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In Competition

Sims’ spotlight on banks, NBN, cars

31 August 2017

ACCC Chairman Rod Sims has recently made statements in two different public forums that shed light on the ACCC’s enforcement priorities for 2017 and his views on his legacy.  On 16 August 2017, Mr Rod Sims appeared before the House of Representatives’ Standing Committee on Economics to clarify the enforcement priorities of the ACCC. The Chairman of the ACCC then gave a speech on 24 August at a Committee for Economic Development (CEDA) in Perth.

While these two appearances by Mr Sims have confirmed a number of matters from the ACCC’s Compliance and Enforcement Policy for 2017 (especially the ACCC’s continued focus on cartel conduct, especially criminal cases, and big business), they also shed some new light on areas of particular interest to the ACCC.

Mr Sims’ appearance at the Standing Committee on Economics also gave him an opportunity to reflect on his achievements as he enters his seventh year at the helm of Australia’s competition and consumer regulator.

Cashed up to examine the financial services sector

Mr Sims’ comments at both venues show that the ACCC intends to make swift progress in its Government-directed inquiry into the financial sector, the first aspect of which is an assessment of the extent to which the Major Bank Levy influences the pricing of residential mortgage products by the banking industry in Australia.  The ACCC has “had a lot of consultation with a lot of people”, including not only banks, but other financial sector regulators.

The ACCC has issued notices to banks requiring the production of documents on this topic, the final tranches of which are due at the end of August.  It is clear that the ACCC is looking to obtain a thorough understanding of the banks’ decision-making processes in relation to the pricing of their mortgage products, not just at a Board level but at an operational level within the banks’ various business units. Armed with the information gleaned from these documents, Mr Sims has estimated that the ACCC may be able to deliver a first report early in the new year.

The ACCC’s inquiry is well-resourced, and also more wide-ranging than just the question of whether the bank levy will be passed through to customers – the ACCC will receive $13 million from the government over four years to establish a dedicated unit to undertake regular in-depth inquiries into specific competition issues in the financial system, foreshadowing additional compliance and enforcement activity by the ACCC in the financial services sector in the months and years to come.

Hooked up to the NBN

Mr Sims also referred to the ACCC’s three-part strategy to attempt to deliver improved advertising practices, better informed consumers and improved consumer experiences in relation to services supplied using the NBN. The three prongs of this strategy comprise:

  • A broadband monitoring scheme, incorporating data to be collected and analysed from more than 7,400 volunteer households that have registered. Mr Sims believes that the existence of a public speed monitoring program will encourage providers to “lift their game” and encourage competition on performance and price.
  • Giving guidance to industry in relation to advertising standards, with a view to increasing awareness by consumers of the speeds they can expect at peak times. This guidance was released on 21 August 2017.
  • Enforcement action, in particular investigating whether retailers are offering or have sold broadband services to consumers at maximum or off-peak speeds that they cannot deliver.

Another industry driving the ACCC’s agenda

Mr Sims spoke in detail to CEDA about consumer and competition issues with the sale of new cars. The ACCC is currently completing a market study into the new car retailing industry, which has identified alleged defects in car manufacturers’ complaints handling systems and recommended the introduction of a mandatory scheme to share technical information with independent repairers, as well as the provision of more accurate information about cars’ fuel consumption and emissions to consumers.

As examples of the ACCC’s activity in this area, Mr Sims pointed to the ACCC’s recent enforcement action against Ford (alleging false or misleading representations and unconscionable conduct when dealing with customer complaints), the well-known diesel emissions claims proceedings against Volkswagen and Audi, and a Court-enforceable undertaking recently given by Holden in relation to its dealings with consumers.

Mr Sims also spoke in detail about product safety issues before the Standing Committee, in particular the recall of Takata Airbags, to which it has assigned a dedicated task force of eight staff. The investigation is looking into whether a voluntary recall is sufficient to address the ACCC’s concerns, or whether alternatives such as a mandatory recall should be pursued.

This is clearly another industry that is driving the ACCC’s agenda. We will watch with interest as the ACCC progresses its work in all of these areas.

The Chairman’s legacy

As Mr Sims enters his seventh year at the helm of the ACCC, he was asked by the Standing Committee on Economics about which results he has been most proud of, in terms of results for consumers and competition in Australia. Mr Sims spoke about the ACCC’s consumer work, especially in relation to larger companies.

In particular, he pointed to the ACCC’s proceedings against Dulux for misleading claims about cooling properties of one of its paint products. He also pointed to the ACCC’s proceedings against Heinz alleging false or misleading representations in relation to a line of food products marketed to children and toddlers. This is notable because, while these are undoubtedly significant matters, they are not necessarily the ACCC’s ‘headline’ cases from Mr Sims’ period as Chairman that he might otherwise have identified.

Finally, as might be expected, Mr Sims referred to:

  • the ACCC’s work on criminal cartels, including the recent criminal prosecution against Japanese shipping liner Nippon Yusen Kabushiki Kaisha, noting in addition that he expected a “flow of criminal cartel cases”; and
  • the ACCC’s ongoing work in relation to energy prices.

Mr Sims’ current term expires in August 2019, leaving plenty of time still for him to leave his mark on many industries.

Image: Flickr (Greg Scales) / cropped and edited to B+W / CC2.0

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