Competition law update

In brief

In touch: Competition law update is a regular publication by the Allens Competition group to keep you informed of the latest news and developments in this area. For more information or for legal advice, please contact one of the Partners listed below. We look forward to hearing from you.

Significant news

ACCC opposes AGL's acquisition of Macquarie Generation

The ACCC announced its intention to oppose the acquisition of the assets of Macquarie Generation by AGL Energy Limited, as it considers that the acquisition is likely to result in a substantial lessening of competition in the market for the retail supply of electricity in New South Wales.

The key assets of Macquarie Generation are the Bayswater and Liddell power stations (together, these power stations account for 27 per cent of NSW capacity). The ACCC formed the view that the proposed acquisition would be likely to result in a significant reduction both in hedge market liquidity and the supply of competitively priced and appropriately customised hedge contracts to second tier retailers competing in NSW.

The ACCC considered that it is unlikely that the remaining non-aligned generators in NSW (Delta Coast and Snowy Hydro) would be able to provide a sufficient quantity and type of hedge cover to adequately service the requirements of second tier retailers that sought to either enter the NSW retail market or grow their existing retail position. The ACCC found that acquisition would therefore be likely to prevent sufficient vigorous competition with AGL, Origin and EnergyAustralia, who already have 85 per cent of the overall retail market in NSW and 95 per cent of the mass market, and would have a combined share of 70-80 per cent of electricity generation capacity or output in NSW if the acquisition proceeded.

In addition, the ACCC found that AGL would have become the largest generator in each of NSW, Victoria and South Australia, and the ACCC remained concerned about the likely competitive impact of the proposed acquisition in one or more of the wholesale electricity markets in these regions.

The ACCC concluded that the draft undertaking offered by AGL on 17 February 2014 (see In Touch 25 Feb 2014) was not capable of addressing the ACCC's competition concerns on the likely effect of the proposed acquisition on competition in the market for the retail supply of electricity in NSW. The ACCC will publish a Public Competition Assessment in due course. Read the ACCC media release.

ACCC News

Medion provides undertaking for 'unlimited' telco claims – 6 Mar 2014

Medion Australia Pty Limited has provided a court enforceable undertaking to the ACCC after representing that its ALDImobile 'Unlimited Pack' provided customers with unlimited features when, in reality, significant usage restrictions applied.

Medion supplies pre-paid mobile products and services under the brand name ALDImobile on the ALDImobile website and in ALDI stores. Medion is not a related entity of ALDI stores. Between 14 September 2013 and 15 November 2013, Medion represented on the ALDImobile website that the 'Unlimited Pack' provided customers with 30 days of unlimited voice calls, voicemail, SMS and MMS, when in fact consumers were subject to daily, three-day and 30-day limits on voice calls, SMS and MMS.

Medion has admitted that it is likely to have engaged in misleading conduct, and made false or misleading representations, in contravention of sections 18 and 29(1)(g) of the Australian Consumer Law (ACL). In response to the ACCC's concerns, Medion has changed the name of the 'Unlimited Pack' to '$35 Plan', removed the description of 'unlimited' from the ALDImobile website and in-store advertising and provided a court enforceable undertaking to the ACCC.

The undertaking requires Medion to:

• refrain from engaging in the same or similar conduct for three years;
• publish a corrective notice on the ALDImobile website for 30 days; and
• establish and implement a competition and consumer law compliance program for two years.

Read the ACCC media release.

ACCC not to oppose Bluescope's acquisition of OneSteel Sheet and Coil – 6 Mar 2014

The ACCC will not oppose the acquisition of the OneSteel Sheet and Coil business from Arrium Limited by BlueScope Steel Limited.

OneSteel Sheet and Coil is a distributor of a range of flat steel products collectively referred to as sheet and coil products, with distribution sites in Sydney, Brisbane, Adelaide and Perth. BlueScope, through its subsidiaries Sheet Metal Supplies and Impact Steel, is also a distributor of sheet and coil products from sites in Melbourne, Sydney, Brisbane, Adelaide and Perth, and is the only domestic manufacturer for the majority of flat steel products supplied to sheet and coil distributors.

Through market consultation, the ACCC identified competition concerns in sheet and coil distribution in Western Australia. BlueScope has agreed to provide a court-enforceable undertaking requiring it to sell its sheet and coil processing assets in Western Australia to an ACCC-approved purchaser, Selection Steel. Selection Steel is a sheet and coil distributor headquartered in Melbourne with a presence in all states. Its operations in Western Australia consist of a stocking centre where it distributes limited volumes of sheet and coil products. The ACCC considers that the divestiture should enable Selection Steel to expand its operations in Western Australia and compete with BlueScope in the processing of sheet and coil products.

The ACCC will issue a public competition assessment in due course. Read the ACCC media release.

ACCC authorises Clubs Australia to collectively bargain with suppliers – 6 Mar 2014

The ACCC has authorised, for a period of five years, collective bargaining arrangements put forward by Clubs Australia. Clubs Australia represents 6,500 licensed clubs across Australia, including sporting and recreation clubs, cultural and religious clubs, and RSL clubs.

Clubs Australia sought authorisation to negotiate and/or enter into agreements on behalf of its current and future members with suppliers of major goods and services to registered clubs across Australia. The proposed arrangements include wagering services, energy services, and insurance services. Read the ACCC media release.

