On 26 February 2019, Rod Sims announced the ACCC’s compliance and enforcement policy for 2019. A summary of the key areas of focus are set out below.
What you need to know
- Continued focus on criminal cartels
- Test cases for “effects” test (misuse of market power) and concerted practices
- Merger clearances in concentrated sectors will be harder to obtain
- Competition law investigations into finance and commercial construction sectors
- Very significant penalties for breaches of ACL (up to $100m)
- Focus on consumer loyalty schemes, consumer guarantees, online subscriptions, unfair terms and product safety
- More market studies
- Effective compliance continues to be critical in minimising risk
Competition law – cartels and SLC
Following major reforms in November 2017, competition law now effectively prohibits two types of conduct: cartels and anything that substantially lessens competition in a market.
Accordingly, in 2019, the ACCC will continue its focus on criminal cartels as well as conduct, agreements or transactions that substantially lessen competition. In respect of the latter, the ACCC has stated that it will actively seek to test the new “effects” test for misuse of market power and the new concerted practices prohibition (both of which are subject to the SLC test). None of this comes as a surprise. Interestingly however, the ACCC appears to suggest that merger clearances may be more difficult in concentrated sectors. It has indicated that because there is “a current bias to excessive consolidation; to fewer firms in each sector,” it will closely scrutinise any transaction to ensure there remains “strong competition from a sufficient number of competitors.”
In terms of key sectors, the ACCC will undertake in-depth investigations of the financial and commercial construction sectors.
Australian Consumer Law – higher penalties and the usual assorted mix
Following the recent amendments that increase the penalties for breaches of the ACL (now equivalent to penalties for breaches of competition law), the ACCC will seek very significant penalties for such breaches. Rod Sims stated:
“I believe Parliament intended that in particular cases there should be penalties of over $100 million for breaches of consumer law to improve deterrence.”
We anticipate that those cases will be ones engaged in by large companies and where there is deliberate conduct, significant consumer harm and profits derived from the conduct.
The other areas of ACL focus for the ACCC are consumer loyalty schemes, consumer guarantees relating to high value consumer goods, subscriptions via online platforms, unfair terms relating to small business and product safety.
Finally, we expect that the ACCC will continue its work in conducting comprehensive market studies into various sectors of the economy.