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In Competition

Here’s looking at you

2 March 2015

2015 is set to be another busy year for the ACCC, with cartel conduct in government procurement, truth in advertising, industry codes and competition and consumer issues in the health sector among its new compliance and enforcement priorities.

Chairman Rod Sims launched this year’s Compliance and Enforcement Policy (C&EP) last week (see here), with a speech to the Committee for Economic Development of Australia (see here).

The ACCC has published the C&EP on an annual basis since 2012 to ensure that enforcement action is carefully targeted and to provide guidance for individuals and businesses. The C&EP sets out the principles adopted by the ACCC to achieve compliance with the Competition and Consumer Act 2010 (Cth) (CCA), and outlines the ACCC’s enforcement powers, functions, priority areas and strategies.

Announcing priorities and striving for tougher penalties – Mr Sims’ speech

Mr Sims emphasised that the ACCC will continue to advocate for the courts to impose pecuniary penalties of appropriate deterrent value in each case, to take full advantage of the “new” penalty regime (in place since 2007), which permits a court to impose a maximum penalty per contravention of:

  • $10 million;
  • three times the gain from the contravening conduct; or
  • if the gain cannot be measured, 10% of the company’s turnover.

Mr Sims stated:

Penalties should not be seen as simply a cost of doing business. They need to be at a level which achieves both specific and general deterrence. Some companies think they have a lot to gain from breaching our competition and consumer law; they should have much to lose as well.

This has been, and will continue to be, an important standpoint for the ACCC.

Mr Sims also commented on the role that market analysis will continue to play in supporting the ACCC’s compliance and enforcement approach. Having previously conducted studies into door-to-door selling practices and the fuel industry, the ACCC will begin a new program of reviews for selected industry sectors.

Mr Sims also announced the ACCC’s new compliance and enforcement priorities for 2018, which are discussed in further detail below. Finally, Mr Sims previewed other key activities and developments for the ACCC in the year ahead, including:

  • ensuring that privatisation delivers for consumers and not just the fiscal bottom line;
  • improving the functioning of the financial system in light of the Murray Report;
  • ensuring a smooth transition for consumers to NBN services; and
  • reviewing water rules to improve outcomes in the Murray-Darling Basin.

A mix of established and new priority areas – the 2015 C&EP

The 2015 C&EP contains a mix of established and new priority areas.

Established priority areas include:

  • cartel conduct;
  • anti-competitive agreements and practices;
  • misuse of market power;
  • product safety;
  • competition and consumer issues in highly concentrated sectors (such as the fuel and supermarket sectors);
  • repeal of the carbon tax; and
  • scam disruption.

New priority areas include:

  • cartel conduct in government procurement;
  • competition and consumer issues in the health sector;
  • competition and consumer issues in the online marketplace;
  • compliance with industry codes (in particular the Franchising Code and the new Groceries Code of Conduct);
  • consumer protection activities affecting vulnerable consumers (such as indigenous consumers, older consumers and consumers who are newly arrived in Australia); and
  • truth in advertising.

The 2015 C&EP makes clear that the first four established priority areas (in bold above) “are so detrimental to consumer welfare and the competitive process that the ACCC will always regard them as a priority”. The ACCC will also “remain vigilant” in areas where significant outcomes have previously been achieved (such as door-to-door selling and credence claims) to ensure that unlawful practices do not re-emerge.

It is important for individuals and businesses to be familiar with the ACCC’s enforcement powers, functions, priority areas and strategies, and to keep up-to-date with variations from year-to-year. The ACCC is particularly focussed on the “strong deterrence message” that results from taking cases to court and from the imposition of pecuniary penalties or other orders.

Targeted industry sectors and businesses affected by the priority areas must be especially prudent in ensuring that their trading practices comply with the CCA.

Photo credit: kev-shine / Foter / CC BY

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