Hot off the heels of its Annual Report (see our earlier post) the ACCC has published its quarterly ACCCount report for July – September 2019.
In keeping with its stated 2019 priorities, the ACCC’s activities in the quarter continued to focus on competition issues in the financial services, construction and agriculture sectors.
Enforcement highlights
The ACCC scored:
- its largest criminal fine under the Competition and Consumer Act of $34.5 million, when Japanese shipping company Kawasaki Kisen Kaisha Ltd was convicted for criminal cartel conduct;
- $26.5 million in penalties against Empower Institute, the highest penalty imposed for breaches of the Australian Consumer Law (ACL). Empower Institute must also repay more than $56 million in Commonwealth funding it received for certain diploma courses; and
- the first penalty for breach of the Horticulture Code, against potato wholesaler Mitolo Group.
The ACCC also commenced two new cartel proceedings in the quarter, against:
- BlueScope Steel Limited (Bluescope), and its former sales and marketing general manager Mr Jason Ellis, for alleged price fixing in the supply of flat steel products. Mr Ellis has also been charged with inciting the obstruction of a Commonwealth officer due to his actions during the ACCC’s investigation – this is the first time an individual has been charged with inciting obstruction in relation to an ACCC investigation; and
- Wallenius Willhelmsen Ocean AS (WWO) – a Norwegian based global shipping company, for alleged cartel conduct relating to international shipping of vehicles to Australia in 2011-2012. These are criminal cartel charges.
The ACCC also took the opportunity to update its Immunity and Cooperation Policy for Cartel Conduct, which took effect on 1 October 2019, and established an anonymous reporting portal specifically for tipping off anti-competitive conduct in the construction industry.
Managing mergers
ACCC merger activity picked up again this quarter with:
- 84 confidential merger matters pre-assessed (up from 59 in the previous quarter);
- 5 public reviews undertaken (up from 4 in the previous quarter)
- 7 statement of issues released.
The key merger decisions involved the agriculture sector with the ACCC clearing Landmark’s proposed acquisition of RuralCo, Elders’ proposed acquisition of Australian Independent Rural Retailers, and Saputo’s proposed acquisition of Lion Dairy & Drink’s cheese business in relatively quick succession, following public inquiries. The ACCC is likely to continue to closely scrutinise consolidation in the agriculture space.
A prolific publisher
Consistent with Chairman Rod Sims’ dual approach to promoting the objectives of competition law (enforcement plus market studies) the ACCC wrapped up three inquiries this quarter and launched a new inquiry into water markets in the Murray Darling Basin.
The ACCC published its highly anticipated final report from the “world first” Digital Platforms Inquiry on 26 July 2019, with 23 recommendations to promote competition, empower consumers, protect privacy and address the impacts of digital platforms on Australian media businesses
This was followed by the final report on the foreign currency conversion services inquiry on 2 September 2019, which found that consumers are paying too much for conversion services due to complex and confusing pricing and lack of strong competition. Hot tip – the ACCC found that credit and debit cards are generally the cheapest conversion service (as compared to travel cards, money transfers or foreign cash).
On 24 September, the ACCC published its final report from the wine grape market study, with recommendations to improve price transparency, payment terms and inequality of bargaining power for growers.
The ACCC also published its draft report in the Customer Loyalty Schemes market study, signalling that frequent flyer, supermarket and credit card loyalty scheme operators must be careful not to misled consumers about the benefits they will receive, changes to terms and conditions, and the use of their consumer data. Keep an eye out for the final report due by the end of the year.
Caring for the consumer
This quarter, the ACCC commenced four new ACL cases, and concluded five more, with 30 cases remaining on foot. In addition to the whopping $26.5 million penalty against Empower Institute, the ACCC also obtained smaller penalty amounts against:
- LG Electronics Australia – for misleading representations to two consumers about consumer guarantee rights – $160,000;
- Mitolo Group – for breach of the new Horticulture Code by not specifying the time for agreeing prices with potato growers in writing – $240,000 penalty and a declaration that certain contract terms were unfair and therefore void;
- Ultra Tune Australia – for providing insufficient detail about its marketing funds in breach of the Franchising Code of Conduct – $2 million; and
- Europcar – for excessive credit and debit card surcharges (up to 1.43%) in breach of the ban on excessive surcharged which took effect in September 2016 – $350,000.
The ACCC also appealed the Federal Court’s decisions to dismiss part of the ACCC’s case against Kimberly-Clark (in regard to “flushable” wipes”) and its case against Woolworths (in related to biodegradable cutlery). This shows that the ACCC continues to be concerned about the accuracy of marketing claims where customers pay more for “premium” and “environmentally friendly” or “sustainable” products.
