The Australian Competition and Consumer Commission (ACCC) has hit the ground running in 2023, setting its sights on the pricing of essential services in a bid to crackdown on the rising cost of living.
The regulator will be targeting the gas, childcare and telecommunications industries and warned the business community that it has new and existing enforcement powers and is not afraid to use them. Importantly, these matters are in addition to the 2022-23 Compliance and Enforcement Policy and Priorities and reinforce the ACCC’s focus on existing and emerging issues and their potential impact on consumer welfare and the competitive process in Australia.
Businesses and stakeholders are therefore encouraged to take note and refresh themselves of the types of conduct and the industries which the ACCC is concentrating their resources on in the new year.
In its July 2022 Gas inquiry 2017-2025 Interim report, the ACCC forecasted gas price increases and warned the east coast gas market was facing a gas shortfall in 2023 which could impact the stable operation of Australia’s electricity network.
In response, the ACCC’s role as infrastructure regulator was enhanced in December when the Australian Government handed the ACCC wide-reaching powers under the Competition and Consumer (Gas Market Emergency Price) Order 2022.
Under the Order, wholesale gas prices are temporarily capped at $12 per gigajoule for gas sold by East Coast and Northern Territory gas producers and their affiliates to wholesale customers in Australia. The ACCC has since published interim Compliance and enforcement guidelines explaining how the ACCC intends to exercise its enforcement role.
While the guidelines are intended to support the gas industry with their obligations to comply with the new laws, the ACCC said it is ready to exercise its enforcement powers in response to any alleged contraventions, particularly any conduct that may be intended to circumvent the price cap. This is particularly relevant as the ACCC has been granted maximum pecuniary powers under the Competition and Consumer Act 2010 (Cth) to enforce the price cap against corporations including fines the greater of; $50 million, three times the value of the benefit obtained, or 30% of annual Australian turnover of the corporation in the preceding 12 months if the value of the benefit cannot be determined.
As part of the order, the ACCC will also be preparing a mandatory industry code of conduct to ensure Australians in the east coast gas market have access to Australian gas at reasonable prices and on reasonable terms. Preparation of this code is already underway and the provisions are expected to be released for industry consultation in tranches as they progressed.
The ACCC has resolved to crack down on the cost of childcare and associated out of pocket costs in 2023, which have continued to rise despite government intervention. This will support the inquiry the regulator was tasked with by the Australian Government which will review the market for the supply of childcare services.
The ACCC has begun examining and considering the costs of operating childcare, including employees’ wages and property costs; the level of competition in the childcare market; the level of demand and supply; and prices charged to consumers, including any impacts of government policy. It is also considering the quality, accessibility and affordability of childcare across different geographies, age groups and children’s needs, as well as different forms of childcare including centre-based care, outside school hours care and family day care.
The ACCC is already well progressed on this inquiry which will determine whether the current government mechanisms and subsidies are achieving their price limiting intention. The regulator is expected to provide an interim report by 30 June 2023 and wrap up the inquiry by the end of the year.
In the meantime, the ACCC will continue to track any changes in childcare standards and pricing after new childcare subsidies kick in mid-year.
Telecommunications providers and retailers are also on notice in 2023 for any attempts to mislead customers on pricing, following significant and successful enforcement activity last year.
The regulator initiated proceedings against Telstra for allegedly making false or misleading representations about upload speed to residential broadband customers of its cheaper brand, Belong. It also secured admissions from Australia’s three largest internet service providers for making false or misleading representations to consumers when promoting certain NBN internet plans. And the ACCC decided not to authorise proposed regional mobile network arrangements between Telstra and TPG after taking the view the arrangement would likely lead to less competition in the longer term and leave mobile users worse off over time, in terms of price and regional coverage.
In addition, the ACCC will continue its work cracking down on scams, which often target vulnerable and disadvantaged people, after combined losses of over $2 billion reported to Scamwatch, the government and the financial sector in 2021. The regulator has warned that part of this onus would fall to digital platform providers, particularly after the significant Optus and Medibank data breaches, and recommended new measures to address harms from digital platforms including mandatory dispute resolution processes and stronger requirements for combating scams, harmful apps and fake reviews in the fifth report of the ACCC’s five-year Digital Platform Services Inquiry.
In addition to the above priorities, recent legislative change around unfair contract terms and compliance action against greenwashing will mean these issues face heavy scrutiny in 2023.
After long advocating for the introduction of penalties for unfair contract terms, the ACCC welcomed the passing of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 (Cth) in the federal parliament last year.
Under the legislation, new penalties for businesses that include unfair contract terms in their standard form contracts with consumers and small businesses were introduced. Businesses have until 9 November this year to review and update their standard form contracts before these penalties apply.
Importantly, the Bill also increased the maximum pecuniary penalties for corporations to $50 million and to 30 per cent of a corporation’s annual turnover over the period the breach occurred (whichever is greater) for certain competition law and consumer law breaches. Maximum fines for individuals who engage in anti-competitive conduct and breaches of the consumer law protections also increased from $500,000 to $2.5 million. These new penalties apply in respect of conduct engaged in from 10 November 2022, and as noted above, would include gas pricing behaviour with the imposition of the price cap.
Businesses will also need to be ready to substantiate any environmental or sustainability claims when marketing their goods and services after the ACCC launched two internet sweeps late last year to identify misleading environmental and sustainability marketing claims and fake or misleading online business reviews. The sweeps were conducted with the broad aim of identifying deceptive advertising and marketing practices by businesses or industries.
So, it is important that businesses can back up the claims they are making, whether through reliable scientific reports, transparent supply chain information, reputable third-party certification, or other forms of evidence as the ACCC won’t hesitate to take enforcement action by issuing substantiation notices where consumers are being misled or deceived by green claims.
Notably, the ACCC isn’t the only regulator eyeing off this issue with the Australian Securities and Investments Commission recently issuing infringement notices to listed companies Vanguard Investments Australia Ltd, Black Mountain Energy Limited, Diversa Trustees Limited and Tlou Energy Limited over concerns about sustainability-related statements that the companies did not have a reasonable basis to make.
Stay off the ACCC’s radar
The ACCC’s priorities are relevant for public sector entities, private businesses and consumers to understand their legal rights and obligations, particularly given the current economic circumstances.
ACCC Chairwoman Gina Cass-Gottlieb recently told the Australian Financial Review:
“It has become more and more significant as we face the rising CPI, monetary responses in terms of interest rates, and the significant increases in energy pricing that everyone is facing, both to households, small businesses and other users.”
With the regulator emphasising its readiness to step into an enforcement role if required, it is important for the business community to be familiar with these priorities, and know where to seek help.