RECENT ENFORCEMENT DEVELOPMENTS
Visa ordered to pay $18 million penalty for anti-competitive conduct following ACCC action
On 4 September 2015, in proceedings brought by the ACCC, the Federal Court ordered Visa Worldwide Pte Ltd (Visa Worldwide) to pay a pecuniary penalty of $18 million for exclusive dealing conduct, in contravention of the Competition and Consumer Act 2010 (Cth) (CCA), after the parties reached an agreement and Visa admitted to this contravention on the eve of the trial. Visa was also ordered to pay $2 million towards the ACCC's costs.
During the period 1 May 2010 to 6 October 2010, Visa Worldwide implemented and maintained a moratorium by making changes to the Visa rules which prohibited the further expansion of the supply of Dynamic Currency Conversion (DCC) services on point of sale (POS) transactions on the Visa network by its rival suppliers of currency conversion services in many parts of the world, including in Australia. This prohibition meant that merchants that were not already offering DCC to their customers as at 30 April 2010 could not choose to offer DCC. In effect, this froze the pool of merchants who could offer DCC during the period of the prohibition, which in turn prevented the further expansion of DCC during that period.
Given Visa's admission in respect of exclusive dealing for POS transactions, the ACCC did not press the misuse of market power allegations. The ACCC also alleged that Visa engaged in a misuse of market power and exclusive dealing in relation to the supply of DCC at ATMs. However, these allegations were also not pursued by the ACCC as a result of Visa's admission.
In relation to the issue of penalty, the parties jointly submitted that this matter is of "mid-range seriousness" and that the penalty should be towards the "top of the mid-range of penalties available", being the maximum penalty of $33.1 million, having regard to 10% of Visa Worldwide's annual turnover. Following the recent CFMEU case (see here), Justice Wigney emphasised that it "remains entirely a matter for the Court to determine the appropriate pecuniary penalty having regard to all the relevant facts and circumstances".
His Honour indicated that the penalty should send a clarion call to large multi-national corporations with operations in Australia, that whatever decisions may be made globally, Australia will not tolerate conduct that contravenes its competition laws and will not tolerate conduct likely to substantially lessen competition in Australian markets.
Convictions against individuals for section 155 offences
On 10 September 2015, the Federal Court convicted Mr Michael Anthony Boyle of knowingly giving false or misleading evidence to the ACCC about his knowledge of Peter Foster's involvement in Sensaslim Australia Pty Ltd (in liquidation). Mr Boyle pleaded guilty to two charges of breaching section 155(5) of the CCA and the Court imposed a $3,500 fine.
On 15 September 2015, the Federal Court found Mr Robert Paul Davies guilty of aiding and abetting the failure by Natural Food Vending Pty Ltd to comply with a compulsory notice issued by the ACCC. Mr Davies defended the charge but was found guilty of an offence against section 155(5) of the Trade Practices Act 1974 (Cth) (now the CCA). The matter will return to the Federal Court for a sentencing hearing on a date to be determined.
Federal Court orders Lux to pay $370,000 for unconscionable conduct
On 24 August 2015, the Federal Court ordered Lux Distributors Pty Ltd (Lux) to pay a total of $370,000 in pecuniary penalties for engaging in unconscionable conduct. The Court also made orders for injunctions preventing Lux from engaging in similar conduct in the future and requiring the establishment of a compliance and education program for all Lux employees and its agents.
These orders follow declarations by the Full Court of the Federal Court in August 2013 that Lux had engaged in unconscionable conduct in the sale of vacuum cleaners to three elderly women. The relevant unconscionable conduct was door-to-door sales whereby a Lux sales representative would enter homes under the premise of conducting a free vacuum cleaner maintenance check, but with the actual purpose of selling a vacuum cleaner. See here for more details in our earlier report.
ACCC applies for special leave to appeal to the High Court from the Full Federal Court Flight Centre judgment
The ACCC is seeking special leave of the High Court to appeal the July 2015 decision of the Full Court of the Federal Court in which the Full Court dismissed price fixing allegations against Flight Centre Travel Group Limited (Flight Centre).
At trial, in March 2014, Justice Logan of the Federal Court held that Flight Centre and the airlines competed in the market for booking and distribution services for the retail or distribution margin on the sale of air fares. His Honour found that Flight Centre had attempted to induce anti-competitive arrangements with the airlines to prevent them from offering international airfares on their websites which undercut the airfares being offered by Flight Centre.
