It has been a busy year so far for the ACCC, with a large number of proceedings filed, merger clearance decisions made, and judgments handed down by the Court on competition and consumer law actions.
Partner Johnathan Quilty, and Lawyers Luke Callaghan and Adam Conti report on some of the key ACCC-related activities seen so far in 2019.
Misleading conduct is a target area for the ACCC, with at least nine separate proceedings initiated this year alleging that a business has engaged in misleading or deceptive conduct, or made false or misleading representations. Of particular note:
- Optus is in the firing line again for allegedly misleading consumers about the need to move to the NBN or risk being disconnected. This follows on from previous proceedings in 2018 where Optus was ordered to pay $1.5 million in respect of similar allegations.
- The ACCC is alleging that Sony misled consumers about their consumer guarantee rights on its website and in dealings with its Australian PlayStation customers. Sony allegedly told consumers that it did not have to provide refunds unless the game developer had told the consumer that the game was irreparably faulty or otherwise authorised a refund. Sony also allegedly told consumers that it could provide refunds using virtual PlayStation currency instead of money.
- Online retailer Kogan is facing proceedings in which it is alleged that Kogan ran a misleading 10% discount promotion, where Kogan had in fact raised the prices of more than 600 of its products immediately before the promotion, in most cases by at least 10%. The ACCC has secured penalties for "was / now" pricing on multiple occasions before.
The regulator has expressed its disappointment at the recent decision of the Court dismissing allegations brought against Kimberly-Clark that it had misled consumers about the suitability of its wipes to be flushed down the toilet. However, the ACCC has had its share of success in 2019:
- It secured penalties against Birubi Art for $2.3 million, Jetstar for $1.95 million, Click Energy for $900,000 and Activ8me for $250,000, all for misleading conduct; and
- It received judgment in cases against Viagogo, GSK and Novartis for misleading conduct, with penalties to be determined at a later date.
Consistent with its enforcement priorities, the ACCC appears to be driving a broader push towards prosecution of domestic and cross-border price fixing. The ACCC investigates cartel conduct and may refer serious cartel conduct to the Commonwealth Director of Public Prosecutions (CDPP) to consider criminal prosecution.
Current investigations underway include:
- Following charges laid in February 2018 (the first criminal cartel charges of their kind under the Competition and Consumer Act), Country Care Group, its Managing Director and a former employee were committed to stand trial in the Federal Court. The charges relate to alleged cartel conduct involving assistive technology products used in rehabilitation and aged care, including beds, mattresses, wheelchairs and walking frames.
- Criminal charges were also laid against Vina Money Transfer (a money transfer business) and five individuals for allegedly fixing the exchange rate for the Australian dollar / Vietnamese dong. It is alleged that the exchange rate and fees charged were fixed for when money was sent from Australia to Vietnam between 2011 and 2016. The proceedings arose following a comprehensive joint investigation by the ACCC and AFP. The charges relate to remittances totalling approximately $700 million per year.
- It is interesting to note that a private cartel class action was also commenced by Maurice Blackburn in May 2019, alleging that a group of banks manipulated the forex benchmark rates, control spreads' pricing, and trigger client stop-loss orders and limit orders. The banks targeted in this class action are UBS, Barclays, Citibank, Royal Bank of Scotland and JP Morgan.
This will certainly be of interest given the ACCC's publicly stated aim, outlined earlier this year by its Chairman, to bringing two or three new criminal cartel cases each year, along with three to be referred to the CDPP in 2019 alone.
As part of the long-running air cargo cartel investigation, the Federal Court ordered PT Garuda Indonesia Limited to pay penalties of $19 million. The investigation has so far resulted in penalties of $132.5 million against 14 airlines since 2008.
However, the ACCC's appeal in the laundry detergent cartel case was dismissed. The Full Court of the Federal Court upheld a ruling that there was insufficient evidence to find that PZ Cussons engaged in cartel conduct in relation to alleged agreements to stop supply standard concentrate laundry detergent in favour of ultra-concentrate detergent.
Recent ACCC publications, speeches and guidance shows an increasing focus on emerging issues of data and digital platforms, and how consumer rights and corporate merger activity may be affected by their development. We believe that going forward the regulator, at least in the short to medium term, will continue to carefully monitor these electronic platforms as evidenced by, amongst other things:
- Consumer Data Right (CDR): The CDR is a reform announced by the Australian Government in July 2017, aiming to allow consumers to easily obtain access to their data and have it transferred to service providers they trust. Following a substantial consultation process, on 29 March 2019, the ACCC published the draft rules for the CDR to seek feedback from consumers, businesses and community organisations. The CDR will be implemented in the banking sector first, and then in the energy and telecommunications sectors. Further consultation is ongoing.
- Digital Platforms Inquiry: The final report of the ACCC's digital platforms inquiry was anticipated to be released by 30 June 2019. This report promises to detail how digital search engines, social media platforms and their ilk affect competition in media and advertising services markets. In particular, the inquiry is looking at the impact of digital platforms on the supply of news and journalistic content, and the implications for media content creators, advertisers and consumers.
The ACCC has made several high-profile decisions on proposed mergers throughout 2019, most notably opposing the proposed $15 billion merger between TPG and Vodafone. The ACCC concluded that the proposed merger would preclude TPG from entering or disrupting the market as a mobile network operator and reduce competition in the mobile services market.
Somewhat embarrassingly, the ACCC inadvertently disclosed its decision on the merger a day early, which resulted in both Vodafone and TPG's share price immediately plummeting. Both entities have vowed to bring legal action to pursue the merger.
Additionally, the ACCC released a statement of issues which raised preliminary competition concerns about Nutrien's (which operates through its wholly owned subsidiary, Landmark) proposed acquisition of Ruralco, stating that a merged entity would be "by far the largest retail and wholesale supplier of rural merchandise in Australia, with Elders the only other large national chain".
Conversely, GSK's acquisition of Pfizer's consumer healthcare business in Australia was not opposed. The acquisition covers the majority of their over-the-counter products, including Panadol and Voltaren (produced by GSK), and Advil (produced by Pfizer).
We had previously reported on the ACCC's enforcement priorities for 2019. It is interesting to observe the heavy focus on ACL contraventions since those enforcement priorities were released.
The continued focus on cartel and anti-competitive conduct is certainly a target area for the ACCC, and businesses should take care to ensure that their compliance strategies are operating effectively.