Australia’s antitrust and consumer protection legislation is contained in the Competition and Consumer Act 2010 (CCA). The object of the CCA is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection. There have been a number of key developments over the past year.
The appellate judgments of the civil cases brought by the Australian Competition and Consumer Commission (ACCC) against Flight Centre and ANZ bank for attempted and actual price fixing were handed down in July 2015. The Flight Centre case (which the ACCC lost) and the ANZ Bank case (which the ACCC also lost) each examined the role of intermediaries (travel agents and mortgage brokers respectively) in markets. The ACCC has applied for special leave to appeal to the High Court for the Flight Centre decision, but has indicated that it will not appeal the ANZ Bank decision. If the High Court grants the ACCC’s special leave application in the Flight Centre case, the High Court’s decision will have important implications for the way businesses in Australia structure their distribution channels.
The High Court unanimously set aside the Full Federal Court’s decision in Director, Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union (CFMEU). The High Court judgment confirmed that parties such as the ACCC and ASIC, and those that are the subject of civil prosecutions, are able to make joint submissions to the Court about the appropriate pecuniary penalty or range of penalties to be determined by the Court.
The Federal Court found that Japanese company Yazaki Corporation engaged in collusive conduct with its competitor when supplying wire harnesses to Toyota in Australia. The case has been informative to international corporations doing business, whether directly or indirectly, in Australia. The Court found that Yazaki’s conduct was subject to the CCA and the Criminal Code because Yazaki was carrying on business in Australia, notwithstanding that much of the conduct occurred in Japan. However, the Court held that because the price fixing conduct by Yazaki did not occur in a market in Australia, it did not contravene the price fixing provisions. At the time of writing, no hearing on relief has been scheduled.
The Australian government released its response to the Harper Committee’s report on Australia’s competition law regime. The Harper Committee’s report recommended a raft of amendments to the regime, including the introduction of an effects test for Australia’s prohibition on misuse of market power, simplification of Australia’s cartel laws, changes to Australia’s merger control regime and the introduction of a new prohibition on concerted practices. The government supported 39 of the Harper Committee’s recommendations in full or in principle, and a further five recommendations in part.
The Competition and Consumer Act
The CCA is based on similar principles to North American and European competition laws. It has three key pillars:
- competition provisions, which prohibit anticompetitive behaviour either on a per se basis or a rule-of-reason basis. Cartels are prohibited per se and may attract criminal or civil sanctions. All other forms of anticompetitive behaviour, except for vertical price fixing and one type of tying conduct, require an assessment of the substantial purposes of the behaviour or the likely effect of the behaviour on competition. The competition provisions include a merger control regime;
- access provisions, which enable market participants to obtain access to monopoly or ‘essential’ infrastructure; and
- consumer protection provisions.
The Australian Competition and Consumer Commission
The CCA is administered by a single, independent federal agency, the ACCC. The ACCC includes the Australian Energy Regulator (AER), which regulates Australia’s national energy market. The ACCC currently employs about 715 full-time staff and has budgeted to increase its staff to about 735 in 2014–2015. The current chairperson of the ACCC is Rod Sims, who succeeded Graeme Samuel on 1 August 2011, for a term of five years.
Mr Sims has stated that his priorities for his term as chairperson include closer scrutiny of acquisitions of non-controlling stakes in businesses and the pursuit of strategic litigation where the outcome may be less predictable.
The ACCC actively investigates possible breaches of the CCA and is a regular litigator.
The ACCC may accept court-enforceable undertakings (remedies) to address concerns it may have about potential breaches of the CCA. The ACCC may also apply to the Federal Court for orders to injunct conduct, orders for divestiture, orders to void acquisitions ab initio, orders for substantial civil pecuniary penalties (against companies and individuals) and orders for legal costs and other forms of relief.
The ACCC may also commence representative actions for classes of persons for awards of civil damages and orders for legal costs in the Federal Court, and in relation to its consumer protection powers, issue infringement notices, substantiation notices and public warning notices.
In the 2014–2015 financial year, the ACCC had revenues of A$167.4 million, reviewed approximately 322 mergers, and at year’s end was involved in 27 proceedings before the Federal Court on competition matters (including 12 for civil cartel conduct).
