RECENT ENFORCEMENT DEVELOPMENTS

ACCC acts on alleged false or misleading juice representations

On 28 May 2015, the ACCC announced that Supabarn Supermarkets Pty Ltd (Supabarn) and The Real Juice Company Pty Ltd (The Real Juice Company) have each paid penalties totalling $20,400, following the issue of two infringement notices to each company by the ACCC.

The ACCC issued the infringement notices because it had reasonable grounds to believe that Supabarn, a supermarket operator, and The Real Juice Company, a juice manufacturer, had made false or misleading representations about the composition of the private label 2 litre apple juice and 2 litre cranberry juice products, in contravention of the Australian Consumer Law.

By using the phrases “it’s produced locally using the freshest quality Apple”, “Straight From a Farm” and “Made in Griffith” the companies represented that the apple juice was made from fresh apples grown in Australia. However, the product was actually made from reconstituted apple juice concentrate imported from China.

The package labelling on the cranberry juice used the phrases “No added sugar; No artificial flavours; No artificial colours; No preservatives”, “So if you like your juice fresh with nothing else added” and “It’s really just fruit juice”. In fact the cranberry juice contained added sugar and other additives.

Wholesalers and retailers can both be held responsible for false or misleading representations made on packaging or labelling. Truth in advertising is a current priority area for the ACCC.

RECENT MERGER DEVELOPMENTS

Federation Centre’s proposed acquisition of Novion Property Group

On 21 May 2015, the ACCC announced that it will not oppose the proposed acquisition of Novion Property Group (Novion) by Federation Centre after accepting court-enforceable undertakings from both parties that in the event the acquisition proceeds, either Federation Centre or Novion will divest their Karingal Hub or Bayside shopping centre, respectively, in South East Melbourne to an approved purchaser within a specified (confidential) period.

Federation Centres owns (or co-owns) 65 shopping centres and Novion owns (or co-owns) 27 across Australia. Following the divestiture of Karingal Hub or Bayside in South East Melbourne, the merged entity will own 91 shopping centres making it the second largest owner of shopping centres in Australia.

The ACCC considered that the acquisition will not give rise to competition concerns in the majority of relevant markets the parties operate in due to sufficient competition from alternative shopping centre managers nor will it substantially lessen competition in the overall supply and management of shopping centres.

The ACCC was concerned about the proposed acquisition’s effect on competition in South East Melbourne where the parties own the only two large multi-purpose shopping centres within 20 km of the Frankston CBD. The ACCC concluded that Karingal Hub and Bayside are each other’s closest competitors in the region and that absent any divestitures the proposed acquisition would result in a substantial lessening of competition in that relevant market. The court-enforceable undertaking that imposes an obligation to divest falls away if the other party has already divested. The aim of the undertakings is to ensure, amongst other things, that the purchaser of the divested shopping centre will have all the necessary assets and rights to compete effectively with the merged entity. It has been reported that Federation Centres has now sold a half-stake in the Karingal Hub shopping centre to ISPT (property fund manager) for $115 million, satisfying the requirements of the undertaking.

A public competition assessment will be issued in due course.

RECENT AUTHORISATION DEVELOPMENTS

Australian Directors Guild Limited

On 20 May 2015, the Australian Directors Guild Limited (ADG) lodged an authorisation application for current and future members to collectively negotiate and to give effect to a model agreement when contracting with television producers to direct television series and serials. The model agreement would affect current and future members of the Screen Producers Australia (SPA), current and future television producers who receive funding from SPA and current and future television producers who benefit from the Producer Offset Tax Rebate, which is administered by the SPA.

The ADG has argued that increased bargaining power for directors in negotiations and improvements in the level of input that directors have in contractual negotiations would be among the public benefits. Other benefits include reduced transaction costs for ADG and SPA members, overcoming information asymmetry through augmented access to resources for directors and assisting the SPA in public funding applications.

The ADG submits that the proposal will not result in any public detriment, as the model agreement is voluntary and does not prevent directors and producers from negotiating their own agreements for television series and serials. Rather, the proposed model agreement provides a benchmark by which directors can ensure minimum terms of engagement are satisfied.

The ACCC has already contacted interested parties, including the Department of Communications, the Australian Communications and Media Authority and all the major television broadcasters for consultation. Submissions close on 12 June 2015.

OTHER DEVELOPMENTS

ACCC lodges submission on Harper Review recommendations

On 29 May 2015, the ACCC lodged its submission to the Treasury in response to the Harper Review Final Report (Final Report). The ACCC supports most of the recommendations of the Final Report, but has particular concerns regarding the cartel conduct prohibition (Recommendation 27), exclusive dealing coverage (Recommendation 33) and the National Access Regime (Recommendation 42).

The ACCC is concerned that the Final Report’s recommended drafting of changes to the cartel conduct contraventions will be less effective in preventing cartel conduct. In particular, the ACCC is concerned that the simplified drafting may create a risk that conduct currently captured by the provisions will fall outside the scope of the new prohibitions. The Panel intended to remove conduct which may be beneficial from the scope of the cartel prohibitions so that it may be assessed by reference to whether it substantially lessens competition. However, the exceptions contained in the Panel’s model legislation are susceptible to abuse and may prevent outright cartel conduct being addressed as criminal behaviour under theCompetition and Consumer Act 2010 (Cth) (Act).

The ACCC recommends these issues be addressed through changes to the draft legislation proposed by the Panel. In the alternative, the ACCC suggests it is better to leave the current cartel provisions in place, despite their complexity, to ensure Australia can take effective action against hard core cartel conduct.

The Final Report recommended repealing the exclusive dealingprovision (section 47 of the Act) and instead, addressing exclusive dealing in sections 45 and 46 of the Act. In response to this recommendation the ACCC submitted that sections 45 and 46 would fail to adequately fill the gap left by the repeal of section 47, as section 47 uniquely covers situations where the relevant conduct does not amount to an agreement (an offer or refusal) and where unilateral conduct by an entity without a substantial degree of market power still has the purpose or likely effect of substantially lessen competition.

In the alternative, the ACCC supports a simplification of section 47 of the Act but noted that the revisions in the proposed model legislation are actually wider than the current scope of section 47.

The ACCC re-emphasised its position, made in previous submissions that any changes to the provisions controlling theNational Access Regime should be consistent with those recommendations made in the Productivity Commission’s 2013 Report.

The Productivity Commission recommended that the criteria focused on whether access promotes competition and that the “privately profitable” test should be revised to a “natural monopoly” test. In contrast, the Harper Review recommended that for access to be granted it must promote a substantial increase in competition in a dependent market that is nationally significant and it must be uneconomical for anyone else to develop another facility to provide the service.