ACCC Chairman Outlines 2018 Compliance and Enforcement Priorities, Reviews 2017

Monday 26 February 2018 @ 9.55 a.m. | Corporate & Regulatory | Trade & Commerce

On Tuesday (20 February 2018) the ACCC Chairman, Mr Rod Sims, outlined the "2018 Compliance and Enforcement Priorities" of the ACCC at his annual Committee for Economic Development of Australia (CEDA) address. In his address Mr Sims indicated that in 2018, the ACCC would focus on:

"consumer issues in broadband services and energy, competition in the financial services and commercial construction sectors, systemic consumer guarantee issues, and conduct that may contravene the new misuse of market power and concerted practices provisions".

In his address Mr Sims covered the following topics: 

  • Reflections on 2017,
  • Challenges faced by the ACCC,
  • ACCC’s enforcement and compliance priorities for 2018.

Reflections on 2017

A major highlight of 2017, according to Mr Sims, was the passage of the Competition and Consumer Amendment (Competition Policy Review) Bill 2017 and the Competition and Consumer Amendment (Misuse of Market Power) Bill 2017 through Parliament, as the legislation brought the "Competition Policy Review" (namely, the Harper Review) to "a very successful conclusion". The Harper legislation featured a broad range of amendments to the Competition and Consumer Act 2010 (the CCA) with respect to cartels, price signalling and concerted practices, exclusionary provisions, third line forcing, resale price maintenance, merger and non-merger authorisations, notifications and access. Mr Sims said:

"These amendments potentially rank as the most significant changes to our competition laws since the introduction of the Trade Practices Act in 1974. Most significantly, they position the ACCC better to protect competition and consumer interests in a time of unprecedented technological change."

In the area of cartel prosecutions, Mr Sims reported that progress was made with the second criminal cartel prosecution in Australia for cartel conduct marking a significant step forward in the ACCC's investigations and approach to cartel prosecution. Mr Sims saw the conviction of NYK, a Japanese shipping company and the $25 million fine imposed by the Federal Court as indicating the seriousness with which Courts view  cartel style collusion. Mr Sims also highlighted that a second case involving K-Line, also a Japanese shipping company, is before the Federal Court of Australia, listed for trial in Sydney later in 2018.

On the civil law side, Mr Sims mentioned the largest and longest cartel investigations the ACCC has been involved in, namely, the Air New Zealand and Garuda Indonesia air cargo case where: 

". . . a significant milestone was reached last year with the High Court ruling unanimously in favour of the ACCC to conclude that Air New Zealand and Garuda Indonesia were engaged in this long-standing international cartel. . . . This judgment, from Australia's highest court, puts beyond doubt that companies whose conduct has impacts in Australia are subject to enforcement of our competition laws."

On the Australian Consumer Law generally Mr Sims indicated that: 

"There is now momentum towards greater penalties for breaches of Australian Consumer Law (ACL). . . . In its final report on the ACL Review, Consumer Affairs Australia and New Zealand (CAANZ) recommended penalties for a breach of the ACL be raised from $1.1 million for companies to the greater of $10 million, three times the value of the benefit received, or where the benefit cannot be calculated, 10 per cent of annual turnover in the preceding 12 months."

Mr Sims further indicated that penalties against individuals under the ACL are to be increased from $220,000 to $500,000 with the introduction last week of the Treasury Laws Amendment (2018 Measures No. 3) Bill 2018 to the Parliament. If passed, the Bill will align the maximum penalties under the ACL with the maximum penalties under the competition provisions of the CCA consistent with a Productivity Commission recommendation into Consumer Law Enforcement and Administration. According to Mr Sims: "This is a profound change that will change corporate behaviour significantly."

Mr Sims addressed the ACCC's role as a proactive competition advocate highlighting the importance to this role of the market studies conducted by the ACCC:

"Market studies give us the capacity to investigate how markets are really working and to develop a deep understanding of the commercial realities of those markets. . . . Sometimes we make referrals within the ACCC to our enforcement teams. It is important to note that market studies are almost always the beginning of our work in a market, not the end."

Challenges faced by the ACCC

Mr Sims identified the following areas as presenting challenges for the ACCC in 2018.

  • Making cartel laws effective deterrence by relying on the strong message that ACCC cases ". . . send to deter future misconduct and encourage compliance among all businesses.
  • Bigger penalties for big businesses - looking to see if large businesses should bear penalties which are commensurate to their size, in order to achieve specific and general deterrence: "Making this happen is a huge priority and challenge for the ACCC in 2018."

ACCC’s enforcement and compliance priorities for 2018

In 2018 the ACCC will focus on consumer issues relating to broadband services and energy, competition in the financial services and commercial construction sectors, systemic consumer guarantee issues, and conduct that may contravene the new misuse of market power and concerted practices provisions.

In relation to energy, Mr Sims noted that Australia faces an energy affordability crisis. The ACCC’s retail electricity pricing inquiry report and the ACCC’s wholesale gas inquiry have given the ACCC and the wider community, a stronger understanding of the issues and pressures around rising energy prices.

Another area of priority is the consumer issues arising from the provision of broadband services, which includes dealing with misleading speed claims and statements made during the transition to the NBN. According to Mr Sims, this has become one of the ACCC’s most prominent issues in the past two years and highlights the importance of the ACCC's consumer and competition focus.

He believes the ACCC is well placed to play a role in consumer and competition issues relating to access to data, and says that this has been recognised by the government.

“This is a hugely important pro-competition and pro-consumer innovation. At the heart of the proposals is giving consumers access to data that is held about them by business, including the ability to direct that such data be copied and provided to a third party.”

The ACCC’s Financial Services Unit is now well established and will, post 1 July 2018, proactively identify and investigate competition issues in the sector. Mr Sims highlighted 2018 will be the first full year the ACCC will have powers covering misuse of market power and concerted practices.

Mr Sims also stressed the importance of higher penalties under both consumer and competition law. In relation to the ACL:

“Currently, the maximum penalties for breaches of the ACL are, for corporations, approximately one-tenth of the lowest maximum penalty for breaches of the Competition Law. There is no good reason for this difference as we have seen cases where consumer law breaches have led to very substantial harm to many consumers.”

In relation to competition penalties, the ACCC is also anticipating the launch of an OECD report at the end of March which will " . . . shine a light on Australia’s approach to antitrust sanctions in comparison with other developed competition law jurisdictions".

Most keenly anticipated, according to Mr Sims, is the ACCC’s inquiry into digital platforms:

“Concerns about the influence of digital platforms have become prominent in recent years, on many fronts, and this inquiry will be the first of its kind to explore broadly the competition and consumer implications, . . . A key question will be how much consumers know about the amount and use of the data about them that is collected and sold by the digital platforms in the form of advertising.”

In all Mr Sims said that he felt 2018 will be "an exciting and full year" which should see the role of the ACCC in consumer law become even more mature and important to the community in terms of protecting consumers.

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