Although the ability to pursue cartel participants for criminal sanctions was introduced in Australia in 2009, the ACCC has yet to refer any case to Australia’s Federal Director of Public Prosecutions for prosecution under the criminal cartel laws, or if the ACCC has referred any case to the Federal Director of Public Prosecutions, the Federal Director of Public Prosecutions has not yet commenced any criminal proceedings as a result of the referral.
In response to globalisation of the world economy and antitrust regulation, the ACCC cooperates with foreign competition regulators, and is an active participant in various international forums of national competition law agencies and advisers that share information and expertise, including OECD committees, the International Competition Network and the ASEAN Expert Group on Competition. In April 2015, the ACCC hosted the annual meeting of the International Competition Network, which was attended by more than 400 international delegates from over 70 countries. The ACCC has memoranda of understanding in place with competition agencies in China, Chinese Taipei, the Republic of Korea, India, Fiji, Papua New Guinea, the Philippines, the United Kingdom, Europe, Canada and New Zealand, takes the benefit of a treaty between the governments of Australia and the United States, and signed a cooperation arrangement with Japan in April 2015.
The ACCC’s Compliance and Enforcement Policy outlines the ACCC’s general approach to compliance and enforcement. In enforcing the provisions of the CCA, the ACCC’s primary aims are:
- to stop the unlawful conduct;
- deter future offending conduct;
- undo the harm caused by the contravening conduct;
- encourage the effective use of compliance systems; and, where warranted
- punish the offender by the imposition of penalties or fines.
The ACCC has regard to a number of factors when determining whether to pursue particular conduct, including whether the conduct:
- is of significant public, national or international interest or concern;
- results in a substantial consumer (including small business) detriment;
- demonstrates a blatant disregard for the law; or
- involves concentrated markets or significant new or emerging market issues.
In February 2015, the ACCC announced its Compliance and Enforcement Policy for 2015. In addition to behaviour such as cartel conduct, anticompetitive agreements and misuse of market power – which the ACCC considers to be ‘so detrimental to consumer welfare and the competitive process that the ACCC will always assess them as a priority’ – the ACCC also flagged nine consumer protection priorities, including:
- competition and consumer issues in the health and medical sectors;
- ensuring compliance with new or amended industry codes of conduct, such as the franchising code and the new grocery code;
- emerging systemic consumer issues in the online marketplace;
- truth in advertising, particularly widespread conduct or misleading claims by large businesses that result in significant consumer detriment;
- consumer protection issues impacting on indigenous consumers; and
- consumer protection issues impacting on vulnerable and disadvantaged consumers, with a particular focus on older consumers and consumers who are newly arrived in Australia.
‘Root and branch’ review of competition policy
In December 2013, the Australian federal government announced a wholesale review of Australia’s competition policy. The review was led by Professor Ian Harper and was the first comprehensive review of Australia’s competition laws in over 20 years. After the release of an Issues Paper in April 2014 and the Draft Report in September 2014, the Competition Policy Review Panel released its final Report on 31 March 2015.
The final Report makes a number of recommendations for reforming Australia’s competition laws, including:
- amending the misuse of market power provisions to include an effects-based test, in the alternative to the current purpose-based test;
- repealing the current price signalling laws;
- introducing a new civil prohibition on concerted practices;
- simplifying Australia’s cartel laws; and
- retaining the ACCC as the decision maker at first instance for both formal and informal merger clearances, and combining the option for parties to seek formal clearance and authorisation for a merger into one process, with the ability of a party to seek a review of an ACCC decision by the Australian Competition Tribunal (the Tribunal).
The government issued its response to the final Report on 21 November 2015, in which it supported 39 of the Report’s recommendations in full or in or in principle, and a further five recommendations in part. The government indicated that it will publish draft exposure legislation for consultation with the states and territories in order to implement those recommendations that require legislative change. Of the recommendations set out above, the government has indicated that it needs more time to consider whether Australia’s misuse of market power provisions should be amended to include an effects test but that it will implement the other recommendations. Current indications are that the government will implement the changes over the next one to two years.
Australia’s merger control regime
The CCA prohibits direct and indirect acquisitions of shares or assets that would, or would be likely to, have the effect of substantially lessening competition in a market in Australia, or a state, territory or region of Australia.
The CCA applies to offshore acquisitions of shares where the acquisition would result in a change of control of an Australian subsidiary, and this change of control would be likely to substantially lessen competition in Australia and would not be offset by public benefits.
