Australia: ACCC announces competition and consumer law enforcement priorities for 2018

Last Updated: 12 March 2018
Article by Nick Christiansen

Introduction

The Australian Competition and Consumer Commission (ACCC) has announced its compliance and enforcement priorities for 2018, identifying areas of competition and consumer law, and industry sectors, where it will focus its attention in the coming year.

This year, the ACCC is signalling a commitment to the enforcement of new competition laws—introduced as a result of the Harper Review - in particular around the misuse of market power and concerted practices prohibition, as well as a renewed focus on consumer guarantee claims and a push for tougher penalties for consumer law breaches. Industries in the spotlight include new car retailing, broadband services, large or national consumer retailers, financial services, energy, digital platforms, franchising, agriculture and commercial construction.

An understanding of the ACCC's compliance and enforcement priorities is essential for all Australian companies, particularly those in the sectors that will be targeted this year. Businesses should use the ACCC's annual announcement as an opportunity to review their current practices, ensure compliance with the competition and consumer law, and avoid enforcement action.

Criminal prosecutions for cartel conduct

The ACCC has renewed its commitment to enforcing compliance with the anti-cartel provisions of the competition law, pointing to a need to deter future cartel conduct and encourage compliance by heavy fines and criminal prosecutions. The ACCC recently commenced its first criminal prosecution of an Australian corporation, and the first prosecution of individuals, under the criminal cartel provisions. Announcements about the outcomes of a number of cartel investigations are expected throughout the year. These proceedings will send a strong signal to Australian businesses, and their officers and employees, that cartel conduct will be actively prosecuted and heavily penalised.

Enforcing the new misuse of market power and concerted practices prohibitions

In what the ACCC regards as the most significant changes to competition law in more than 40 years, the Harper Review has resulted in numerous amendments to the competition law concerning cartels, price signalling, concerted practices, exclusionary provisions, third line forcing, resale price maintenance, merger and non-merger authorisations, notification and access.

Of particular note is the addition of a new prohibition on concerted practices, substantially lessening competition and amendments to the misuse of market power provisions.

The new misuse of market power provisions prohibit corporations with substantial market power from engaging in conduct that has the purpose or likely effect of substantially lessening competition.

The concerted practices provisions prohibit any form of cooperation between two or more persons or businesses for the purpose or likely effect of substantially lessening competition, and helps overcome the difficulties the regulator previously faced establishing the "contract, arrangement, or understanding" previously required. There is still considerable uncertainty about how the new provision will be applied by the courts and businesses will need to take extreme care in their interactions with competitors to avoid contravening Australian competition laws.

The ACCC fought hard for these changes and intends to use them—a new Substantial Lessening of Competition Unit has been established for this purpose.

Targeting financial services, commercial construction and agriculture

The ACCC is also focusing on anti-competitive conduct in the financial services and commercial construction industries.

Its recently established Commercial Construction Unit will be engaging with businesses and organisations in the commercial construction industry on allegations of cartel conduct and other potentially anti-competitive arrangements, including concerted practices. Supplier wholesalers and construction trade associations, in particular, should take steps to become familiar with these new provisions and seek advice to ensure they are compliant.

The ACCC will also set up a new dedicated Financial Services Unit to identify and address competition issues in the financial services industry, which is likely to lead to significant investigations and enforcement action.

Competition and consumer law issues in agricultural supply chains will be receiving ACCC attention as well, with a particular focus on dairy, viticulture and enforcing the Horticultural Code of Conduct.

Unfair contracts and enforcement of industry codes—franchising in the spotlight

It is expected that the ACCC will continue to take enforcement action on B2B unfair contract terms, particularly where small businesses are involved. These generally involve contracts heavily weighted for the benefit of one party and to the detriment to the other. In 2018, the ACCC will concentrate on ensuring that small businesses receive the protections afforded to them by industry codes, particularly the Franchising Code of Conduct, where large or national franchisors are involved. Franchisors and small businesses should review their B2B contracts to ensure compliance with the relevant codes and laws to avoid possible enforcement action.

Consumer guarantees compliance in the new car industry and by large retailers

On the consumer law front, the ACCC will focus on new car manufacturer and retailer responses to consumer guarantee claims, as well as systematic avoidance or misrepresentation of consumer guarantee rights by large or national traders. The latter is seen by the ACCC as a "perennial issue" warranting renewed attention. Retailers of all sizes should be taking the opportunity to review their refund policies to ensure consumer guarantee rights are adequately covered and accurately stated to consumers.

Misleading claims around broadband and the NBN

As it continues to conduct its Measuring Broadband Australia program, the ACCC will target misleading speed claims and statements made by broadband service providers during the transition to the NBN. It seeks to ensure consumers are provided with accurate information by service providers and we expect further interventions in this area.

This work will form part of the ACCC's high level plan to address consumer and competition issues in the internet economy, which includes issues concerning the use of digital platforms, algorithms and consumer data.

Find out more

For more information, read the 2018 ACCC Compliance and Enforcement Policy and Priorities here and ACCC Chairman Rod Sims' speech at the launch of the policy here.

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.

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