Australia: Competition Review: January 2016

RECENT ENFORCEMENT DEVELOPMENTS

ACCC takes action against Woolworths for alleged unconscionable conduct towards supermarket suppliers

In proceedings filed in the Federal Court on 10 December 2015, the ACCC alleges that Woolworths Limited (Woolworths) engaged in unconscionable conduct in dealings with a large number of its supermarket suppliers through its 'Mind the Gap' scheme (the Scheme).

The ACCC alleges that the Scheme was designed to reduce Woolworths' expected significant half year gross profit shortfall, by obtaining payments from a group of 821 "Tier B" suppliers. These payments would range from $4,291 to $1.4 million and would be seen as "supporting" Woolworths (or, if not agreed, as not supporting Woolworths).

The ACCC alleges that these requests were made in circumstances where Woolworths was in a substantially stronger bargaining position, with the knowledge or indifference towards the fact that they had no contractual entitlement to seek payments or a legitimate basis for requesting a Mind the Gap payment from every targeted supplier.

Woolworths allegedly sought approximately $60.2 million in these payments and ultimately captured approximately $18.1 million. The ACCC alleges that these requests were unconscionable in all circumstances and commented that suppliers cannot properly budget for arbitrary claims for payments outside of trading terms.

The ACCC is seeking pecuniary penalties for the alleged conduct and costs. The penalty amount to be determined by the court will largely depend on how the court 'counts' the number of contraventions if Woolworths is found to have engaged in unconscionable conduct in contravention of the Australian Consumer Law (ACL).

In addition, the ACCC is also seeking a declaration that Woolworths engaged in unconscionable conduct and injunctions that Woolworths refund the $18.1 million in payments received under the Scheme to suppliers. The first Directions Hearing is on 1 February 2016 before Justice Yates.

Harvey Norman franchisee ordered to pay penalties of $52,000 for false or misleading representations about consumer rights

On 14 January 2016, the Federal Court ordered Bunavit Pty Ltd (Bunavit) (a Harvey Norman franchisee) to pay $52,000 in penalties for making false or misleading representations about consumer guarantee rights, in contravention of the ACL.

The Court held that sales representatives made misleading representations when they stated that Bunavit had no obligation to provide remedies such as refunds, replacements or repairs. Instead, the sales representatives stated that the consumer would have to pursue the manufacturer's warranty directly with the manufacturer, or pay for the cost of the repair.

The Court considered factors including that there were more impugned statements than in other comparable cases, the conduct occurred over a longer period, more staff members were involved, and Bunavit's turnover and profit were substantially higher than other offending companies. However, unlike some of the other cases, none of Bunavit's senior staff were involved.

The Court declined to make declarations because it considered the penalties were sufficient to address the conduct. It also declined to order injunctions, in part because Bunavit has ceased trading.

The ACCC has now obtained penalty orders totalling $286,000 against ten Harvey Norman franchisees for false or misleading representations regarding consumer rights.

Federal Court orders Electrodry franchisor to pay $215,000 in penalties for fake testimonials

On 18 December 2015, the Federal Court ordered the franchisor of the Electrodry Carpet Cleaning business, A Whistle & Co (1979) Pty Ltd (Electrodry), to pay penalties of $215,000 for its involvement in the publishing of fake testimonials on the internet. The Court found that Electrodry posted, and requested that its franchisees post, customer testimonials about the quality of carpet cleaning services, when those customers were fabricated and the services had not been provided. The relevant review websites included Google, True Local, and Yelp.

The Court noted that in deciding the amount of penalty to impose on Electrodry, a substantial discount for Electrodry's co-operation in the investigation and proceedings was warranted in the circumstances.

Kogan pays $32,400 penalty for alleged false or misleading representations in a Father's Day promotion

On 18 January 2016, the ACCC announced that online retailer Kogan.Com Pty Ltd (Kogan) paid $32,400 after the ACCC issued three infringement notices for false or misleading representations about the price of computer monitors. Kogan is a major online retailer and is well-known for selling electronic products.

The ACCC issued the infringement notices because it had reasonable grounds to believe that Kogan had made false or misleading representations about the price of three computer monitors advertised during its Fathers' Day promotion 2015 on its eBay store, in contravention of the ACL.

