In Touch looks at what's been happening in Competition this month, and what it means for your business.
We hope you find this issue interesting and 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.
Interesting Competition facts – November 2016
- Keep your hands off our promising start-ups: Rod Sims recently spoke about increased concentration in Australia's economy and warned that the ACCC will 'be alert to the consequences of large firms acquiring promising start ups', while also discussing competition between bricks-and-mortar and online businesses in the retail sector. The speeches can be found here and here.
- Keeping the reviews honest: the ACCC has been assessing the online review policies of sharing economy platforms for potential consumer law issues and has released a guide for platform operators that is intended to encourage compliance with Australia's competition and consumer protection laws. The ACCC's media release and guide can be found here and here.
- Keep on motoring: the ACCC has released an issues paper for its market study into the new-car retailing industry. The ACCC intends to examine consumer issues in the sector relating to consumer guarantees, warranties, fuel consumption, emissions and car performance. The ACCC will also consider competition issues in the sector including vertical relationships between manufacturers, dealers and repairers; and competition in post-sales markets. The issues paper can be found here.
- Keep on sailing: criminal charges have been laid against Japanese-based company Kawasaki Kisen Kaisha (K-Line) in relation to alleged cartel conduct concerning the international shipping of cars, trucks and buses to Australia between July 2009 and September 2012. This is the second matter in which criminal charges have been laid against a corporation under the criminal cartel provisions. The ACCC's investigation into other alleged cartel participants is ongoing. The ACCC's media release can be found here.
Misleading or Deceptive Conduct: Dulux
Dulux has been ordered to pay penalties totally $400,000 for false or misleading representations it made about the temperature reducing characteristics of two of its paint products. Dulux admitted it had not tested for any reduction in the room temperature of houses painted with these products so it did not have any reasonable grounds for making the representations. The judgment can be found here.
What this means
- It is important to ensure that any claims about the characteristics and benefits associated with products are accurate and backed by adequate evidence, particularly where the claims are of a scientific or technical nature.
Acquisitions: ACCC will not oppose Australian Paper's acquisition of Edwards Dunlop Office Products
Australian Paper has given a behavioural undertaking to the ACCC in relation to its proposed acquisition of Edwards Dunlop Office Products. The ACCC generally prefers structural undertakings (undertakings to divest part of the merged firm) due to their permanence and relatively low compliance costs. However, the ACCC has concluded that it will not oppose Australian Paper's acquisition of Edwards Dunlop Office Products following, among other things, a commitment by Australian Paper that it will not include any exclusivity restriction in any contract with Edwards Dunlop's largest copy paper customer group. The customer is therefore free to place orders with competitors. The review focused on the market for the supply of copy paper in Australia.
More information can be found in the merger registry entry.
What this means
- The ACCC has shown an increased willingness in recent years to accept behavioural undertakings from parties seeking merger clearance where the undertaking is sufficiently robust to address competition concerns.
If you would like more information on this issue, get in touch with Fiona Crosbie.
Misleading or Deceptive Conduct: GSK
The ACCC has concluded its investigation into whether GlaxoSmithKline (GSK) made false, misleading or deceptive statements linking the price increase for its Panadol Osteo products to the de-listing of the product from the Pharmaceutical Benefits Scheme.
In December 2015, GSK sent a letter to pharmaceutical wholesalers stating:
The Government recently confirmed most OTC [Over The Counter] medicines, including Panadol Osteo, will no longer be available on the PBS from 1st January, 2016.
In moving to an OTC business model, GlaxoSmithKline is no longer able to sustain its current pricing of Panadol Osteo. As such, there will be a price increase on Panadol Osteo from 1st January 2016.
The ACCC found that the delisting from the Pharmaceutical Benefits Scheme resulted in some modest indirect costs to GSK, but was only one of a number of reasons for the price increase.
While the ACCC found that the evidence available was unlikely to establish a contravention of the Australian Consumer Law, it had significant concerns about the ambiguity of GSK's statement. You can read more in the ACCC's media release.
The ACCC's investigation of GSK follows a history of regulatory action on misleading representations about the reasons for price increases. In 2015, the ACCC succeeded in proceedings against Actrol Parts Pty Ltd for falsely attributing the significant price increases for its refrigerants to the introduction of the carbon tax scheme. In announcing the outcome of the GSK investigation, the Chairman of the ACCC reiterated that businesses needed to be careful not to mislead consumers by incorrectly linking price increases to a particular factor, such as a change in Government policy, when the price increase is attributable to a number of factors. Read more in the ACCC's media release.
What this means
- Businesses need to think carefully before issuing any statement about the reasons for price increases and ensure any statements are accurate.
If you would like more information on this issue, get in touch with Carolyn Oddie.
Investigations and Enforcement: Expedia and Booking.com amend contracts with Australian hotels
Online travel agents Expedia and Booking.com have each agreed to amend 'most favoured nation' (MFN) clauses in their contracts with Australian accommodation providers, following an investigation by the ACCC.
The MFN clauses originally required accommodation providers to offer their best prices on the online travel sites. Accommodation providers raised concerns that such clauses were anti-competitive as they effectively stopped consumers having access to different prices from competing online sites.
Expedia and Booking.com have now agreed to allow hotels to offer lower rates on other third party websites and through the hotels' offline channels (such as telephone calls and walk-ins). However, the two companies will be able to prevent hotel providers from offering lower rates on the hotels' own websites than they offer through the online travel agents. You can read more in the ACCC's media release.
What this means
- Businesses should seek advice before including MFN clauses in contracts with suppliers or buyers.
- The ACCC is showing an increasing willingness to investigate the use of such clauses, which may raise competition law issues, depending on the circumstances.
If you would like more information on this issue, get in touch with Jacqueline Downes.