- The FuelWatch scheme gives the ACCC power for the first time to impose fines on individuals and companies for breaches of certain elements of the scheme without going before the courts.
Rising fuel costs, and the question of what (if anything) should be done about them, is the hot topic of conversation, it seems, wherever one turns these days. The proposed introduction of a National FuelWatch scheme recently announced by the Government has only served to intensify the debate.
Understandably, much of the debate thus far between the political parties, amongst the general public and within the fuel industry itself has concerned the ability of the FuelWatch scheme to deliver lower petrol prices to consumers and fuel-reliant industries.
Yet an examination of the powers conferred upon the ACCC by the National FuelWatch (Empowering Consumers) Bill reveals another, significant development which may herald a new range of powers intended for the ACCC - namely, to issue "speeding fines" on an administrative basis without the need to commence legal proceedings nor prove any breach of the legislation.
The national FuelWatch Bill has been referred to the Senate's Economics Committee to report no earlier than September 29.
The Committee will examine the impact of the proposed scheme on the price consumers will pay for petrol in metropolitan areas, regional centres and rural Australia.
It will look into economic costs of the proposed scheme, including the compliance costs of the scheme for industry, particularly independent retailers.
No doubt the debate will centre on whether the predecessor to the Bill, the WA FuelWatch Scheme, is the probable cause of lower average prices for fuel in that state since 2001.
A further issue to be examined is the ACCC's concerns that the scheme should not operate in regional areas because of concerns that it may give rise to higher prices through a loss of competition between the smaller number of sites in regional centres.
Since January 2001 Western Australia has implemented a FuelWatch scheme as a means of providing transparency and certainty of retail fuel prices in order to theoretically bring down petrol prices.
Predicated on the same notions of price transparency and price certainty in the retail fuel market, the National FuelWatch Scheme proposed by the Government in its National FuelWatch (Empowering Consumers) Bill 2008 requires:
- relevant petrol retailers (likely to be all those in metropolitan centres) to provide certain details to identify their business to the ACCC;
- these petrol retailers must each day, to avoid a fine, notify the ACCC of their next day's fuel prices by 2.00 pm each day;
- petrol retailers must then sell at their notified prices from 6.00 am the next day and maintain these notified prices for a 24-hour period;
- the ACCC will publish the notified standard price for fuel offered for sale by petrol retailers on a website by 4.00 pm each day; and
- the ACCC to maintain a register that contains details, and copies of notices, which petrol retailers are required to provide under the National FuelWatch Scheme.
Where petrol retailers fail to give the requisite details to the ACCC, fail to notify the ACCC of their retail price for the next day, or sell motor fuel at a price other than their notified price, a civil penalty of up to $22,000 for an individual or up to $110,000 for a company may be imposed by the Federal Court on application by the ACCC.
Importantly, the National FuelWatch Scheme also grants the ACCC power to issue an infringement notice to petrol retailers it believes on reasonable grounds to be in breach of one of these obligations. These infringement notices entail a pecuniary penalty of $550 for individuals and $2750 for companies and do not require the ACCC to apply to the court for determination of the matter.
While the focus of the debate about FuelWatch has been on the merits of the scheme with respect to prices and its ability to deliver lower fuel prices to end users, the powers given to the ACCC to impose fines on individuals and companies for breaches of certain elements of the scheme without having to first go before the courts are a first.
Will they be followed for other areas of the Act such as anticompetitive conduct or conduct likely to mislead or harm consumers?
Curiously, in a recent address to a competition law conference in Sydney on 24 May 2008, the chairman of the ACCC, Graeme Samuel, rejected the suggestion that the ACCC should be granted "cease and desist powers" to be used against those it believes to be engaging in illegal activity.
Mr Samuel expressed the view of the ACCC that the power to potentially shut down a business is not a mere administrative matter and should therefore remain the jurisdiction of the courts. He argued that seeking to impose such restrictions on a trader should be subject to a requirement to prove to a court a prima facie case
While the penalties that the ACCC can impose under the FuelWatch scheme are not as great as those considered in relation to cease and desist powers, it is significant that the underlying basis of the power to impose penalties under FuelWatch is the same as that which underlies the cease and desist powers which Mr Samuel opposes as being beyond the scope of the ACCC's regulatory functions.
The powers conferred upon the ACCC by the Bill are substantial and appear to impose a significant compliance burden on petrol retailers- despite the claim in the Bill that the "estimated net compliance costs to petrol retailers associated with the establishment and ongoing operation of National Fuelwatch is negligible".
That comment suggests a possible lack of appreciation of the difference of the compliance costs and risks controls needed when imposing a legal standard, carrying substantial penalties, on industry compared to the costs of the current arrangements whereby the major fuel companies lodge prices with Informed Sources, a commercial aggregator of fuel prices.
Hopefully the true compliance costs of new regulation of this type will be better appreciated once the benefits of the Scheme can be tested. However, whether the conferral of power on the ACCC to impose on-the-spot penalties will remain unique to the FuelWatch scheme, or whether it marks the beginning of a significant expansion of the scope of the ACCC's functions beyond that of mere regulation and monitoring of competition in Australia, only time will tell.
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.