As part of the promotion, Kogan advertised that consumers would receive a 20% discount on the computer monitors if they were purchased between 24 and 29 August 2015. Before or at the start of the promotion, Kogan increased the prices of the three computer monitors. As a result, although consumers received a 20% discount off the newly increased prices, they in fact only received a 9% discount off the previously advertised prices for each of the monitors. Shortly after the promotion ended and the 20% discount offer ceased, the advertised prices of the three computer monitors returned to the lower prices offered on Kogan's eBay store before the promotion commenced.

ACCC accepts undertakings from BP, Caltex, Woolworths, 7-Eleven and Informed Sources

On 22 December 2015, the ACCC accepted from BP Australia Pty Ltd (BP), Caltex Australia Petroleum Pty Ltd (Caltex), Woolworths Ltd (Woolworths), 7-Eleven Stores Pty Ltd (7-Eleven), and Informed Sources (Australia) Pty Ltd (Informed Sources) a court enforceable undertaking in relation to its subscription to a petrol price information sharing service operated by Informed Sources.

The undertaking requires that Informed Sources will not supply a petrol price information exchange service unless it makes the information available to Australian consumers and third party information service providers.

The undertakings for BP, Caltex, Woolworths and 7-Eleven require that they will not enter into or give effect to any price information exchange service unless the petrol price information that they receive is made available to consumers and third party organisations.

The Federal Court has also ordered that proceedings against BP, Caltex, Woolworths, 7-Eleven and Informed Sources be discontinued. In August 2014, the ACCC instituted proceedings against Informed Sources and several petrol retailers alleging that the information sharing arrangements between Informed Sources and the petrol retailers allowed the retailers to communicate prices with each other and that these arrangements had the effect or likely effect of substantially lessening competition.

In August 2015, Mobile Oil Australia Pty Ltd accepted a court enforceable undertaking that it would not subscribe to the Informed Source information sharing service for a period of five years. In December 2015, Eureka Australia Petroleum Pty Ltd (trading as Coles Express) also accepted a court enforceable undertaking that it would not enter into any price information sharing service agreement that is similar to the one operated by Informed Sources.

ACCC accepts undertaking to preserve competition in child restraint wholesaling

On 18 December 2015, the ACCC announced it would accept a court enforceable undertaking offered by Nordic Capital Fund VII (Nordic) and Max-Inf Holdings Limited (Max-Inf). Nordic is proposing to acquire a controlling interest in Max-Inf.

Max-Inf is a Chinese manufacturer of child restraint systems, and supplies Infa-Secure Pty Ltd's (Infa-Secure) child restraint systems. Infa-Secure is one of the three main wholesalers of these products in Australia. Britax Childcare Pty Ltd (Britax), which is ultimately owned by Nordic, is a close competitor of Infa-Secure.

The undertaking requires Max-Inf to comply with the terms of a Transitional Supply Agreement between Max-Inf and Infa-Secure, which provides for continuity of supply and access to intellectual property rights to allow Infa-Secure to establish alternative supply arrangements. It also prevents Max-Inf and Britax from doing anything to hinder Infa-Secure obtaining child restraint systems, or accessing or using confidential information.

ACCC accepts undertaking from Optus

On 17 December 2015, Optus Internet Pty Limited (Optus) paid penalties totalling $51,000 for alleged false or misleading representations in relation to cable broadband internet speeds.

Between January 2015 and August 2015, Optus used the term 'nbn-like speeds' (a reference to the nbn" network) in advertising both its cable broadband service and particular cable broadband plans. The advertised price referred to a 30/2 plan, when nbn speed tiers go up to 50/20 and 100/40. Optus also offered a higher priced 100/2 service. However, in each case, the upload speeds were not comparable to upload speeds available over the nbn" network.

Optus also gave the ACCC a five year court enforceable undertaking, agreed to write to customers who joined its service during the advertised period and allow no cost cancellation (including refund of set up fees) and engage a third party to review its trade practices compliance (and implement any recommendations made).

LEGISLATIVE DEVELOPMENTS

Australian Consumer Laws Set For Review in 2016

On 1 December 2015, ACCC Chairman Rod Sims announced that Consumer Affairs Australia and New Zealand will conduct a review of the ACL in 2016. The final report is expected in March 2017.

During the keynote address at the Consumer Law Roundtable, Mr Sims flagged some possible areas for review, including:

  • the adequacy of the ACL penalty regime in delivering deterrence;
  • the application of the ACL to the sharing economy;
  • challenges around adopting trusted international product safety standards; and
  • in relation to phoenix companies.

On international product safety standards, Mr Sims said that the ACCC welcomes moves to reduce duplicative domestic regulation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.