Hold separate undertakings
There are three instances on the public record where the ACCC has allowed a merger to complete subject to a hold separate arrangement to allow the ACCC to conduct a public review.
The first involved Ramsay’s acquisition of a portfolio of private hospitals from CVC and Ironbridge in 2006. In that case, Ramsay undertook to offer to divest hospitals or assets that, in the absolute discretion of the ACCC, were identified by the ACCC. At the end of the ACCC’s review, Ramsay divested 19 hospitals.
The second instance of a hold separate undertaking involved the Tasmanian Government’s proposal to acquire the Tamar Valley Power Station in 2008. In that case, the Tasmanian government agreed to hold separate the Tamar Valley Power Station while the ACCC conducted a more detailed review and acknowledged that the ACCC would take such action as necessary to remedy any breach at the end of its review. At the end of the review, the ACCC concluded that the acquisition would not be likely to result in a breach and did not, therefore, take any further action.
The third instance of a hold separate undertaking involved Dometic’s acquisition of Atwood in late 2014. In that case, Dometic Atwood undertook to hold separate Atwood’s Australian subsidiaries while the ACCC completed its review and undertook to negotiate and offer in good faith a remedy to address the ACCC’s conclusion if the ACCC concluded that the acquisition would result in a breach. The ACCC’s review is ongoing at the time of writing.
The ACCC is responsible for investigating proposed mergers to assess whether or not they would be likely to have the effect of substantially lessening competition.
In the 2014–2015 financial year, the ACCC assessed 322 proposed transactions. Of these, 278 were assessed without requiring a public review, 42 underwent a public review and two were subject to a confidential review. Of the 44 that were subjected to public reviews or reviewed confidentially, the ACCC accepted undertakings to divest shares or assets in seven and did not oppose any mergers outright.
Australia’s merger control regime is not subject to turnover thresholds. Rather, the ACCC’s policy is to further investigate proposed acquisitions which would be likely to result in:
- the acquirer having a market share of 20 per cent or more; and
- the products of the merger parties being either economic substitutes or complements.
Australia’s merger control regime does not contain a mandatory notification procedure.
Where a proposed merger would be likely to substantially lessen competition in Australia and the parties proceed with the merger without first having obtained clearance from the ACCC, they bear the risk that the ACCC will seek either an injunction, or orders for divestiture, or to void the acquisition, civil pecuniary penalties and orders for legal costs.
The practical effect of the ACCC’s enforcement powers is that Australia has a much-used voluntary notification procedure for mergers.
In practice, acquirers usually seek clearance from the ACCC in advance of completion if their proposed acquisition would:
- result in the acquirer having a market share of 20 per cent or more;
- remove a vigorous and effective competitor;
- create significant vertical integration issues or conglomerate effects;
- be likely to be referred to the ACCC by other regulators (including, for example, Australia’s Foreign Investment Review Board (FIRB), the Australian Communications and Media Authority, the Australian Securities and Investments Commission and Australia’s prudential agencies); or
- attract public attention or complaints from competitors, suppliers or customers.
An acquirer of shares or assets may notify the ACCC of their proposed acquisition as a matter of courtesy (including on a confidential basis), or seek formal or informal clearance for their proposed acquisition from the ACCC, or (based on public benefits) apply to the Australian Competition Tribunal for authorisation of their proposed acquisition.
Informing the ACCC of a proposed acquisition as a matter of courtesy is an abridged form of the informal clearance process. It is usually used where the acquirer is confident that the ACCC will not identify any substantial issues with their proposed acquisition, and their transaction documents do not contain a condition precedent to closure of the acquisition that requires clearance from the ACCC, but the acquirer wishes to avoid delay as a result of FIRB seeking the ACCC’s views or to avoid a ‘please explain’ letter from the ACCC after the acquisition is announced.
Informal clearance process
Informal clearance is a popular notification method. It allows the acquirer to approach the ACCC on a confidential basis for a non-binding view before the acquisition is announced, or on a non-confidential basis once the acquisition is announced, or both.
Approaching the ACCC on a confidential basis is desirable because it gives the acquirer and the ACCC an opportunity to identify and narrow any issues before the ACCC commences its market inquiries to assess the likely effect on competition of the proposed acquisition. During market inquiries, the ACCC actively canvasses information from competitors, suppliers and customers of the parties to the proposed acquisition, as well as other interested persons (including government departments and agencies).
