ACCC contemplates broader powers; new guidance on the IP exemption repeal; and the final word on foreign currency conversion services

6 min read

Enforcing the issue: Rod Sims contemplates broader powers

ACCC Chairman Rod Sims covered a range of topics in his recent speech to the annual Law Council of Australia Competition Law Workshop, including the fitness for purpose of Australia's merger control regime, gaps in consumer laws relating to unfair practices, increased penalties for misconduct, and new investigatory powers for market studies.

In particular, Mr Sims:

• stated that the ACCC doesn't yet have a 'complete view' of what the merger control regime should look like, but is firming its view that change is needed. Mr Sims drew comparisons with the US regime, which 'has courts starting with the basic premise that increased concentration will cause a lessening of competition' – a starting point that the ACCC considers does not exist in Australia. He also noted the informal merger review process is undermined where merger parties and their lawyers underplay the degree of overlap and market dynamics in submissions to the ACCC;
• continued to argue for the introduction of penalties for unfair contract terms and for a new general prohibition on 'unfair trading practices', as called for in the ACCC's Final Report in its Digital Platform Inquiry;
• noted the ACCC's desire to seek more significant penalties as a deterrent to misconduct, giving an overview of recent penalties awarded in ACCC enforcement matters (including a $34.5 million fine against shipping company K-line for cartel conduct) and stating that the ACCC plans to release draft guidelines on calculating the penalties it will seek in civil cases; and
• spoke to the importance of market studies and inquiries, calling for new investigatory and information-gathering powers specifically designed for such studies – in contrast to the ACCC's current powers to conduct formal market inquiries that are based in the statutory price monitoring regime.

IP could happen to you: guidelines on IP exemption repeal

The ACCC has published new guidelines on the repeal of the intellectual property exemption in section 51(3) of the Competition and Consumer Act 2010 (Cth) (the CCA). The repeal takes effect on 13 September 2019, and will mean that certain types of IP-related conduct are no longer exempt from the provisions in the CCA relating to cartel conduct, anti-competitive agreements (s45) and exclusive dealing (s47).

The guidelines outline the types of IP-related conduct that may be prohibited when s51(3) ceases to apply, as well as the general principles that will guide the ACCC's enforcement of the CCA in relation to such conduct.

The new guidelines are an update of the draft guidelines issued by the ACCC in June, providing more information on the elements of the relevant competition law provisions, as well as more detailed examples. The new guidelines also state the ACCC's views that intellectual property rights and competition law are not in fundamental conflict, and that the repeal of s51(3) should not impact the majority of IP rights arrangements.

You can read further about the repeal of s51(3) in our Insight: Review your IP arrangements: IP exemption from competition laws soon to be repealed.

Wallenius Wilhelmsen Ocean AS charged with criminal cartel conduct

Following an investigation by the ACCC, the Commonwealth Director of Public Prosecutions has charged Wallenius Wilhelmsen Ocean AS (WWO) with criminal cartel conduct in relation to the international shipping of certain vehicles to Australia between June 2011 and July 2012.

WWO is a Norwegian-based international shipping company and is the third international shipping company to be charged with criminal cartel conduct under the CCA. WWO is alleged to have participated in the same cartel in relation to which two Japanese shipping companies, Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K-Line), have already been convicted of cartel conduct. NYK was convicted and fined $25 million in August 2017, while K-Line was convicted and fined $34.5 million in August 2019.

The ACCC has not released further information, as the matter is currently before the court.

Troubled waters: misleading claims on water filter cartridges

Water filter cartridge business Saipol Technologies has acknowledged that it likely contravened the Australian Consumer Law (the ACL) by engaging in misleading or deceptive conduct and making false or misleading representations regarding its water filter cartridges.

The matter related to Saipol's promotional material for its 'C grade' water filter cartridges issued to business customers between 1 January 2017 and 3 July 2018. That material represented that the pore size or micron rating of such cartridges (which determines the level of filtration) was compliant with a Queensland Health Directive issued in 2016, which the ACCC was concerned was not the case.

Saipol has amended its promotional material in response to the ACCC's investigation, and has given the ACCC a court enforceable undertaking, which requires that Saipol:

• review the representations in all its promotional correspondence and advertising material to ensure they do not contravene the ACL; and
• establish and implement an ACL compliance program, and maintain this program for three years.

ACCC Commissioner Sarah Court stated that this case acts as 'a reminder to all businesses that claims about the quality or grade of a product should be accurate'.

Knowledge is power: next step for Consumer Data Right in energy

Following its consultation paper in February, the ACCC has published a position paper on the Consumer Data Right (the CDR) reforms in the energy sector, nominating the Australian Energy Market Operator (AEMO) gateway model as its preferred data access model.

Under the gateway model, AEMO would have a gateway function, providing CDR data concerning consumers' electricity arrangements from data holders (including retailers and potentially distributors) to trusted third parties authorised by the consumer. The ACCC prefers this model, in part, because it leverages AEMO's existing e-Hub data transfer infrastructure, as well as AEMO's energy data and IT expertise. This differs from the 'economy wide' model that will be rolled out in the banking and telecommunications sectors.

The ACCC will now seek to develop and consult on the designation instrument for the energy sector and CDR rules to accommodate energy-specific arrangements, including authorisation and authentication models. These rules will follow, and are likely to leverage, the locked-down version of the CDR Rules for the banking sector, which the ACCC released on 2 September.

The position paper also states that the ACCC will release an energy CDR implementation timetable to stakeholders later in 2019, given the previously contemplated timing for roll-out of the CDR in the energy sector (the first half of 2020 for priority data sets) is no longer achievable.

You can read more about the implementation of the CDR in the energy sector in our Insight: The Consumer Data Right and energy – what it means and what to do about it. 

FX inquiry: ACCC hopes recommendations have currency

The ACCC has released its Final Report in its inquiry into foreign currency conversion services.

The inquiry focused on the effect of FX services on individuals and small-to-medium sized enterprises, and particularly on international money transfers, foreign cash services, credit and debit card FX services, and travel card services.

The report finds:

• there are signs that recent competition from new entrants is delivering better outcomes for consumers, but there is scope for more robust competition – particularly in the supply of international money transfers; and
• prices of FX services are difficult to compare, as they are complex, lack transparency and are presented in different ways. In turn, this can limit customer switching and competition.

In response, the ACCC recommends:

• establishing a due diligence scheme to ensure that non-bank suppliers of international money transfers can obtain efficient access to the banking and payment services needed to compete; and
• that FX service providers implement a range of measures to improve how prices, fees and price comparisons are displayed to consumers.

The ACCC has stated it will monitor take-up of its recommendations and assess whether any further regulatory response is needed. It has also published on its website a guide for consumers on FX services, to supplement the guidance contained in the report.