The Australian Competition and Consumer Commission (ACCC) has reinforced its focus on cost of living pressures, the price of essential services, the integrity of environmental and sustainability claims and anti-competitive conduct in its 2023-24 Compliance and Enforcement Policy and Priorities.
Outlining the regulator's agenda for the coming financial year, ACCC Chair Gina Cass-Gottlieb also highlighted scam detection and disruption, unfair contract terms in consumer and small business contracts and competition and pricing issues in gas markets as new priorities, necessitated by the current cost of living impacts on Australia's economy.
Therefore, businesses should review and refresh themselves on the types of conduct and the industries which the ACCC will concentrate their resources on for the 2023-24 financial year.
Competition law enforcement priorities
Wholesale gas markets
With record-high energy prices likely to continue into the mid-term, the Australian Government introduced the Competition and Consumer (Gas Market Emergency Price) Order 2022 in December and tasked the ACCC with enforcing it.
Under the Order, wholesale gas prices are temporarily capped at $12 per gigajoule for gas sold by East Coast and Northern Territory gas producers and their affiliates to wholesale customers in Australia.
The ACCC has since published interim compliance and enforcement guidelines explaining how the ACCC intends to exercise its enforcement role and will prioritise compliance with the cap, and the forthcoming mandatory code of conduct in the coming year.
Financial services sector
The ACCC will maintain a focus on supporting competition in financial services with a range of market study, enforcement, compliance and engagement activity planned for 2023-24.
Despite 10 consecutive interest rate rises by the Reserve Bank and most banks fully passing through the cash rate target increases to their home loan interest rates, increases in interest rates on deposit products appear to have been smaller, less consistent and often with conditions attached.
Recognising that deposit and savings accounts are an important source of income for many Australians, the ACCC has launched an inquiry into how banks set interest rates for savers, including differences in interest rate increases between bank deposits and home loans.
Additionally, the regulator has commenced proceedings against Mastercard for allegedly misusing its market power in the supply of debit card acceptance services, which follows similar action against Visa in 2021, where the regulator accepted a court-enforceable undertaking from the payment processor.
In 2023-24, the ACCC will remain concerned about competitive harm caused by the use of exclusive arrangements by traders who are in a position of market power, which can increase barriers to entry or lead to the anti-competitive foreclosure of rivals.
It comes after the regulator served Australasian Food Group, trading as Peters Ice Cream, a just dessert last year in the form of a $12 million penalty and a three-year competition law compliance program undertaking after it admitted to engaging in exclusive dealing behaviour in relation to the distribution of single serve ice creams sold in petrol stations and convenience stores across the country.
After achieving recent success, the ACCC has highlighted that it will continue to pursue both criminal prosecutions and civil actions to stop and punish cartels.
Last year, individuals were sentenced for criminal cartel offences in Australia for the first time after pleading guilty to fixing the Australian dollar / Vietnamese Dong exchange rate and related transaction fees.
While Alkaloids of Australia and its former export manager, Christopher Kenneth Joyce, were sentenced after pleading guilty to several criminal cartel offences relating to anti-spasmodic medications.
And, the Federal Court ordered NQ Cranes to pay a $1 million penalty after it admitted that it had entered into an illegal market-sharing agreement with a competitor.
According to the ACCC's General Manager, Competition Enforcement and Cartels, Heidi Snell, cartel investigations are a priority for the regulator in the next financial year and the ACCC will continue their international cooperation with other cartel enforcers, including the Five Eyes competition authorities.
The ACCC is also educating public sector procurement officials about the risks and indicators of cartel behaviour in procurement processes through outreach. This outreach program is part of the regulator's efforts to strengthen its measures to drive proactive cartel detection. The ACCC has also developed a cartel screening tool to identify potential investigation targets through data analysis techniques.
Small business industry codes of conduct
The introduction of industry codes of conduct in the franchising, dairy and horticulture sectors have played a role in protecting small businesses with limited bargaining power in their dealings with larger businesses. The ACCC will continue to monitor the codes and enforce them when necessary.
The regulator has already had some success after a court found that Lactalis Australia Pty Ltd had breached the Dairy Code in 2022. Significantly, this was the first dairy code related court outcome.
Consumer law enforcement priorities
Environmental claims and sustainability
Businesses will need to be ready to substantiate any environmental or sustainability claims when marketing their goods and services this financial year after the ACCC announced it would investigate a number of businesses for potential 'greenwashing' following an internet sweep which found more than half made misleading statements about their environmental or sustainability practices.
Of the 247 businesses or brands across eight sectors reviewed, 57 per cent were identified as having made concerning claims about their environmental credentials, including marketing products or packaging as biodegradable, compostable or recyclable without evidence, exaggerating climate benefits, inappropriately comparing products to a competitor, and developing individual certification schemes.
These proceedings come amid a wider crackdown on companies making false claims about their green credentials, with the Australian Securities and Investments Commission (ASIC) recently accusing Mercer Superannuation (Australia) Limited of greenwashing and issuing infringement notices to two energy companies, a fund manager and a superannuation fund trustee for allegedly lying about their green credentials.
Digital economy and platforms
Manipulative and deceptive practices in connection with digital services will continue to be a key priority for the ACCC in 2023-24.
