In touch: Competition news

In Touch looks at what's been happening in Competition, and what it means for your business.

We hope you find this issue helpful. Please let us know if you would like us to investigate any competition news in the next month and, as always, get in touch.

Cartels: The cooperation agreement between Australia and China in relation to cartel engagements

The ACCC and the National Development and Reform Commission of the People's Republic of China (NDRC) have signed a memorandum of understanding. ACCC Chairman Rod Sims noted that the agreement paves the way for increased engagement between the ACCC and NDRC on international cartel investigations affecting Australian and Chinese markets. The agreement allows the agencies to take coordinated action in response to anti-competitive conduct, including through the exchange of information and evidence. The NDRC is one of three bodies administering China's Anti-Monopoly Law. It is the agency responsible for price supervision and related enforcement action. The ACCC now has cooperation agreements in place with all three of China's competition agencies.

What this means

This agreement follows the cooperation agreement with Japan earlier this year and is consistent with the stated aims of the competition law section in the Trans-Pacific Partnership. In practice, this will extend the reach of the ACCC's investigatory powers and indicates a trend towards greater cooperation across enforcement agencies.

If you would like more information on this issue, get in touch with Kon Stellios.

Mergers: ACCC will not oppose Vocus' proposed acquisition of M2

The ACCC has announced that it will not oppose Vocus Communication Limited's proposed acquisition of M2 Group Limited. Vocus and M2 have limited overlaps in the supply of retail and wholesale fixed broadband services, the supply of retail and wholesale fixed voice services, the acquisition of transmission services and the supply of data centre services. In markets where Vocus and M2 overlap, they tend to focus on different customer segments, with M2 mainly focused on residential and small business customers and Vocus mainly focused on large enterprise and government customers. Neither Vocus nor M2 is a significant supplier of wholesale transmission services. Accordingly, the ACCC determined that the proposed acquisition will not materially increase vertical integration between wholesale and retail telecommunications services providers. Further, the merged firm will face significant competition from Optus, Telstra and TPG.

What this means

In September, Rod Sims made comments about further concentration in the fixed broadband market and maintaining a competitive backhaul market. Sims cautioned against any further consolidation among the top four players and stressed the importance of maintaining a competitive backhaul market which includes non-vertically integrated suppliers of wholesale transmission services. However, this merger demonstrates that the ACCC will look at activity in the telecommunications sector on a case-by-case basis and that it does not view consolidation as a 'black and white' issue.

If you would like more information on this issue, get in touch with Fiona Crosbie.

Anti-competitive conduct: Calvary found to have substantially lessened competition in day surgery market

The ACCC instituted proceedings against Calvary for maintaining certain by-laws that regulated the use of Calvary medical facilities by medical practitioners. These by-laws contained provisions that permitted Calvary to refuse to grant, or to revoke, the right of medical practitioners to use its premises if the practitioner became involved with a competitor of Calvary. The ACCC alleged that the by-law constituted exclusive dealing and had the purpose and effect of substantially lessening competition in the market for the supply of day surgery services in Wagga Wagga in contravention of s47 of the Competition and Consumer Act.

The court accepted the ACCC's claims, finding that although Calvary did not in practice refuse to grant or renew accreditation to any medical practitioner, the imposition of the by-laws by Calvary may have had the effect of deterring new entrants to the day surgery market in the relevant regions and, therefore, substantially lessened competition in the market. The court accepted undertakings from Calvary that it would delete those impugned clauses in the by-laws and did not impose a penalty.

What this means

Exclusive dealing arrangements are common in Australian contracts. This decision is a useful reminder that where an exclusive dealing restraint deters new entry in a local market it may be illegal. The decision also illustrates that simply including an exclusive dealing restraint may lessen competition and breach the Act, even if the restraint is not enforced in practice.

If you would like more information on this issue, get in touch with Ted Hill.

Investigations & enforcement: Chrisco's lay-by agreements contained unfair contract term

The Federal Court has found that Chrisco Hampers Australian breached the ACL by including an unfair contract term in its lay-by agreements. The term allowed Chrisco to continue to take direct debit payments after the consumer had fully paid for their order. To avoid the automatically deducted payments, the customer was required to 'opt out'.

The court also found that Chrisco made a false or misleading representation to consumers that they could not cancel their lay-by agreement after making their final payment. The matter is now set for a penalty hearing. The ACCC is seeking pecuniary penalties, declarations, injunctions and costs.

What this means

The proceedings highlight the ACCC's focus on consumer protection for those in vulnerable communities and reflect the ACCC's priorities for 2015, in particular, issues affecting Indigenous consumers, older consumers, and consumers whohave recently arrived in Australia.

We previously reported on new legislation, which extends unfair contract terms protections to small businesses with fewer than 20 employees. The Act¹ has received royal assent and will commence on 12 November 2016.

If you would like more information on this issue, get in touch with Carolyn Oddie.

Misleading or deceptive conduct: Airbnb and eDreams online pricing difficulties

Airbnb and eDreams have provided undertakings to the ACCC in relation to the regulator's concerns that the companies were misleading consumers by failing to adequately disclose to consumers mandatory fees on certain pages of their online booking platforms. In addition, the ACCC alleged that eDreams failed to comply with the requirement to specify a single total price inclusive of all fees when advertising particular products and services in circumstances where such fees were quantifiable at the time when it made the representations. In this case, the fees were for mandatory cleaning services. Both companies have undertaken to alter their pricing representation practices so that all mandatory fees will be incorporated into the prices displayed on their websites or disclosed to consumers clearly to ensure that consumers are given more accurate and accessible price information when making purchasing decisions.

What this means

This matter is the latest example of the ACCC's continuing focus on price representations in online commerce. Businesses that use online platforms to sell goods and services must ensure that they disclose mandatory fees and costs that are unavoidable up-front and prominently. The ACCC's view is that consumers who invest time choosing a product on the basis of an inaccurate low price may not be inclined to switch to an equivalent product once they realise there are additional fees. The ACCC wants to ensure that consumers do not pay higher prices than they might have otherwise and that businesses that are fully disclosing costs up-front are not disadvantaged by losing sales.

If you would like more information on this issue, get in touch with David Brewster.

Unconscionability: ACCC takes court action against Unique International College

The ACCC and Department of Education and Training have commenced court action in the Federal Court against Unique International College for alleged misleading and unconscionable conduct in respect of the educational provider's advertisement and sale of certain VET FEE-HELP funded courses. It is alleged that the sales technique employed by Unique International College included the failure to provide clear and accurate information about the nature of the VET FEE-HELP loan schemes. The ACCC is particularly concerned about the door-to-door marketing practices performed by representatives of the College, who allegedly failed to adequately explain the price of the courses. The ACCC and Department of Education are seeking that affected consumers be compensated by cancelling any VET FEE-HELP debt and that the College repay course fees provided to it by the Government under the scheme.

What this means

Following its recent concerns about door-to-door marketing in the energy industry, the ACCC is now focusing on this type of marketing in the education sector, particularly to vulnerable consumers. Businesses that sell their products or services using door-to-door marketing must take a strict approach to compliance.

If you would like more information on this issue, get in touch with Jacqueline Downes.