The ACCC has recently announced its enforcement priorities for 2016.  As outlined below, the ACCC's priorities are a combination of continuing priorities in relation to such matters as cartels, misuse of market power and consumer guarantees, as well as new priorities including notably a focus on competition and consumer issues in the agriculture sector.

In addition, while the Government's consideration of the Harper Review recommendations continues, new legislation has just been passed to prevent businesses imposing excessive surcharges on customers for the use of payments methods such as credit and debit cards.  We provide an overview of these new prohibitions below.

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ACCC Enforcement Priorities 2016

ACCC Chairman, Rod Sims, has announced the regulator's priorities for 2016.

In summary, key priorities include:

  • cartel enforcement, where the ACCC expects one or two criminal prosecutions this year;
  • agriculture, where there will be a market inquiry into the competitiveness of the agricultural sector;
  • health and medical sector, particularly in relation to the disclosure practices of health service providers as well as misleading health claims in relation to food products;
  • consumer guarantees, especially in relation to express and extended warranties; and
  • vulnerable and disadvantaged consumers.

Consumer protection

The ACCC has announced its intention to prioritise matters relating to indigenous consumers, vulnerable and disadvantaged consumers, product safety, consumer guarantees, new car retailing, health, scams disruption, unfair contract terms for small business and industry codes.

Mr Sims identified recent enforcement actions the ACCC has taken regarding various misleading and unconscionable practices targeting indigenous consumers, older consumers and consumers who are newly arrived in Australia.

Product safety issues and consumer guarantees were also noted in the context of the regulator's recent proceedings against Woolworths which resulted in over $3 million in penalties for ACL safety breaches, and recent and ongoing actions regarding misleading representations about consumer guarantees, particularly in the context of businesses offering extended warranties. Consumer guarantees in relation to new car retailing was specifically identified as an area of focus.

With regards to industry codes, Mr Sims noted that 'concentrated industries' have been a priority for the ACCC in past years, but the regulator is shifting its focus to the Food and Grocery Code of Conduct, as well as industry codes more generally, including the Franchising Code of Conduct and Horticulture Code of Conduct.

Competition

The ACCC has announced its intention to continue to prioritise matters related to cartels, anti-competitive conduct and practices, and misuse of market power.

Mr Sims noted that the ACCC has around 20 cartel investigations underway at any one time, and expect one or two criminal prosecutions this year, along with other civil proceedings. He indicated that the regulator feels there is more work to do in the area of government procurement, noting the ACCC's current proceedings in relation to the Mount Penny coal exploration licence tender.

Advocacy, market studies and compliance

The ACCC has announced that competition and consumer issues in the agriculture sector will be a new priority. Mr Sims said that these will be a primary focus of the ACCC's market studies, picking up concerns raised in the Federal Government's Agriculture White Paper regarding increasing consolidation beyond the farm gate and unfair trading practices through the agricultural supply chain.

Coinciding with this, on 24 February the Federal Government appointed Mr Mick Keogh as the ACCC's first Agriculture Commissioner. The ACCC has also established an Agriculture Enforcement and Engagement Unit which will have additional staff to conduct investigations and engagement in rural and regional areas with funding provided through the Agriculture White Paper.

In addition to agriculture, the ACCC is also conducting regional petrol market studies to investigate higher petrol prices and margins in certain regional locations, as well as finishing its ongoing East Coast Gas Inquiry.

Ban on excessive payment surcharging

On 22 February, Federal Parliament passed the Competition and Consumer Amendment (Payment Surcharges) Bill 2015, which upon receiving royal assent will insert a new 'Part IVC' in the Competition and Consumer Act 2010 (Cth) (CCA), prohibiting 'excessive surcharges' on any payments covered by a Reserve Bank standard or regulations made under the CCA.

Those standards or regulations will set the permitted surcharge levels for the relevant payments, which are presently likely to be payments made via the MasterCard, VISA, and American Express Companion Card Scheme systems, and designated debit and prepaid cards (VISA, MasterCard and EFTPOS).

The new CCA provisions include a statement that the object of the new Part IVC, "is to ensure that payment surcharges:

  • are not excessive; and
  • reflect the cost of using the payment methods for which they are charged."

The new laws will affect all companies who impose credit card payment fees or surcharges, but will particularly impact on industries such as airlines, ticketing companies and taxis. In order to ensure compliance, merchants who wish to impose surcharges will need to obtain information about the cost of each payment product from their supplier of acquiring services so that any surcharges imposed are not excessive and reflect the actual cost of the specific payment method.

Enforcement and proposed penalties

Contravention of the new prohibition will attract a maximum pecuniary penalty of up to 6,471 penalty units (currently $1,164,780) for a corporation and up to 1,295 penalty units (currently $233,100) for other persons.  Other civil remedies, such as damages and injunctions, will also be available for breach of this prohibition.

The ACCC has been given the power to issue infringement notices of up to 600 penalty units for listed companies (currently $108,000), 60 penalty units for other companies (currently $10,800) and 12 penalty units for individuals (currently $2,160) for each offence.

In support of its enforcement powers, the ACCC has also been given the power to issue notices requiring a merchant or other person involved in payment processing to provide information or documents evidencing the amount of a payment surcharge and/or the cost of processing a payment in relation to which a surcharge was paid.  This will enable the ACCC to determine whether a surcharge has been excessive.

Proposed RBA surcharging standards

Draft RBA standards and an accompanying consultation paper show that at present the RBA intends to introduce limits on the amount merchant businesses can surcharge customers for the use of these payment methods.  The charges need to be referrable to the direct cost of providing the credit card payment method.  The RBA consultation paper also covers proposed changes to the regulation of interchange fees.

As the Bill does not itself impose these limits, the new rules will only come into effect with the implementation of the RBA standards, which are still being finalised. The ACCC, which will enforce the standards, has indicated that it will provide guidance to businesses in coming months, once the RBA's consultation process is finalised.

Post-Harper Review consideration continues

The Federal Government has recently undertaken a further consultation process on options to strengthen the prohibition against misuse of market power in section 46 of the CCA following the Harper Review's recommended changes to this and other prohibitions against anti-competitive conduct.  The Government has indicated that it is aiming to finalise its position on what if any changes there should be to section 46 of the CCA by the end of March 2016. 

The Federal Government previously announced in late November 2015 its response to the other recommendations of the Harper Review.  As part of that response, the Federal Government indicated that it would consult with the states and territories on proposed amendments to the CCA to implement many of the Harper Review recommendations, including the introduction of a prohibition on concerted practices, simplifying cartel laws, streamlining merger clearances, introducing a class authorisation process and establishing more flexible collective bargaining provisions.