The regulator is particularly concerned about the manipulation of online reviews and search results, and the use of algorithms to achieve this manipulation, as well as comparison websites and social media influencers who don't disclose commercial relationships, including paid promotions.
It comes after the ACCC conducted a sweep to identify misleading testimonials and endorsements by social media influencers on Instagram, TikTok, Snapchat, YouTube, Facebook and Twitch – with a particular focus on sectors such as fashion, beauty, travel, health and fitness where influencer marketing is widespread.
With consumers and businesses increasingly reliant on digital platforms to purchase and sell products and services online, the ACCC was directed to conduct an inquiry into these markets and recently released the fifth interim report for the Digital Platform Services inquiry.
The report identified issues including online interface design choices or 'dark patterns' that exploit behavioural biases and distort consumer choice, subscription traps, practices designed to get consumers to agree to unfair or unfavourable contract terms, a significant increase in scams, as well as harms from fraudulent apps and fake reviews.
It also recommended a range of new measures to address harms from digital platforms to Australian consumers, businesses and competition. The ACCC is awaiting policy decisions by the government.
Unfair contract terms
After long advocating for the introduction of penalties for unfair contract terms, the ACCC welcomed the passing of the Treasury Laws Amendment (More Competition, Better Prices) Bill 2022 (Cth) in the federal parliament last year.
Under the legislation, businesses may face contraventions of the law and penalties if they use unfair contract terms in standard form contracts or rely on them in their dealings with customers or small businesses.
Businesses have until 9 November this year to review and update their standard form contracts before these penalties apply.
In anticipation of the new provisions, the ACCC is undertaking a review of business terms and conditions across a number of different sectors to be used as the basis for future enforcement cases.
Consumer product safety
Recognising that children are particularly vulnerable to harm from unsafe products, the ACCC will continue tackling product safety issues for young children this financial year.
The regulator has vowed to build on its work this year which, to date, has seen 43 recalls of unsafe children's products by focusing on high-risk safety issues for young children, including products containing button batteries, products designed for and used when young children are sleeping, children's toys and household hazards including toppling furniture.
First Nations consumers
The ACCC's focus on First Nations issues has now become integral to the larger remit of much of the ACCC's work as it identifies the disproportionate impact of conduct such as scams and misleading advertising and sales practices on First Nations communities and conducts inquiries into the insurance sector, childcare and mobile regional infrastructure will allow greater consideration of the challenges faced by First Nations people in accessing and acquiring key services.
While its work in the past has primarily focused on education and outreach activities for First Nations consumers in northern Australia, the regulator is looking to broaden its engagement work beyond regional areas to metropolitan and peri-urban areas in 2023-24.
In addition to these enforcement priorities, the ACCC is continuing to advocate for further amendments to the Competition and Consumer Act 2010 (Cth), namely:
- legislative reform to address the harms caused by digital platforms
- reforms to the merger control regime
- changes to enforcement action for breaches of consumer guarantee obligations
- the possible introduction of an unfair trading practices regime.
This comes after a successful year for the ACCC in obtaining significant reforms to:
- the unfair contract terms regime – with penalties introduced and the expansion of the scope of consumer and small business contracts captured by this regime
- penalties for contraventions – with increased maximum penalties for both competition and consumer law contraventions.
Stay off the ACCC's radar
The 2023-24 priorities and Mr Cass-Gottlieb's valuable insights are relevant for public sector entities, private businesses and consumers to understand their legal rights and obligations. They are particularly useful when businesses are keen to ensure they are doing the right thing.
In her recent address, ACCC Chair Ms Cass-Gottlieb said:
"Our priorities must and do reflect the issues impacting the Australian economy, consumers and businesses in Australia. They are our own work, but they are informed by extensive feedback and engagement with many people and organisations, as well as complaints data, public discourse and international developments, among other information sources.
The present key issues of cost of living pressures, the price of essential services including energy and telecommunications, the integrity of environmental and sustainability claims, ever increasing losses to scams, consumer and fair trading harms from manipulative marketing practices in the digital economy and the always high risk to markets, business rivals and consumers from anti-competitive conduct, strongly feature in our priorities."
It is important to note that the maximum pecuniary penalties for corporations have increased to $50 million and to 30 per cent of a corporation's annual turnover over the period the breach occurred (whichever is greater) for certain competition law and consumer law breaches. At the same time, maximum fines for individuals who engage in anti-competitive conduct and breaches of consumer law protections have also increased from $500,000 to $2.5 million. These new penalties apply in respect of conduct engaged in from 10 November 2022.
Therefore, public sector entities and private businesses should be familiar with these compliance and enforcement priorities, and know where to seek help.
How can we help?
Our team can assist you in understanding your legal rights and obligations, staying up to date with any impending changes to the law, or providing advice that may address emerging issues by:
- undertaking an annual internal review of your entities' competition compliance policies. This would include reviewing existing and anticipated arrangements to identify any risks arising from the competition and consumer sectors that have been highlighted by the ACCC above
- ongoing investigations, inquiries and market studies that the ACCC is conducting and how to properly assist the ACCC with these
- conducting regular compliance training sessions on how to properly manage and identify anti-competitive behaviour.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.