The ACCC does not publish applications for clearance, but may make non-confidential information contained in applications available to market participants when it seeks their views.
Most non-complex mergers receive informal clearance from the ACCC within eight weeks from the date on which the ACCC commences its market inquiries.
More complex mergers may require a two-stage review, which involves the ACCC conducting two rounds of market inquiries, punctuated by the publication by the ACCC of a statement of issues. A Statement of Issues sets out the concerns identified by the ACCC during its first round of market inquiries and forms the focus of the ACCC’s second round of market inquiries. In cases where the ACCC publishes a statement of issues, the clearance process takes 12 weeks or – as is usually the case – substantially longer.
For example, the clearance processes for CSR’s acquisition of Boral, Royal Dutch Shell’s acquisition of BG Group and Coles’ proposed acquisition of nine Supabarn stores (which is still ongoing at the time of writing) each took at least six months, while the acquisition of iiNet by TPG Telecom took nearly three months. At the time of writing Halliburton’s proposed acquisition of Baker Hughes Incorporated has been under review by the ACCC for over nine months and is still ongoing. It is possible that reviews take this length of time because of delays in the deal process that are outside the ACCC’s control, but this is not clear from the public record.
Informal clearance results in the ACCC providing a letter of comfort to the acquirer, stating that it does not intend to oppose the acquisition based on the information considered. It does not confer statutory immunity and is not subject to merits review. It is rare for the ACCC to provide a letter of comfort to the acquirer and subsequently decide to oppose an acquisition. We are only aware of two instances where this has occurred since 1974. In one of those instances, we understand the ACCC considered that the acquirer deliberately misled it. In the other instance, the ACCC considered that a material change in circumstances occurred after it issued the letter of comfort.
During the informal clearance process, the ACCC will protect the identity of complainants.
Authorisation from the Tribunal
During 2013–2014 there were two applications to the Tribunal for the authorisation of proposed mergers – the first instances of this statutory authorisation process being invoked – and one in 2014–2015.
Unlike the ACCC’s informal merger review process, the Tribunal’s process is relatively transparent, is subject to a statutory time clock (with six months being the maximum period for the review) and, if granted, results in statutory immunity from prosecution for the merger. Under the process, the three-person Tribunal must be satisfied in all the circumstances that the proposed merger would result, or be likely to result, in such a benefit to the public that the merger should be allowed to occur. In effect, the Tribunal is required to weigh up the claimed public benefits that are likely to result from the proposed acquisition against the detriment arising as a result of any lessening of competition from the merger.
The first to reach the Tribunal was Murray Goulburn’s application for authorisation of its proposed acquisition of Warrnambool Cheese and Butter Factory Company in late 2013. The application was withdrawn after Murray Goulburn’s offer to acquire Warrnambool Cheese and Butter Factory Company was trumped by a higher offer from the Canadian-based Saputo Inc.
In March 2014, the ACCC announced that it would oppose the acquisition of the electricity generation assets of the state-owned Macquarie Generation business by vertically integrated energy business AGL, as part of the New South Wales (NSW) government’s privatisation process. In response to a request for informal clearance from AGL, the ACCC declined to grant informal clearance because it considered that the proposed acquisition would substantially lessen competition in the market for the retail supply of electricity in NSW. In particular, the ACCC was concerned about increased barriers to entry and expansion flowing from a significant reduction in hedge contract liquidity, and an increase in AGL’s ability and incentive to withhold competitively priced and customised hedge contracts.
On 24 March 2014, AGL made an application to the Tribunal seeking authorisation for the proposed acquisition, subject to certain behavioural conditions it was prepared to assume. AGL’s application was heard by the Tribunal in Sydney for eight days between 2 and 13 June 2014.
Under the Tribunal process, the role of the ACCC is to assist the Tribunal, principally by preparing a report for the Tribunal but also by making inquiries, calling and examining witnesses and making submissions. In its main report, the ACCC maintained its view that the acquisition was likely to reduce competition with the ultimate effect being that consumers would pay more for electricity, receive lower quality service and be offered less choice.
