Competition news

New focuses for the ACCC: Harper, robots and excessive surcharges

Last month was a month of new direction and focus for the ACCC.

On 6 November, significant changes to Australia's competition laws commenced, implementing the key recommendations of the Harper Panel's review of Australian competition law and policy. The changes comprise a range of major amendments to the Competition and Consumer Act 2010 (Cth) (CCA), including:

• introducing the effects test for misuse of market power;
• removing the formal clearance and Tribunal authorisation options for merger clearance and introducing a merger authorisation process with the ACCC;
• amending the joint venture exception for cartels; and
• introducing a provision prohibiting concerted practices that substantially lessen competition.

In anticipation of these laws, the ACCC has released guidelines on the merger process reforms and interim guidelines on the misuse of market power and concerted practices reforms.

For more detailed information of the changes that have taken effect, see our analysis of the key changes and guidance note for General Counsel.

The ACCC has also indicated its willingness to tackle novel applications of competition law in new technology industries. At a recent event on artificial intelligence, ACCC chairman Rod Sims delivered a speech in which he articulated the potential for companies to engage in collusive activities by-proxy, using algorithms and 'bots' that trawl competitor websites and match prices. Mr Sims made the blunt point that '[i]n Australia, we take the view that you cannot avoid liability by saying 'My robot did it''. The speech is available in full here.

Finally, the ACCC has taken action for the first time to enforce recently enacted laws against excessive payment surcharges. The ACCC issued online trader 'Red Balloon' four infringement notices, with penalties totalling $42,200. These notices followed four instances in March and June of Red Balloon charging consumers excessive surcharges in respect of Visa and Mastercard credit payments.

Read our guide to the new excessive surcharges prohibitions here.

Communications and media industries in the spotlight

The ACCC has issued a draft report of the communications sector market study. The market study considers the state of competition in the supply of retail communications services to individual, residential and small business consumers and in the markets for intermediate inputs and other wholesale services. The draft report found there is strong price competition between major service providers despite considerable concentration in both fixed and mobile retail markets, and noted the competitiveness of smaller service providers may be impeded by their access to key inputs such as aggregation services. The ACCC is currently seeking comments on the draft report and intends to publish its final report in early 2018.

The ACCC has also published guidance on how it will assess mergers in the media industry. The ACCC's new guidelines replace the current 2006 version. In releasing the new guidelines the ACCC accepted that the media industry is changing. ACCC chairman Rod Sims noted that '[t]hese guidelines are a regulatory reflection of the rapidly changing media landscape. The ACCC continues to keep pace with the innovation entering and disrupting the market'.

The ACCC also recently issued its final report in the Domestic Mobile Roaming Declaration Inquiry. The ACCC was not satisfied that declaring mobile roaming services would promote the long-term interests of end-users, and considers the solution lies elsewhere publishing a 'Measures to address regional mobile issues' paper. The paper proposes a number of measures to improve outcomes for regional mobile users, and is currently undertaking a market study in the communications sector.

Mergers in the clear

The Australian Competition Tribunal has authorised Tabcorp's acquisition of Tatts following a Federal Court appeal of its original decision which remitted the matter back to the Tribunal for reconsideration. Justice Middleton released a brief statement in advance of publishing detailed reasons, noting that '[t]he Tribunal [was] satisfied in all the circumstances that the proposed merger would result, or would be likely to result, in such a benefit to the public that the acquisition should be allowed to occur.' Our article on the appeal can be found here.

The ACCC has cleared Borg Group's proposed acquisition of Carter Holt Harvey Pinepanels' (CHH) Mount Gambier and Oberon particleboard plants. CHH is a significant supplier of raw particleboard, particleboard flooring and value-added particleboard to Borg's competitors. The ACCC was satisfied that Borg would continue to face competition in the supply of raw and value-added particleboard from other providers, and, accordingly, the merger would be unlikely to substantially lessen competition.

Similarly, the ACCC has cleared the proposed merger between Essilor, wholesaler of finished ophthalmic lenses and Luxottica, wholesaler of prescription frames and sunglasses who also owns retail outlets, including OPSM and Laubman & Pank. The ACCC cleared the proposed transaction on the basis that the merged entity would likely continue to face competition at all levels of the supply chain, including from other vertically integrated operators.

Finally, earlier this month, the ACCC also cleared the proposed acquisition of OfficeMax by Complete Office Supplies, two suppliers of office products to commercial and government customers in Australia, concluding that the merged entity would continue to face competition by Winc (formerly Staples) which will remain the market leader post acquisition.