ACCC proposes to allow collective negotiations by coal producers – 6 Mar 2014

The ACCC has issued a draft decision proposing to grant authorisation for 15 years to a group of Queensland coal producers, known as the RG Tanna Coal Export Terminal Producers, to collectively negotiate with Gladstone Ports Corporation in relation to the terms and conditions of new coal handling and port services agreements at Gladstone Port in Queensland. The RG Tanna Coal Export Terminal Producers are Anglo American Australia Limited, BHP Billiton Mitsubishi Alliance, Cockatoo Coal Limited, Glencore Coal Investments Australia Pty Limited, Idemitsu Australia Resources Pty Ltd, Jellinbah Resources Pty Ltd, Rio Tinto Coal Australia Pty Ltd, Sojitz Coal Mining Pty Ltd, Wesfarmers Resources Ltd and Yancoal Australia Ltd.

The ACCC seeks submissions from interested parties in relation to its draft determination before making a final decision. Read the ACCC media release.

ACCC takes action against Zen Telecom – 3 Mar 2014

The ACCC has commenced proceedings in the Federal Court against Zen Telecom Pty Ltd for alleged contraventions of the ACL in relation to its unsolicited telemarketing practices.

Zen Telecom is a supplier of telephone, broadband, mobile and mobile broadband services across Australia and trades as XLN Telecom, Venus Telecom, Action Telecom, Alpha Talk and Telko Key. The ACCC alleges that Zen Telecom, through marketing companies engaged to telemarket its services, made false, misleading or deceptive representations during unsolicited calls to consumers by representing that they were acting on behalf of Telstra or a business or company associated with Telstra.

The ACCC also alleges that Zen Telecom breached the unsolicited consumer agreement provisions of the ACL, including by failing to provide consumers with a copy of their contract within five business days, an agreement that clearly stated Zen Telecom's address and informed consumers of their cooling off rights, and a notice to cancel the contract; and that it supplied services to consumers during the 10-day cooling off period.

The ACCC seeks pecuniary penalties, declarations, injunctions, an order for corrective notices, orders for compliance programs and costs. The matter is listed for a directions hearing in Perth on 28 March 2014. Read the ACCC media release.

ACCC proposes to grant authorisation to David Jones for 'stores within stores' promotions – 27 Feb 2014

The ACCC has issued a draft determination proposing to grant authorisation to David Jones to continue inviting certain businesses, known as concessions or licensee businesses operating within its stores to participate in various promotions. These 'stores within stores' display and sell only the brand of product promoted and sold by the relevant licensee business, and are operated independently of David Jones. The ACCC seeks submissions in relation to its draft determination, before making a final decision. Read the ACCC media release.

ACCC proposes to revoke immunity for collective bargaining and collective boycott against NRL by betting agencies – 26 Feb 2014

The ACCC has issued a draft notice proposing to revoke two collective bargaining notifications lodged by the Australian Wagering Council Limited (AWC). The AWC, on behalf of a number of betting agencies, proposed to collectively bargain about the terms on which the sports betting companies share wagering revenue and information with the National Rugby League (NRL). The AWC also proposed to enter into arrangements that would allow the group, or a subset of the group, to agree only to negotiate with the NRL through the AWC, or collectively to refuse to deal with the NRL (which would constitute a collective boycott).

If the ACCC had not intervened, protection for the AWC and its members to collectively bargain with, and collectively boycott, the NRL would have automatically commenced on 27 February 2014. The ACCC will engage in further public consultation about both notifications before making a final decision. Read the ACCC media release.

Cases

Court decides detailed and definitive declarations desirable

Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2014] FCA 148 (Justice Greenwood, 28 February 2014)

Key issues

• Declarations should be framed with precision to properly identify the established breaches as they serve a number of utility factors including a deterrent effect

Summary

In the primary judgment on 10 September 2013 (see Allens Focus: Agents airlines and ash – the ACCC's 'A'-list brings less than 'A'-grade results), the court made a number of 'interim' declarations in relation to its findings and orders. However, the parties could not agree on the final form of the declarations.

In considering the final form of appropriate declarations to make, Justice Greenwood observed that a declaration must 'recite the rights of the parties with respect to the final resolution of the matter in controversy with precision rather than ... some form of shorthand summary of the outcome'¹.

Justice Greenwood stated that declarations served various 'utility' values, including that they:

• are an appropriate vehicle by which to record the ACCC's disapproval of the conduct;
• vindicate the ACCC's claim(s) of breaches of the Competition and Consumer Act 2010 (Cth) (the CCA);
• may be of future assistance to the ACCC in carrying out its duties;
• may assist in clarifying the law; and
• may have a deterrent effect.

Justice Greenwood also stated that it is inappropriate to make declarations as to 'non-contravention' of the CCA by the respondents – rather, declarations should be framed to state that the relevant part of the proceedings were 'dismissed' as against the respondents².

Taking these considerations into account, Justice Greenwood made detailed final declarations in relation to the dismissal of the claims for misuse of market power under s46 of the CCA, and the breaches that had been established under s45 in relation to specific contracts that substantially lessened competition and particular conduct concerning one individual.

Source: AustLII