In contrast, AGL argued that the merger would provide public benefits to the state and the public in the state, particularly because it would provide the state with about A$1 billion, which had been earmarked for the funding of infrastructure improvements in the state. Further, AGL argued that a public benefit would arise from a more efficient operation of the generation assets by AGL, including as a result of A$345 million that AGL had committed to invest in the assets to achieve more efficient operation, and to increase their capacity and longevity (which in turn would allow AGL to generate more and cheaper electricity to the wholesale market).
The Tribunal concluded that the proposed acquisition would result in such public benefit that it should be allowed to occur, reaching the view that the acquisition was not likely to result in a significant detriment to retailers competing in the NSW electricity market. Accordingly, on 25 June 2014, the Tribunal granted an authorisation to AGL that was conditional on AGL offering at least 500MW of electricity hedge contracts to smaller retailers in NSW for a period of seven years.
On 9 July 2015, the ACCC announced its decision to oppose Sea Swift’s proposed acquisition of Toll Marine Logistics Australia. Both companies are suppliers of marine freight services into the Northern Territory. The ACCC declined to grant informal clearance because it considered the proposed acquisition would substantially lessen competition, with Sea Swift and Toll Marine Logistics Australia being the largest two, and on some routes, the only two suppliers of scheduled freight services into the Northern Territory. It was considered that the proposed merger would eliminate competition between the two parties and would also increase the barriers to entry or expansion for other freight providers. On 21 September 2015, Sea Swift made an application to the Tribunal seeking authorisation for the proposed acquisition, but subsequently withdrew its application on 17 November 2015 indicating that it would refile a strengthened application in the future.
Formal clearance process
Formal clearance results in statutory immunity from prosecution for the acquirer to undertake the proposed acquisition or, if the ACCC declines to grant formal clearance, a right to apply to the Tribunal for limited merits review of the ACCC’s decision (but only based on the information before the ACCC).
Applications for formal clearance are subject to transparent statutory procedures, including requirements to submit an application form prescribed by the regulations (which is similar to the European Union’s Form CO).
If the formal clearance procedure is used, the ACCC must make its decision within 40 business days of receiving a valid application, subject to any extensions of the 40-business-day period. In all but one instance, extensions to the 40-business-day period require the consent of the acquirer.
There have been no applications for formal clearance in Australia to date. However, the formal clearance process may be used in Australia in the future, especially if its rules are amended to be less rigid and unworkable and where the acquirer is expecting complaints and desires greater transparency around the identity of the complainants and nature of the complaints than is currently allowed under the informal clearance procedure.
Cartel conduct remains a high enforcement priority for the ACCC.
Parallel civil and criminal regimes
In Australia, cartel conduct is subject to parallel regimes of civil prohibitions and criminal offences. Except for the standard of proof and the requirement to demonstrate intentional participation for the criminal offence, the civil prohibitions and criminal offences have identical elements.
Definitions of cartel conduct
The CCA defines cartel conduct to comprise provisions in contracts, arrangements and understandings between actual or potential competitors that have:
- the purpose or likely effect of fixing, controlling or maintaining prices (or components of prices) for goods or services; or
- the purpose of restricting output, allocating customers or suppliers, or rigging bids.
At the time of writing, there have been no criminal prosecutions for cartel conduct in Australia since the criminal regime was introduced in Australia in the second half of 2009. One reason for this may be that the ACCC must refer criminal cartel matters to the Federal Director of Public Prosecutions (DPP) for criminal prosecution and may only be likely to do so in exceptional cases where, for example, there is recidivism.
Immunity and leniency policies
The ACCC has immunity and leniency policies that encourage participants in cartels to voluntarily notify the existence of cartel conduct in return for full or partial immunity from civil prosecution by the ACCC and from criminal prosecution by the DPP.
The ACCC has power to grant immunity to corporations and their officers and employees from civil prosecution for cartel conduct. However, only the DPP has power to grant immunity to corporations and their officers and employees from criminal prosecution for cartel conduct. In making decisions to grant immunity from criminal prosecution for cartel conduct, the DPP takes into account recommendations made by the ACCC and applies the same criteria as the ACCC when it assesses whether to grant immunity.
The ACCC’s immunity policy provides that only one participant in a cartel will be eligible for immunity, and they need to be first through the door to the ACCC and to fully cooperate with the ACCC’s (or the DPP’s) investigation and prosecution of the cartel. Where a company applies for immunity, it is possible for the company to gain derivative immunity for its officers and employees.
