supply of ball and roller bearings for vehicles. The ACCC also instituted proceedings alleging that a cartel denied Australian consumers the benefits of lower prices for laundry detergent products.
Finally, the ACCC has commenced proceedings against Visa Inc alleging it misused its market power and engaged in exclusive dealing in relation to dynamic currency conversion services. The case continues in the Federal Court.
Norcast SárL v Bradken Limited was the first test of the new cartel laws that came into force in 2009. The primary judge found that Bradken had engaged in cartel conduct by bid rigging. Bradken appealed against the decision and the ACCC sought leave to intervene on the appeal and make submissions in support of the primary judge’s interpretation of the cartel provisions. The parties then reached a commercial settlement and no appeal was required. The Full Court ensured effect was given to this settlement in a way which left intact the reasoning and legal and factual conclusions of the primary judge.
Experience tells us that the threat of detection destabilises existing cartels and deters new ones from forming. With this in mind, the ACCC is reviewing its Immunity Policy for Cartel Conduct to ensure we have the best opportunity to detect and break up cartels operating in Australia. Our review is under way and will be finalised in 2014. Another of the ACCC’s enforcement and compliance priorities is competition issues in highly concentrated sectors of the Australian economy, such as the fuel and supermarket sectors. The ACCC is investigating issues relating to the competitive process, including whether supermarkets have engaged in unconscionable conduct or misused their market power in their dealings with suppliers. In the fuel sector the ACCC is investigating an information sharing service which provides subscribers, fuel retailers, with information on competitors’ prices every 15 to 30 minutes.
Mergers and adjudication
Our mergers workload can be difficult to predict. In the past financial year, 289 mergers came across our desk, of which 213 were dealt with expeditiously and ‘pre-assessed’ as not requiring a public review.
One of the ACCC’s merger priorities is to closely scrutinise mergers in concentrated markets, in order to prevent structural changes that are likely to substantially lessen competition.
In recognition of the importance of informing merger parties about our review process, we recently revised our Informal Merger Review Process Guidelines to better reflect our current practices and introduce a number of improvements. In 2013, we also updated our Authorisation Guidelines. The revised guidelines capture recent changes to our approach to assessing public benefits and detriments, and reflect relevant determinations made by the Australian Competition Tribunal.
The ACCC and the Australian Energy Regulator (AER) are working on regulatory issues across the communications, transport, energy, water, ports, airports and rail sectors.
The regulation of the National Broadband Network (NBN) is a core part of the ACCC’s communications work. Australia is rolling out the NBN to replace a wholesale network predominantly owned by the Telstra Corporation. The NBN will be a wholesale-only network, so regulation will be more effective than the previous experience with the vertically integrated Telstra. That said, the NBN will still be a monopoly, with the usual incentives a monopoly has to charge excessive prices or offer inadequate service quality.
A fixed services review is also under way. There have been significant changes in the telecommunications industry, including those relating to the NBN, since our last review in 2009. The review will consider what these changes are likely to mean for the future of competition, and the role of fixed line service regulation.
Increased consumer consultation is a focus for all our regulatory areas. This has been exemplified in the work of the AER following the commencement of the National Energy Retail Law in some state jurisdictions. The AER’s Better Regulation reform programme, which involved significant consumer engagement, has led to the release of guidelines that focus on promoting the long-term interests of consumers.