ACCC raises concerns with various merger matters
The Australian Competition and Consumer Commission ("ACCC") continues to closely examine applications for merger clearance, including undertaking extensive market testing, raising issues and imposing divestments on a number of recent transactions. Notably, the ACCC:
- published a Statement of Issues ("SOI") regarding Dye & Durham's ("DD") proposed acquisition of Link. DD is a provider of technology solutions. Link holds a 42.77% shareholding in PEXA, the only fully operational electronic conveyancing platform in Australia. The ACCC said this vertical integration would entrench DD as a significant supplier of software to lawyers and conveyancers. The ACCC's indicative decision date is 8 September 2022;
- published a SOI regarding THL's proposed acquisition of Apollo, citing horizontal concerns alleging they are the two largest competitors for the rental of motorhomes in Australia. The ACCC's indicative decision date was 21 July 2022 (since delayed, pending receipt of further information);
- approved Culligan's proposed acquisition of Waterlogic subject to Waterlogic's divestment of its "Billi" business. The ACCC argued the transaction would otherwise result in a substantial lessening of competition as the parties are both leading providers of instant water taps; and
- cleared Aurizon's proposed acquisition of One Rail subject to a divestment remedy. The divestment remedy provides for either a trade sale or demerger of the divestment business into a separate listed entity.
While Australia has a voluntary merger filing regime, the ACCC is a very active regulator in reviewing proposed mergers. Careful consideration should always be given to whether a merger which may impact Australian markets should be notified to the ACCC.
ACCC seeks contempt charges against party for non-compliance with undertakings
The ACCC has instituted criminal contempt proceedings against Ultra Tune for allegedly breaching various court orders handed down in 2019. This case is an important reminder that the ACCC is not only active in pursuing enforcement action for alleged breaches of competition and consumer laws, but it also actively monitors and enforces undertakings and other remedies imposed on parties. Businesses should be mindful of this when negotiating commitments with the ACCC and must ensure if they have given any undertakings that these are fully complied with.
In 2019, Ultra Tune was found to have breached the Australian Consumer Law and the Franchising Code of Conduct in relation to its statements to franchisees about its marketing fund expenditure. These statements were found to contain insufficient detail to franchisees about how those funds were being used by Ultra Tune. Ultra Tune is required to provide franchisees this information under the Franchising Code of Conduct.
Ultra Tune was penalised AUD 2.104m in 2019 for its conduct, and various orders were made including for Ultra Tune to implement a compliance program. The compliance program required an Ultra Tune Compliance Officer to provide quarterly reports to the ACCC on the continuing effectiveness of its compliance program.
The ACCC alleges that between April and December 2021, Ultra Tune failed to ensure its Compliance Officer provided these reports to the ACCC in contravention of the 2019 orders.
The ACCC has now commenced criminal contempt of court proceedings against Ultra Tune, citing the importance of holding Ultra Tune to account given their prior contraventions.
ACCC grants interim authorisation to address energy crisis
The interim authorisation allows participants in gas and electricity markets to work together to support Australia's energy supply and systems. We anticipate energy markets to be an area of focus for the ACCC, aligning with current economic trends and the ACCC's 2022-23 enforcement priorities. This matter also reminds us that authorisation may be available for conduct which would contravene Australian competition laws if the conduct would have a net public benefit.
On 29 June 2022, the Australian Energy Market Operator ("AEMO") lodged an urgent application to the ACCC for interim authorisation to allow industry participants to co-ordinate efforts to address issues impacting the safety, security and reliability of Australia's energy supply by allowing industry participants to share essential personnel, parts and equipment, and certain operational information.
The ACCC approved the interim authorisation application on 1 July 2022, two days after lodgement. The interim authorisation will remain in place until the ACCC has made its final determination on the AEMO's substantive application for authorisation (which it has sought for a period of 9 months).
In approving the AEMO's application, the ACCC cited increased prices for energy, largely fuelled by an increase in demand as Australia emerges from various COVID-19 lockdowns, while supplies remain constrained by the pandemic, sanctions imposed on Russia, recent extreme weather events, and reliance on ageing coal-fired power stations.
This comes after the Federal Treasurer wrote to the ACCC on 6 June 2022 to formally request that the ACCC investigate conduct in electricity and gas markets. The letter expressed concern about increases in prices and the competitiveness of domestic industries and the viability of certain energy retailers.
Strong ACCC enforcement in respect of consumer law claims
There has been significant enforcement activity against alleged contraventions of the Australian Consumer Law ("ACL") in recent months. Notably, there have been large penalty decisions (with one over AUD 40m) from the Federal Court of Australia ("FCA") involving misleading representations/claims.
The ACCC has instituted a number of new FCA proceedings over similar alleged contraventions, and has also filed an appeal against an earlier finding by the FCA that a car manufacturer had not engaged in unconscionable conduct in relation to misleading statements to consumers about their ACL rights.
These matters demonstrate how active the ACCC is in pursuing enforcement of alleged contraventions of the ACL. These matters are a pertinent reminder for businesses to ensure their engagements with consumers are compliant with the ACL.