The ACCC’s immunity policy includes an amnesty-plus regime for cartelists who are not eligible for immunity in a cartel already being investigated by the ACCC but who provide the ACCC with evidence of a second cartel, of which the ACCC was not previously aware. If they satisfy the ACCC’s amnesty-plus policy, they gain immunity from prosecution for both cartels.
No double jeopardy
The CCA avoids double jeopardy for cartelists by allowing civil proceedings to be postponed until criminal proceedings are completed. If the defendant is convicted in criminal proceedings, the civil proceedings will be permanently stayed.
Complete defences and exceptions
There are a range of complete defences and exceptions available for cartel conduct, including for limited types of joint ventures.
Authorisation on public benefit grounds
Proposed cartel conduct may be authorised by the ACCC if the parties can demonstrate that the public benefits of the cartel conduct would likely outweigh the anticompetitive detriment from the cartel conduct.
Seeking authorisation involves a transparent process that is subject to statutory time frames and that can take up to six months. The ACCC does not have power to authorise cartel conduct that has already occurred. Rather, it may only grant authorisation on a prospective basis.
Other forms of anticompetitive conduct
The CCA also prohibits misuse of substantial market power for an anticompetitive purpose, resale price maintenance, provisions in contracts, arrangements and understandings that have the purpose or likely effect of substantially lessening competition, and certain types of vertical conduct (either on a per se basis or where the conduct has the purpose or likely effect of substantially lessening competition).
In each of those cases, the prohibitions are civil in nature.
The ACCC regularly seeks relief in the Federal Court for breaches of these prohibitions.
For example, the ACCC has obtained civil penalties of A$4.9 million from Baxter Healthcare for breaches of the prohibitions on misuse of market power and vertical conduct; A$14 million against Cabcharge for breaches of the prohibition on misuse of market power; A$2.5 million against Ticketek for breaches of the prohibition on misuse of market power; and A$2.2 million against Mitsubishi for resale price maintenance conduct.
In cartels, the ACCC has previously obtained civil penalties of A$8.2 million from suppliers involved in a fine paper cartel; A$36 million from Visy for its involvement in the corrugated cardboard box cartel; and A$98.5 million from a number of airlines involved in the air freight cartel.
In 2014, the ACCC also obtained civil penalties of A$11million against Flight Centre for conduct that was found to be six separate attempts to engage in price fixing (under the prohibition as it stood before the cartel laws were introduced). This penalty amount has subsequently been overturned following the Full Federal Court’s appellate decision in favour of Flight Centre in July 2015.
Penalties for contraventions of the CCA
The Federal Court may impose substantial penalties for breaches of the competition provisions in the CCA. For both civil and criminal prohibitions, corporations face maximum fines and pecuniary penalties of the greater of:
- A$10 million;
- three times the gain from the contravening conduct; or
- where the gain cannot be ascertained, 10 per cent of the corporate group’s annual turnover attributable to Australia.
Individuals face up to 10 years in prison or fines of up to A$340,000 per criminal cartel offence, while the maximum pecuniary penalty for individuals for a civil contravention is A$500,000. It is also illegal for a corporation to indemnify its officers against legal costs and any financial penalty.
The ACCC’s investigatory powers
The ACCC has a broad remit to investigate suspected breaches of the CCA. While the ACCC can and does instigate investigations on its own account, it also receives thousands of complaints each year from businesses and consumers.
The ACCC has power to compel the production of information and documents and to cross-examine individuals under oath without privilege against self-incrimination.
In addition to its ability to request information on a voluntary basis, the ACCC’s most effective investigatory tool is the section 155 notice. This is a statutory notice requiring that recipients produce information and documents, and make available individuals for cross-examination under oath and without privilege against self-incrimination. Information which is subject to legal professional privilege can be withheld from the ACCC.
Section 155 notices often impose a considerable burden on their recipients by requiring the analysis, collation and production of a large number of documents and, in some cases, a significant amount of information within a limited time frame. However, section 155 notices are used relatively sparingly, and the ACCC is usually willing to negotiate over the scope of the notice to ensure that it obtains the most relevant material in the shortest possible time frames, including in tranches.
