On 30 October 2015, the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Regulator (AER) released their joint 2014-2015 Annual Report.

The 402-page report provides a comprehensive review of the performance of the ACCC and AER against their goals, which include:

  • maintaining and promoting competition;
  • protecting the interests and safety of consumers;
  • promoting the economically efficient operation of, use of, and investment in monopoly infrastructure; and
  • supporting the efficient operation of energy markets.

Key statistics

Merger reviews

  • The ACCC considered 322 merger review matters under section 50 of the Competition and Consumer Act 2010 (CCA).  Of those matters:
    • 278 were pre-assessed as not requiring a public review (an increase of 15% from the previous year);
    • 42 were subject to a public review; and
    • 2 were subject to a confidential review.
  • Significantly, no matters were opposed outright, although section 87B undertakings were accepted in 7 matters to address competition concerns.
  • Overall, 97% of all mergers (including pre-assessments) were cleared unconditionally. That figure reduces to 80% when pre-assessments are excluded.
  • In addition, the ACCC:
    • issued 33 final authorisation decisions across a wide range of industries;
    • received 777 exclusive dealing notifications involving 455 separate matters; and
    • published statements of issues in 8 merger review matters.

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Proceedings

  • 21 proceedings were commenced by the ACCC in 2014-2015, which represents a decrease of 30% from the previous year.

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  • In total, the ACCC was involved in 59 separate proceedings in 2014-2015, with 17 of those proceedings concluding in the financial year.

Penalties

  • The ACCC was successful in having total penalties of over $28 million awarded against contraveners of the CCA and the Australian Consumer Law (ACL). Although this is consistent with the total penalties awarded in 2013-2014 (also over $28 million), both years represent a sharp decrease from the $53.23 million awarded in 2012-2013 (of which penalties in the air cargo cartel proceedings comprised more than 75%).
  • In addition, the ACCC received payment in relation to 16 infringement notices from 12 businesses (totalling over $522,000 – more than double the previous year’s total).

Undertakings

  • The ACCC accepted 20 section 87B undertakings – 12 in relation to competition concerns and 8 in relation to consumer protection matters (a change from 10 and 14 in the previous year, respectively).

Section 155 notices

  • The ACCC issued 303 notices pursuant to section 155 of the CCA (up from 290 in the previous year).

Disqualification orders

  • There were no disqualification orders made.

Key themes

Internet shopping

The report demonstrates that the ACCC has been particularly focused on consumer protection issues on the internet. These issues include:

  • Comparator websites: Comparator websites across various industries (including energy, travel and insurance) were one of the ACCC’s top priorities this year. The report noted that, despite being able to increase transparency and promote competition, comparator websites also have the potential to be used to mislead and deceive consumers. The ACCC has recently released consumer and industry guidance for consumers using, and businesses operating, comparator websites.
  • Fake online reviews: The ACCC has commenced proceedings against a company trading as Electrodry in relation to its alleged involvement in posting fake reviews. The report notes that fake reviews can potentially mislead consumers and give businesses an unfair competitive advantage.
  • Drip pricing: The ACCC has expressed concerns in relation to the incremental disclosure of fees and charges during the online booking process, which it says is not transparent and makes it hard for businesses to compete on a level playing field. The ACCC has written to 17 business to alert them of their obligations in relation to pricing.
  • Online group buying: The ACCC has received a significant number of complaints regarding group buying websites, including unreasonable delays in receiving goods, difficulties in redeeming vouchers, and possible misleading representations about the product or service that is the subject of the offer. In December 2014, the ACCC received a court enforceable undertaking from LivingSocial as a result of ACCC concerns about a term in its consumer contracts and representations made on its website.

Product recalls

In 2014-2015 the ACCC actively administered 596 product safety recalls, 230 of which were related to motor vehicles. The report notes that the number of major product recalls, including in relation to airbags, means every business should be “paying close attention to the integrity of their supply chain”.

Section 155 notices

The only challenge to the validity of the 303 notices issued by the ACCC in 2014-2015 was by Moses and Paul Obeid in respect of alleged cartel-related conduct. Those proceedings were dismissed by the Full Court on 20 November 2014.

In a previous post, we commented on the ACCC taking a tough stance on section 155 notices, with two separate proceedings being commenced by the ACCC in 2014-2015 for non-compliance with section 155 notices.

In addition, we note that the Competition and Consumer Amendment (Deregulatory and Other Measures) Bill 2015(Cth) (currently before the Federal Parliament) proposes the introduction of a new sub-section which would permit a court (on application by the ACCC) to make an order directing compliance with a section 155 notice. The proposed sub-section is to the same effect as the amendments sought by the ACCC in its submission to the Harper Review. Read our post on the effect of these proposed changes here.

On the horizon

The ACCC’s priorities for the year ahead include:

  • competition and consumer issues in the health and medical sectors;
  • emerging issues in the online marketplace;
  • misleading discount claims in the energy sector; and
  • ensuring compliance with new or amended industry codes of conduct (e.g. the new Food and Grocery Code).

The report also foreshadows a number of matters that will be on the ACCC’s agenda, including:

  • Agriculture:  raising the level of its enforcement and engagement work in the agricultural sector following the establishment of its Agricultural Enforcement and Engagement Unit. We also note that the Federal Government announced in the Agricultural Competitiveness White Paper that it intends to appoint a new ACCC Commissioner with particular responsibility for agricultural issues.
  • ACL Review:  a review of the ACL (to be conducted by Consumer Affairs Australia and New Zealand) kicked off in June swith public consultation due to start in early 2016. A final report is expected in March 2017.

Finally, we anticipate that the High Court’s upcoming judgment on the role of agreed penalties in the CFMEU proceedings will be decisive in setting the tone for enforcement this year. Read our previous post on the Full Court’s decision here.