Horizontal agreements

Special rules and exemptions

Do any special rules or exemptions apply to the assessment of anticompetitive agreements between competitors in digital markets in your jurisdiction?

In Australia, companies can seek authorisation from the ACCC to engage in anticompetitive agreements or conduct between competitors or notification for small business collective bargaining, exclusive dealing and resale price maintenance which applies in all sectors, including digital markets.  

There are no special rules or exemptions applying to digital markets. The authorisation has been used in the past for agreements between competitors in digital markets, for example, by a collection of banks to collectively bargain and boycott with Apple in relation to access to Apple’s iPhone embedded NFC controller (A91546 and A91547 lodged in 2016 but denied in 2017); by an industry and Reserve Bank of Australia joint venture for the suspension and termination provisions of the New Payments Platform Regulations regulating a new open access real time payments infrastructure in Australia (A91560 and A91562 lodged in 2016 and granted in 2017); and by ihail Pty Ltd, a joint venture between a number of taxi companies and other participants, to launch the ihail smartphone taxi booking app (A91501 lodged in 2015 and granted in 2016). 

Access to online platforms

How has the competition authority in your jurisdiction addressed horizontal restrictions on access to online platforms?

There are no specific rules or regulations addressing horizontal restrictions on access to online platforms in Australia. These arrangements are subject to the general competition prohibitions under the Act.

The ACCC’s Digital Platforms Inquiry found that agreements foreclosing competitor access to data, restrictions on user behaviour that may foreclose links to competitor platforms, or other exclusionary behaviour that is being investigated by other regulators globally, are examples of potential misuse of market power by online platforms.

While the ACCC has yet to commence any actions against online platforms addressing such conduct, the ACCC has investigated Google in relation to discontinuing access by Unlockd to the Google Play Store and AdMob, as a potential misuse of market power. Unlockd had itself commenced proceedings against Google in Australia and the UK, but ultimately discontinued those proceedings, as it went into voluntary administration.

There are ongoing third-party actions in relation to horizontal restrictions on access (see, for example, Dialogue Consulting v Facebook (11 April 2020)).

Algorithms

Has the competition authority in your jurisdiction considered the application of competition law to the use of algorithms, in particular to algorithmic pricing?

The ACCC has not taken public action against any company alleging the breach of competition laws due to algorithmic pricing (including any action involving two algorithms coordinating pricing with no human input).

However, the ACCC has expressed its opinion on the issue of algorithms and the application of competition law in an address at Gilbert + Tobin by Chairman Rod Sims on 17 November 2017, entitled ‘The ACCC’s approach to colluding robots’. The Chair: 

  • identified potential competition issues in mergers and big data, potential for algorithmic collusion (though something more than parallel conduct) and liability for algorithms;
  • noted whether the use of algorithms had contravened competition laws requiring a case by case analysis;
  • recognised that recent competition law reforms in November 2017 (following the Harper Review) are helpful in terms of potential prosecutions relating to theories of harm connected to algorithms. For example, concerted practices that have the purpose, effect or likely effect of substantially lessening competition, are prohibited (section 45 of the Act). (Previously, collusive conduct was only captured by the Act in that it involved a ‘contract, arrangement or understanding’ (ie, some meeting of the minds). The misuse of market power provision was also amended to capture and prevent unilateral conduct by firms with a substantial degree of market power that not only have the prohibited purpose, but also have the effect, or likely effect, of substantially lessening competition); and
  • found that a company cannot avoid liability by saying ‘My robot did it’.

 

In more general terms, the ACCC’s approach following the Digital Platforms Inquiry 2017–2019 and with its new Digital Platforms Branch, is to focus on the proactive monitoring and enforcement of potentially anticompetitive conduct associated with the use of algorithms, so it is likely there will be more activity in this area in the near future. Additionally, the ACCC’s draft code to address bargaining power imbalances between Australian news media businesses and digital platforms also requires Google and Facebook to give all news media businesses advance notice of algorithm changes, which is consistent with the ACCC’s desire to make platform algorithms more transparent.

Data collection and sharing

Has the competition authority in your jurisdiction considered the application of competition law to ‘hub and spoke’ information exchanges or data collection in the context of digital markets?

The ACCC has previously taken action against anticompetitive information exchanges or data dissemination in e-commerce. In 2014, it initiated proceedings against Informed Sources, which operated an electronic retail petrol price information exchange, and a number of petrol retailers on the basis that a subscription to the Informed Source service facilitated information sharing and price coordination, therefore substantially lessening competition under section 45 of the Act. Proceedings were resolved with undertakings that the information would be made available to consumers at the same time as fuel retailers.

The extension of Australian competition law to hub and spoke information exchanges was one of the issues considered during a recent policy review of the Act which led to reforms in November 2017. A key reform was the introduction of a prohibition on concerted practices which has the purpose, or is likely to have the effect, of, substantially lessening competition.

Since the provision was introduced, the ACCC has only taken one enforcement action, in 2019, expressing concerns of anticompetitive concerted practices. The conduct by ANZ Roofing Pty Ltd and Ivy Contractors Pty Ltd involved posts on social media and ‘likes’ about setting minimum rates for the repair of homes damaged by hail. The matter did not result in any court action.  

Other issues

Have any other key issues emerged in your jurisdiction in relation to the application of competition law to horizontal agreements in digital markets?

On 14 December 2016, the ACCC was successful in its appeal to the High Court of Australia against Flight Centre (a travel agent) in which it alleged Flight Centre had engaged in attempted price-fixing with certain airlines by attempting to induce three airlines to enter into a contract, arrangement or understanding to fix, control or maintain prices for air travel: see ACCC v Flight Centre [2016] HCA 49. The conduct related to fixing, controlling or maintaining the price offered by airlines through their own direct channels and the prices made available to Flight Centre.

The High Court found that where an agent exercises their own discretion in the pricing of the principal’s goods or services, and where the agent is not obliged to act in the interest of the principal, this may mean that the principal and agent are in competition with each other.

The decision calls into question the viability of dual distribution models (direct and indirect distribution) in a competition law context, which have long been employed by businesses including in online distribution. Typically, such models have been considered as vertical arrangements, thus arrangements between suppliers and distributors where suppliers also distribute directly to end customers have not raised many competition concerns. This decision broadens the scope of the relationship between suppliers and distributors to an extent that may see certain aspects of such relationships considered as horizontal in nature.

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5 September 2020