Search and seizure powers
The ACCC may apply to a federal magistrate to obtain warrants to conduct ‘dawn raids’ or to enter and search premises, make copies of the material specified in the warrant, and to seize equipment, CDs, files and other storage devices.
When the ACCC conducts a search pursuant to a warrant in relation to a criminal matter, it has the ability to seize material not specified in the warrant if:
- there are reasonable grounds to believe that the material is evidence of an indictable offence against the CCA; and
- seizure of the material is necessary to prevent it from being destroyed or concealed.
Access to infrastructure
The CCA contains a statutory access regime that allows third parties to acquire services produced by natural monopoly infrastructure (such as rail, port and transmission facilities). Some Australian states and territories have enacted legislation that contains access regimes that sit alongside the Commonwealth regime. The state and territory access regimes are not administered by the ACCC.
The purpose of the access regimes is to promote the economically efficient operation and use of infrastructure, including by removing bottlenecks in Australia’s supply chains.
The CCA’s access regime is conceptually similar to the United States’ ‘essential facilities’ doctrine, though it differs significantly in procedure and substance. Under the CCA, specific services produced by means of infrastructure are ‘declared’ by the Federal Treasurer, based on a recommendation from the National Competition Council (NCC).
The NCC cannot recommend declaration of a service unless it is satisfied of each of the criteria set out in the CCA, including that:
- the access would promote a material increase in competition in at least one market, other than the market for the service (namely, there must be a benefit to competition in an upstream or downstream market different to the relevant infrastructure services market);
- it would be uneconomical for anyone to develop an alternative facility to provide the service; and
- the facility is of national significance, in terms of size, trade or economic value.
Once the service is ‘declared’, the service is provided on terms and conditions agreed by the provider of the service and its customers or determined in a binding arbitration conducted by the ACCC.
The ACCC may make a range of arbitral determinations, including requiring the access provider to expand the infrastructure. However, the ACCC cannot make a decision that would prevent an existing user (including, where relevant, the infrastructure owner) obtaining sufficient capacity to meet its actual or reasonably anticipated requirements.
The statutory access regime in the CCA also allows owners of infrastructure to seek approval from the ACCC for voluntary access undertakings, which set out the terms and conditions on which they will provide certain services.
Unlike other jurisdictions, access to infrastructure plays an important role in Australia’s economy and occupies a significant portion of the resources of the ACCC and state regulators in Western Australia, Queensland, New South Wales and Victoria.
In February 2014, the Productivity Commission released its final report into the national access regime, which recommended that the regime be kept in place, but that there should be amendments made to four of the declaration criteria, in order to ensure that the access regime was only applicable in appropriate situations. The government’s response to the Productivity Commission’s report was released on 24 November 2015. The government supported 12 recommendations, noted one and supported recommendation 42 of the Harper Review (which recommended that the declaration criteria in Part IIIA of the CCA should be targeted to ensure that third-party access only be mandated where it is in the public interest) in part.
Significantly, the government supported the introduction of a new test for the ‘uneconomical’ criterion in relation to a facility, suggesting this should be satisfied where ‘total foreseeable market demand for the infrastructure service over the declaration period could be met at least cost by the facility’. This is a significant change from the ‘private profitability’ test applied by the High Court in its decision in the 2012 Pilbara rail access matter.
Australia’s consumer protection provisions are backed by substantial penalties for breaches and additional enforcement powers for the ACCC (including powers to issue substantiation notices, infringement notices and public warning notices).
Australia’s consumer protection regime extends to:
- unfair contract terms;
- unconscionable conduct;
- misleading or deceptive conduct, which includes the use of misleading and false advertising, names and market practices (including lookalike products);
- bait advertising, referral selling, inertia selling, multiple pricing and manufacturer and extended warranties;
- door-to-door sales and outbound telesales;
- consumer guarantees for goods and services; and
- product safety and product recalls.
The ACCC enforces consumer protection laws vigorously at the national level. State and territory consumer regulators (such as the New South Wales Office of Fair Trading and Consumer Affairs Victoria) also enforce consumer protection laws at the local level.
Importantly, the unfair contract terms regime requires all consumer-facing businesses to ensure that any standard form contracts do not contain any unfair terms. An ‘unfair term’ is void and consumers and regulators have the ability to seek a declaration from a court.