On 23 February 2016, ACCC Chairman Rod Sims launched the 2016 ACCC Compliance and Enforcement Policy (Policy). At the launch in Sydney, Mr Sims spoke of the ACCC’s enforcement priorities for the year ahead and the continued focus on protecting consumers and small businesses.
In his closing remarks, Mr Sims also noted the ACCC’s intention to foster greater transparency in its decisions and investigations.
In addition to the ACCC’s continuing focus on cartel conduct, misuse of market power and conduct having widespread anticompetitive effect, the health industry and health claims and consumer rights for indigenous consumers, more detail on which is set out below, for 2016, the ACCC has identified new enforcement priorities.
NEW PRIORITY AREAS FOR 2016
1. Small business: Enforcement actions against large businesses
Enforcement action against large businesses will be a focus for the ACCC this year, with the ACCC continuing to look after the interests of small business. This focus on large businesses is also intended to limit consumer harm and to set clear examples to the market that poor behaviour will be penalised.
The priority areas of industry codes of conduct and unfair contract terms (see discussion below) are further examples of the ACCC’s focus this year on protecting small businesses.
2. Unfair contract terms
In November 2016, legislation will come into effect that extends the unfair contract term protections to small business contracts. The ACCC has indicated that its priority for this year will involve laying the groundwork for the new laws and ensuring small businesses know their rights. For more information, see our Corrs in Brief article here.
3. Consumer guarantees
This year, the ACCC will endeavour to protect consumers, in particular from misleading representations made by large companies in relation to express or extended warranties. A number of businesses were pursued by the ACCC last year, including WFI Insurance Limited (trading as Lumley Retail Warranty) and Fisher & Paykel.
The ACCC has also indicated that it will focus on consumer guarantees claims in the context of car retailing and specifically, after-sales care. The investigation into the Volkswagen emissions case is an ongoing example action by the ACCC in this enforcement priority area.
The ACCC has identified the agriculture sector as a new priority area following the Federal Government’s Agriculture White Paper in 2015. The White Paper identified concerns about unfair trading practices throughout the agricultural supply chain. The ACCC intends to enhance its understanding of this supply chain by conducting a number of specific market studies.
In response to a recommendation of the recent Competition Policy Review that one ACCC Commissioner must have a background in agriculture, Mick Keogh has been appointed as an ACCC Commissioner.
5. Industry codes
In a realignment of focus, somewhat away from ‘concentrated industries’, the ACCC has made industry codes an enforcement priority for 2016. A major focus has been on supermarkets and their relationships with suppliers, including the proceedings against Woolworths for its ‘Mind the Gap’ payment scheme and the ACCC’s concerns about the approach that supermarket retailers are taking to implement the Food and Grocery Code of Conduct. This priority of industry codes will also include attention on the Franchising Code of Conduct and Horticulture Code of Conduct.
PRIORITY AREAS CONTINUING FROM 2015
1. Cartel conduct
Detecting and deterring cartel conduct continues to be a major focus for the ACCC. Mr Sims noted that the ACCC has around 20 cartel investigations under way at any one time and expects one or two criminal prosecutions this year and some other important civil proceedings to be commences. Additionally, Mr Sims noted that there is more work to be done in the context of government procurement.
2. Anti-competitive conduct and practices
The ACCC is continuing to prioritise conduct and practices that are likely to substantially lessen competition in a market. Mr Sims has also noted that the ACCC will be seeking larger penalties in competition cases. For example, in 2015 Visa was ordered to pay $18 million in penalties for exclusive dealing conduct.
3. Misuse of market power
The ACCC is currently undertaking a number of investigations into allegations of the misuse of market power. An example of this is the pending judgment in relation to the appeal in the Pfizer Australia Pty Ltd matter, where it is alleged that Pfizer misused its market power and engaged in exclusive dealing conduct for the purpose of substantially lessening competition in relation to cholesterol lowering products.
The health sector remains a priority area this year following successful interventions by the ACCC in 2015 into instances of exclusive dealing, unconscionable conduct and misleading conduct. The ACCC will also follow up its 2015 report to the Senate on the private health insurance industry – a response to concerns about transparency of policy information.
5. Scams disruption
The ACCC will continue to identify dating and romance scams through online dating websites. In 2015, the ACCC received over 105,000 scam related complaints – a large number of which were associated with relationship scams.
6. Indigenous consumers
In recognition of the challenges that Indigenous consumers face in asserting their consumer rights (particularly when living in remote areas), the ACCC has made the protection of Indigenous consumer rights an enduring priority area.
7. Vulnerable and disadvantaged consumers
The ACCC will continue to prioritise protection of older consumers and consumers who have recently arrived in Australia. To date this year, the ACCC has already taken action in a number of instances of alleged misleading conduct. For example, in February 2016 the ACCC issued two infringement notices to retailers in relation to misleading claims about their adjustable beds and associated mobility equipment.
8. Consumer product safety
An enduring priority of the ACCC is the protection of consumers from defective and dangerous products. In February 2016, the Federal Court ordered Woolworths to pay over $3 million in penalties in relation to safety issues with house brand products. As a continuation of its work in 2015, the ACCC has indicated it will work to highlight the dangers of button batteries, quad bikes and Infinity cables.
EXCESSIVE CONSUMER CREDIT SURCHARGE PROHIBITION
On 22 February 2016, the Senate passed the Competition and Consumer Amendment (Payment Surcharges) Bill 2015 (Cth)which will limit the amount businesses can surcharge customers for use of payments methods such as credit and debit cards.
The ACCC will be given additional powers to gather information and issue infringement notices in enforcing the ban on excess surcharges. Additionally, in the Policy, it is noted that “Where appropriate, the ACCC may also pursue matters that will assist to clarify aspects of the law, especially newer provisions of the Act.”
Under the current legislation, excessive surcharging by merchants may be prevented under contractual arrangements between payment systems and merchants, but is not banned by law. The new legislation will ban excessive surcharging by merchants where the additional cost passed on to consumers is above the merchant’s cost of acceptance of the payment method.
For the purposes of the Bill:
- A “payment surcharge” means either:
- an amount charged, in addition to the price of goods or services, for processing payment for the goods or services; or
- an amount (however described) charged for using one payment method rather than another.
- A surcharge is “excessive” if:
- it is for a kind of payment covered by a Reserve Bank of Australia (RBA) standard, or by any regulations made for the purposes of the new law; and
- the amount of the surcharge exceeds the permitted surcharge referred to in the RBA standard of the regulations.
Given that the RBA standard is still being finalised, businesses have time in the interim to consider whether their current payment surcharges reflect the actual cost incurred in accepting certain payment methods.
While the ACCC has placed a lot of attention on the application of the ban to online airline and ticketing payments, the legislation will also impact surcharges incurred at in-store point-of-sale transactions.
The ACCC’s Policy is a valuable benchmark for businesses to review their existing policies and practices. In particular, where the business operates in one of the ACCC’s new areas of focus, a review can shed light on potential areas of improvement and may assist the business in avoiding ACCC enforcement action. For example:
- Consider what claims you are making about consumer guarantees, particularly in respect of extended warranties.
- Consider whether your payment surcharges are higher than the actual cost you incur by accepting that payment type.
- Unfair contract terms and small businesses – have your standard form contracts reviewed before November 2016.