In July 2015, the Full Court allowed an appeal by Flight Centre and held that there was no separate market for distribution and booking services to consumers and therefore that Flight Centre and the airlines did not compete with each other in such a market.
RECENT MERGER DEVELOPMENTS
ACCC releases Statement of Issues on proposed Foxtel and Ten acquisitions
On 14 September 2015, the ACCC released a Statement of Issues (see here) outlining its preliminary views on the proposed acquisitions between Foxtel Management Pty Ltd (Foxtel) and Ten Network Holdings Ltd (Ten).
Foxtel proposes to acquire up to 15% of Ten while Ten proposes to acquire a 24.99% stake in Multi Channel Network (MCN), a supplier of advertising opportunities on subscription television channels. Ten will also have an option to acquire 10% of Presto TV, an online streaming service which is a joint venture between Foxtel and the Seven Network.
The key competition issues identified by the ACCC that may raise concerns are that the proposed acquisitions have the potential to:
- substantially lessen competition for the supply of free-to-air television services in Australia, particularly in the broadcasting of sports content. This is because the proposed acquisitions would increase the likelihood of Ten and Foxtel entering into joint bids and other commercial arrangements for the acquisition of sports rights, to the exclusion of other free-to-air networks; and
- reduce or even eliminate competition between Ten and Foxtel for the supply of advertising services.
ACCC release Statement of Issues on Coles' proposed acquisition of nine Supabarn supermarkets
On 11 September 2015, the ACCC released a Statement of Issues (see here) outlining its preliminary views on Coles Supermarkets Australia Pty Ltd (Coles) proposed acquisition of nine Supabarn Supermarkets Pty Ltd (Supabarn) supermarkets located in NSW and the ACT. Supabarn is a privately owned supermarket operator with stores in the ACT and south Sydney. Supabarn stores are of a similar size to a typical Coles or Woolworths and is the only full-line supermarket chain in the ACT other than Coles and Woolworths.
The ACCC is concerned that Supabarn's removal may substantially lessen competition and lead to a loss of choice for consumers in at least three of nine locations, being Sans Souci and Sutherland in NSW and Casey in the ACT. In these instances, an existing Coles supermarket operates nearby as the closest competitor.
The ACCC has emphasised that Supabarn's differentiated offer is a non-price-based competitive response to rival supermarket chains, and includes:
- offering what is perceived to be a broader and different range of branded products, including a broader range of locally-sourced products;
- marketing and/or offering fresher and better quality fruit, vegetables, meats, deli products, and seafood;
- offering a superior shopping experience, including customer service;
- presenting unique promotions on a different schedule to other supermarket chains; and
- identifying itself as an independent chain with links to the local community. Supabarn has particular importance in Canberra and has been a part of the Canberra community (e.g. previously sponsoring the Canberra Raiders and its ongoing support of local charities).
The ACCC considers that in the absence of the proposed acquisition, the target stores would continue to be owned and operated independently of, and in competition with, Coles. However, if the proposed acquisition does not proceed, the ACCC considers that it is likely that Coles would seek to open new stores in Canberra, where it has previously submitted that it is underrepresented, and potentially in some of the relevant local markets in NSW.
RECENT AUTHORISATION DEVELOPMENTS
ACCC proposes to authorise levy for National Paint Product Stewardship Scheme
On 10 September 2015, the ACCC issued a draft determination (see here) proposing to grant authorisation for certain paint manufacturers and the Australian Paint Manufacturers' Federation (Federation), to apply a 15 cents per litre levy to certain paints and woodcare products. Authorisation is proposed to be granted until 1 June 2021.
The Federation represents manufacturers accounting for over 90% of paint sold in Australia. The funds raised will be used to support a National Paint Product Stewardship Scheme (Scheme).
The Scheme will be a national program aimed at promoting the safe disposal of waste paint by domestic and trade consumers. The Federation estimates that at present, approximately half of all waste paint in Australia is not disposed of properly. The Scheme will:
- significantly expand waste paint disposal schemes;
- replace State and Territory household hazardous chemical disposal programs; and
- aim to establish collection points for waste paint within a reasonable distance of 85% of Australia's population.
The ACCC considers that the Scheme is likely to result in cost efficiencies and environmental benefits relating to the management and collection of waste paint relative to current arrangements.
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