Australia: Australian Competition and Consumer Commission

Reforms to Australia’s competition regime, judgments in a number of vigorously contested court cases, an increased focus on the agricultural sector, and studies into the gas market and regional petrol prices set the stage for another busy year for the Australian Competition and Consumer Commission (ACCC) in 2016.

Response to the competition review

As predicted, 2015 was a big year. In March, the independent competition review panel handed down more than 50 recommendations aimed at ensuring our competition policy, laws and institutions are able to meet the challenges and opportunities of a rapidly changing world.

In November, the Australian government announced that it will implement the majority of the recommendations ‘to promote more choice, better services and stronger growth’. The ACCC supports the government’s new microeconomic reform agenda that strongly affirms competition principles as a basis for action. We endorse the removal of regulatory barriers to competition across a variety of sectors. These reforms are the most significant of their kind in over 20 years and once implemented should boost economic growth significantly. The ACCC is also pleased to see recommendations that will simplify the Competition and Consumer Act. We also support recommendations on introducing a prohibition on concerted practices and reforms to the collective bargaining and merger assessment processes.

The government, in its response, has reaffirmed the ACCC’s mandate in competition advocacy and market studies.

A clarion call to multinationals

The power of the profit motive very often works for the good of society, but only if it works within the boundaries set by our competition and consumer laws. When we take cases to court, the effect is often considerable. Not just the case law or precedent value, but also the strong deterrence messages that result from penalties and other orders.

The court outcome against VISA Worldwide Pte Ltd is a case in point. In September, the Federal Court ordered an A$18 million penalty against a VISA subsidiary for imposing a moratorium on direct currency conversion services being used in conjunction with VISA cards. The court indicated that the penalty should send a clarion call to large multinational corporations that Australia will not tolerate conduct that is likely to substantially lessen competition.

In 2016, we are looking forward to court judgments in a number of vigorously contested cases. They include the Cement Australia case and the case against Yazaki Corporation relating to a wire harness cartel, where the court is to determine an appropriate penalty following a finding of contravention by Yazaki Corporation. We are also waiting for the Full Court of the Federal Court to determine our appeal in the Garuda and Air New Zealand Air Cargo matters; and before the Federal Court we have the alleged Egg cartel case and the alleged Prysmian and Nexans Cable cartel.

Increased focus on agriculture

In July 2015, the Australian government released the Agricultural Competitiveness White Paper setting out priorities and investment plans for the farm sector. The measures include giving the ACCC an additional A$11.4 million over the next four years to establish an Agricultural Enforcement and Engagement Unit.

We will use the funding to focus on engagement, and we will strengthen our analysis and investigation of competition and unfair trading issues in the agricultural sector.

The government will shortly appoint a new commissioner to the ACCC with responsibility for, and deep knowledge of, agriculture issues. We have started putting structures in place including a dedicated unit of around 10 staff and an agriculture consultative committee.

Complex mergers

In late 2015, the ACCC conducted an unprecedented number of complex merger assessments, some of which will flow into 2016.  These include Brookfield’s proposed acquisition of Asciano; Royal Dutch Shell’s proposed acquisition of BG Group; TPG’s proposed acquisition of iiNet; Foxtel’s proposed acquisition arrangements with Ten Network Holdings; Iron Mountain’s acquisition of Recall; and Halliburton’s proposed acquisition of Baker Hughes. Each transaction has been of significant importance to the Australian economy and required careful assessment. It is tricky to predict what mergers will come our way in 2016, but we expect another demanding year.

Shining a light

The ACCC is using market studies to focus on the eastern Australian gas market as well as petrol markets in some regional cities.

The formal gas inquiry is considering the competitiveness of wholesale gas prices and the structure of the upstream, processing, transportation, storage and marketing segments of the gas industry. The ACCC can be a powerful contributor to an informed debate on the future of energy markets, and information flowing from this inquiry can assist in shaping energy market reform.

The ACCC is also providing more regular and in-depth analysis of fuel markets. We are now producing quarterly ‘macro’ reports looking at petrol price movements, and we are conducting ‘micro’ market studies examining petrol price drivers in regional markets. Starting with Darwin (Northern Territory) and Launceston (Tasmania), the regional studies aim to shine a light on why petrol prices are higher in some regional locations.

Cooperation in the region

Economic globalisation has resulted in an increasing number of reviews of mergers and investigations into cartels and unilateral conduct that transcend jurisdictional boundaries. This requires competition agencies, including the ACCC, to cooperate and collaborate.

The ACCC has worked hard to develop operational frameworks and relationships that enable and enhance cross-border cooperation on law enforcement. We now have more than 10 active memoranda of understanding with our counterparts in the Asia Pacific.

In addition to building agency-to-agency ties, the ACCC engages multilaterally, including as an active member of the International Competition Network (ICN), a growing and energetic network of more than 130 competition agencies. It was a great honour to welcome 500 of our ICN colleagues to Sydney for the ICN annual meeting in April 2015.

It is an exciting time for competition law enforcement in our region. Those ASEAN member states that do not already have a competition law are striving to have a competition law in place and, in most jurisdictions, an agency responsible for enforcing that law by the end of 2015. This will complement other enforcement agencies in our region, including highly experienced agencies in Japan, China, New Zealand and Korea and newer agencies such as the Hong Kong Competition Commission.

I am perhaps proudest of the now established Competition Law Implementation Program. Under this programme, the ACCC is working shoulder-to-shoulder with our counterparts in South East Asia to strengthen our respective competition law enforcement regimes. I am also delighted that the East Asian Top Level Officials’ Meeting has become one of our ‘must attend’ events.