The ACCC has released its compliance and enforcement priorities for 2020. The priorities document and the Chairman's speech issued each year offer the business community insight into the ACCC's regulatory goals for the year ahead.
The overarching theme emerging from Chairman Rod Sims' comments is that, despite a number of well-publicised court defeats (particularly in merger matters), the ACCC will continue to back its judgment and approach to case selection and enforcement. At the same time, it is continuing to advocate robustly for major changes to Australian law and practice, particularly in the merger control area – where it is 'actively' examining best practices from overseas.
Key themes and context
This year, the priorities were released against the backdrop of a chastening court defeat for the ACCC, which on 13 February 2020 failed in opposing the proposed merger between TPG and Vodafone. This was the ACCC's fifth consecutive court loss in a merger control matter since 2014. The ACCC responded to the decision by saying that it stood by its decision to commence proceedings, and if it only picked 'safe' cases, it would not be 'doing its job properly'.
This theme has pervaded Mr Sims' enforcement strategy since his appointment almost a decade ago in 2011. In one of his first speeches, Mr Sims said that the ACCC "needs to back its judgment, and take on cases even if the law is uncertain." In the priorities this year, the Chairman made no fewer than seven references to the ACCC trusting its 'judgment' to select and progress appropriate enforcement matters.
The message could not be clearer: the ACCC's approach to enforcement is not going to change, despite the series of major defeats, which might otherwise have prompted a reevaluation of its approach to assessing potentially problematic market structures. This makes sense in a wider context. Despite its mixed record in merger control litigation and misuse of market power matters, the ACCC has a much better record in other competition law matters and (particularly) in consumer law litigation. The ACCC remains highly respected both domestically, where its enforcement record compares favourably to other Australian regulators, and internationally, for its activity in digital platform markets.
In previous years, enforcement priorities have focused on cartels and conduct in concentrated market segments like retail fuel and groceries. This year, the ACCC will target all kinds of anti-competitive conduct including cartels, anti-competitive agreements and misuses of market power.
It is currently running five criminal cartel matters, another criminal matter related to obstruction of an ACCC investigation, and a civil cartel case. It will bring two further cartel matters to court this year. Whether the new cases will be civil or criminal is unclear at this stage. However, given the ACCC's strategic focus on criminal cartel matters since 2017, it would be no surprise to see at least one more criminal matter launched. Interestingly, the ACCC has also noted that its new anonymous hotline for whistleblowers has yielded a number of active investigations.
The ACCC's reasonably new (and well-resourced) unit targeting substantial lessening of competition cases has been active and plans to commence at least four new cases in 2020. Regarding market power investigations, in December 2019 the ACCC instituted proceedings against Tasmanian Ports Corporations, the first enforcement action under new misuse of market power provisions, which for the first time prohibit conduct that has an anti-competitive effect, as opposed to an anti-competitive purpose. Strikingly, the ACCC noted the prospect of seeking interim injunctions against possible misuses of market power. This kind of enforcement action is rare in Australia and elsewhere. For example, the European Commission recently applied for an injunction in a market power case for the first time in almost 20 years in Broadcom. Mr Sims' pointed reference is unlikely to be coincidental and shows the influence that international regulators have on the ACCC's use of its enforcement toolbox.
Advocacy for change
The ACCC has referred to its continuing commitment to advocate for substantial change in Australian regulation, law and practice. Following the recent negative results in merger control matters discussed above, the ACCC flagged in a further speech made shortly after the release of its priorities that it is 'actively' looking to competition authorities in other jurisdictions for ideas to improve its merger control system. In particular, it is exploring:
- rebuttable presumptions that some types of increased concentration lessen competition;
- changing the weight the Courts give to the ACCC's submissions or its merger guidelines, or parties' documents created after announcement that suffer from 'inherent bias and unreliability';
- whether the ACCC should have to prove what will 'likely' happen to the target company in the counterfactual, in addition to the immediate competitive effects of the transaction; or
- whether a mandatory notification system, along with compulsory information requirements, and a bar on closing, would be more effective.
Further, referring to the extensive debate in the US, the UK, and Europe, the ACCC continues to recommend that an 'unfair practices' provision be inserted into the Australian law.
Overview of 2020 priorities
The ACCC has also set out specific and granular focus areas for this year:
- Digital platforms. Following its Digital Platforms Inquiry (for a detailed overview see our series Unpacking the ACCC Digital Platforms Inquiry Final Report here), the ACCC is concerned about consumers being misled over the collection and use of their personal data. The ACCC launched proceedings against Google late last year and is considering a range of competition issues linked to data. Notably, the ACCC has flagged further international cooperation on these issues, and is working very closely with overseas agencies to develop theories of harm.
- The funeral industry. Responding to several consumer complaints and press scrutiny, the ACCC is considering action in the funerals sector. No specific action was identified, but the ACCC is seeking to protect vulnerable consumers at a negotiating disadvantage from a variety of issues, including anti-competitive bundling, complex and opaque pricing, hidden fees or add-on services, misrepresentations about coverage inclusions, and unfair contract terms.
- Essential services. The pricing and selling practices of retail electricity, gas and telecommunications suppliers has been a priority for a number of years, with particular focus on misleading or deceptive selling practices.
- Misleading claims in food marketing. The ACCC has taken note of the popular focus on health and diet-related issues, and will investigate misleading claims about health or nutritional benefits vigorously. This follows the recent Heinz matter, in which Heinz misrepresented the sugar content of children's snacks and was fined A$2.25m. The ACCC will cooperate with other domestic regulators on this issue.
- The commercial construction sector. The ACCC's dedicated commercial construction unit will continue to investigate boycott activity, conduct aimed at damaging individual small businesses and unfair contract terms, which have been a priority for a number of years.
- Conduct subject to industry codes. The ACCC will continue to focus on enforcement of the Franchising Code of Conduct (foreshadowing a number of 'important cases') and will work with the dairy sector to educate farmers and milk processors about the Dairy Code of Conduct launched in January 2020.
- Consumer guarantees. Consumer guarantees remain the number one source of complaint that the ACCC receives, with white goods and motor vehicles particular areas of concern.
- Product safety. The ACCC will focus on the continuing Takata airbag recall (called the ACCC's 'highest priority') and health and safety issues relating to button batteries.
We will continue to update on the ACCC's activities in what promises to be a busy and potentially transformative year for the ACCC.
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