Mr Rod Sims, Chairman of the Australian Competition and Consumer Commission (ACCC) has recently announced the ACCC's enforcement and compliance priorities for 2021. In his speech, Mr Sims provided valuable insights for both public and private sector entities into the ACCC's enforcement priorities, including the types of conduct and industries on which the ACCC will focus their resources in the year ahead.
In his annual address here, Mr Sims focused on the fact that the ACCC is an economic regulator and how the compliance and enforcement actions by the ACCC have important implications for both economic growth and inequality. Mr Sims highlighted that a lack of competition will discourage investment, innovation and lower productivity, which will have direct impacts on the economy's ability to recover and grow when dealing with the effects of, and the recovery from, COVID-19. Mr Sims also noted that unchallenged economic rents through the use of market power can favour those who benefit from such rents at the expense of others with the effect of creating inequality in the economy.
In particular, Mr Sims highlighted that:
"The ACCC's work is not only necessary for economic prosperity over the long term, but it is important for an equitable economic recovery in the more immediate term."
Against this backdrop, Mr Sims highlighted the sectors of the economy that are of particular focus for the enforcement and compliance action by the ACCC, which include some of the key winners and losers of COVID-19 impacts.
The unique circumstances of 2020 have meant that the ACCC has unfinished business from some of its priorities last year and have therefore rolled over some of the 2020 priorities into 2021. This is the case with the ACCC's priority arising from the pricing and selling practices and the lack of transparency of pricing behaviour of essential services, with a focus on electricity and telecommunication providers. It is anticipated that the uptick in enforcement action in this sector is likely to continue in 2021.
It was also highlighted that the ACCC has the enforcement powers given to it under the so-called "Big Stick" legislation which came into effect in June 20201, which includes the retail pricing prohibition which targets conduct by electricity retailers when they fail to pass on savings to consumers due to lower supply chain costs. In this regard, Mr Sims stated that:
"Importantly, new prohibitions in the electricity market include a requirement that electricity retailers pass on the significant reductions in wholesale electricity costs we have seen over the past year. We are actively monitoring costs and retailers' price responses and asking certain retailers to justify their prices."
"Consumers saw their electricity prices rise enormously over many years; now they need to see them fall considerably. This is only fair."
The broader travel sector remains an area of focus for the ACCC in 2021 with the sales practices in Australia's domestic travel sector and competition in aviation being the key areas. This sector has been particularly hard hit by the COVID-19 border restrictions and the subsequent decline in domestic and international travel. As such, the ACCC will be scrutinising behaviour that could further damage this already fragile sector. It was highlighted in particular that the ACCC will be closely monitoring the entry of Rex into the domestic aviation market and its access to the essential access slots at Sydney airport.
By contrast, the caravan sector has experienced significant growth as a result of international travel restrictions. The ACCC will this year have a continuing focus on consumer guarantee obligations in the caravan industry despite the ACCC's recent loss in its case against Jayco (Australia's largest caravan and recreational vehicle manufacturer).
The ACCC will continue to focus on the commercial construction sector in 2021. Recent enforcement action has been taken by the ACCC against Hutchinson and the CFMMEU over alleged boycott conduct at a building site in Brisbane. It is anticipated that there will be further enforcement action taken in 2021 in this sector.
The ACCC continues to have broad-ranging concerns regarding the operation of the digital market spanning across competition law, consumer protection, media regulation and privacy law, reflecting the growth of digital platforms both here in Australia and globally.
Based on the recommendations from the ACCC, he proposed the media bargaining code is currently before the Commonwealth parliament and wide-ranging privacy and data regulation are being considered by the government. There are likely to be further developments in this sector arising out of the ACCC's Ad Tech Inquiry and its inquiry into the operation of app marketplaces in Australia (which you can read here).
It would not be surprising to see growth in both competition and consumer law enforcement in this sector in the coming years.
Other sectors also highlighted as priorities this year include the funeral sector (in particular due to the concentrated nature of this sector), the agricultural sector (particularly in light of the commencement of the Dairy Code of Conduct and the ACCC's recent Perishable Agricultural Goods Inquiry which was finalised in December last year and the finance sector (following through on recommendations from Home Loan Price Inquiry that was also finalised in December last year).
In addition to these sector-focused priorities, the ACCC retains the following enduring priorities:
- cartel conduct – the ACCC has a number of active criminal prosecutions for cartel conduct, most notably with the Country Care criminal cartel proceedings, which the ACCC mentions here, set to start in Melbourne next month
- anti-competitive conduct – the ACCC will always prioritise anti-competitive agreements and practices and the misuse of the market power, with significant decisions regarding the operation of section 45 arising from the action taken by the ACCC against NSW Ports Operations Hold Co Pty Ltd and others expected shortly (see here for ACCC's announcement)
- product safety – with a focus on button batteries and quad bikes in 2021
- consumers experiencing vulnerability or disadvantage
- conduct impacting Indigenous Australians – as demonstrated through the ACCC bringing proceedings against Telstra for admitted unconscionable conduct in the sale of post-paid mobile products to Indigenous consumers, which the ACCC mentions here.
Finally, Mr Sims pinpoints the following areas of potential advocacy by the ACCC for reform:
- merger reform – following unsuccessful challenges to both the TPG/Vodafone merger and Pacific National's acquisition of the Acacia Ridge Terminal in Queensland from Aurizon, the ACCC is currently exploring merger law reform options in 2021
- national access regime – the ACCC is considering changes to this regime in respect of stand-alone monopoly infrastructure
- consumer law – the ACCC is considering compliance and enforcement action in respect of consumer guarantee regime and unfair contract terms provisions as well as unfair trading practice prohibition as recommended in the Digital Platform and Perishable Agricultural Goods inquiries.
What should you be doing to stay out of the ACCC's spotlight?
It is important for public sector entities and private businesses to be familiar with the ACCC's 2021 priority areas.
On 2 March 2021, we will be expanding on the ACCC's 2021 priorities at our Government lawyers CLE intensive session, looking at some of the regulator's recent enforcement activity and trends, and discussing what this means for you. To learn more about the session and to register, please click here.
In addition to being familiar with the ACCC's priorities and trends that are important to you, our team can assist you with:
- 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.
1 Competition and Consumer Act 2010 (Cth) Part XICA.
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.