Telstra customers obtain remedies

Telstra has agreed to provide refunds to customers that purchased its NBN Plans and AFL Live Pass subscriptions.

Telstra has agreed to give refunds and other remedies to around 42,000 customers on its NBN plans after the ACCC accepted a court enforceable undertaking from the company. The undertaking followed an ACCC investigation in which the regulator found that 8 per cent of Telstra customers had NBN connections which were not capable of delivering the advertised speed on their plan. In some cases, according to the ACCC, customers could not receive the maximum advertised speed of a slower plan.

Depending on the individual customer's plan, the undertaking requires Telstra to allow the customer to:

• change to a plan of the customer's choice and receive a refund of any excess 'speed boost' charges;
• exit the plan without cost and receive a refund of the speed boost charges; or
• remain on their current plan.

In August, the ACCC published guidance on how internet retailers should be representing their NBN plans to consumers. The guidance serves as an industry benchmark against which the ACCC assesses representations made to consumers in relation to the NBN.

The ACCC also raised concerns about Telstra's disclosure of the viewing screen size of its AFL Live Pass app on mobiles and tablets. Telstra advertised the screen size on which its service would display AFL games as full screen, despite subsequently being reduced from this maximum size. Telstra is offering refunds to annual subscribers that purchased AFL Live Pass subscriptions prior to 31 January 2017 and accessed that service using a tablet device.

Meriton misled consumers on review website

The ACCC has succeeded in a Federal Court action against Meriton for creating a misleading impression on a third-party travel review website about the standard of its serviced apartments. The conduct related to strategies employed by Meriton to minimise the number of negative reviews stemming from the 'Review Express' service offered by Trip Advisor online.

Review Express is a tool whereby accommodation providers give the email addresses of guests to Trip Advisor which then sends invitations to the guests to post a review on the website. Meriton admitted that it changed or withheld guests' email addresses, which had the effect that certain guests did not receive an invitation to submit a review.

Meriton argued that the conduct was not misleading or deceptive because, on the evidence, it did not have the effect or likely effect of creating a more positive impression of the standard of Meriton's serviced apartments on Trip Advisor. In particular, Meriton argued that the practices did not stop self-motivated reviewers from posting negative reviews.

However, the Federal Court rejected this argument and held that overall the conduct of Meriton had the effect of improving the relative number of positive reviews. Hence, Meriton's apartments gained a higher ranking on the website than would otherwise have been the case, and consumers who relied on the veracity of the ranking would have been misled.

Meriton having been found liable, the matter was listed for a separate hearing on remedies.

This matter further emphasises the importance of businesses using social media appropriately and the willingness of the ACCC to investigate matters that arise from inappropriate use of social media.

Proposed changes to whistleblower laws

Proposed changes to the Corporations Act 2001 (Cth) and the Taxation Administration Act 1953 (Cth) (under the Treasury Laws Amendment (Whistleblowers) Bill 2017 (the Bill)) aim to create a consolidated whistleblower protection regime for the corporate, financial and credit sectors. The purpose of the regime is to combat corporate crime by providing additional protection to whistleblowers, widening the definition of disclosures protected under the legislation, and implementing better protections for tax whistleblowers.

Currently, the Corporations Act limits the scope of 'disclosable conduct' to disclosures about a contravention of a provision of the Corporations Act. The Bill would expand 'disclosable conduct' to cover disclosures in relation to (but not limited to) the following conduct:

• an offence 'against any law of the Commonwealth that is punishable by imprisonment for a period of 12 months or more'
  Certain offences under the CCA have imprisonment of 12 months or more as a penalty, such as: cartel offences; intimidation of witnesses; providing false or misleading information; offences relating to warrants; and failure to attend the Commission or answer questions.¹ Therefore, whistleblowers disclosing these CCA offences would be protected under the proposed laws.

• misconduct, or an improper state of affairs or circumstances, in relation to the 'whistleblower regulated entity'
  The Explanatory Memorandum states that this 'broad category is intended to cover other forms of conduct not specifically defined, but could include serious breaches of any Commonwealth, state or territory law that are not criminal offences'. Therefore, disclosure of other CCA breaches could also be protected under the proposed legislation.

If passed in its current form, whistleblowers would have:

• the option of anonymous disclosure (and have their identity protected in court proceedings); and
• expanded access to compensation by reversing the onus of proof.

In addition, the legislation would require all public companies and large private companies to implement a whistleblower policy.

If passed, the amendments will commence on the day the Bill receives Royal Assent and apply to whistleblower disclosures made on or after 1 July 2018.

Want to know more? Read our detailed article on these reforms here.