In Touch: News Code of Conduct update; ACCC flags enforcement in the electricity market; and other developments

The latest in competition and consumer law 9 min read

News Code of Conduct update: ACCC releases a draft code for comment

On 31 July 2020, the ACCC released a draft code to address bargaining power imbalances between Australian news media businesses and digital platforms (Draft Code). This follows a request in April this year by the Australian Government for the ACCC to develop a mandatory code as part of the Government’s response to the ACCC’s Final Report in the Digital Platforms Inquiry. The Draft Code indicates an intention for the code to initially apply only to Google and Facebook, consistent with the ACCC's Concepts Paper released in May, which outlined the scope and issues covered by the code. However, the Draft Code contemplates that the code may be applied in the future to other digital platforms designated by the Treasurer where fundamental bargaining power imbalances emerge between the relevant digital platform(s) and Australian news media businesses.

The Draft Code outlines a framework for how negotiations will take place between news media businesses and Google and Facebook to secure payment for the inclusion of news content on the platforms' services, including using final offer arbitration (FOA) if an agreement is not reached after three months of formal negotiations and mediation. FOA, used in a range of commercial contexts but perhaps best known for its use in Major League Baseball salary disputes, is where the arbitrator chooses one of the parties' 'final proposals' on a disputed issue.

The Draft Code also proposes minimum standards of conduct for Google and Facebook, including:

• an obligation on both digital platforms and registered news media businesses to facilitate open communication between the digital platform and the registered new media business;
• an obligation on digital platforms to provide advance notice of an algorithmic change where that change is likely to materially affect news businesses’ referral traffic;
• an obligation on digital platforms to provide advance notice of substantial changes to the display and presentation of news;
• an obligation on digital platforms to provide information to news media businesses about the data Google and Facebook collect through users’ interactions with news on digital platforms;
• an obligation on digital platforms to publish proposals for recognising original news content on digital platforms;
• an obligation on digital platforms to provide flexible user comment moderation tools; and
• the option for news media businesses to prevent news content being included on any individual digital platform service.

Submissions on the Draft Code closed on 28 August 2020, with the code to be finalised soon thereafter. The ACCC will then make a recommendation for the implementation of the final code to the Government.  

Thumbs down: HealthEngine to pay $2.9 million for ACL breaches

The Federal Court ordered HealthEngine to pay $2.9 million in penalties for breaches of the ACL in a decision handed down on 20 August 2020.

As Australia's largest online health marketplace, HealthEngine facilitates bookings between consumers and healthcare providers, and publishes customer reviews and ratings.

HealthEngine admitted to engaging in conduct that included:

• not publishing negative reviews and editing customer feedback before publishing;
• asking customers whether they would recommend a provider, but not publishing the rating when less than 80% of customers voted 'yes' and indicating that the provider had insufficient data to show the satisfaction rating; and
• collecting personal information from consumers who used the booking service and passing on personal information to insurance brokers rather than comparing insurance plans itself.

By doing so, HealthEngine incorrectly represented to consumers that the customer reviews and ratings were genuine, when they were in fact edited to appear more favourable to providers. It also did not make clear that consumers' personal information would be sent to external insurance brokers. HealthEngine admitted it breached the ACL, namely the prohibitions against misleading or deceptive conduct and false or misleading representations.

HealthEngine was also ordered to contact affected customers so they could request to have their personal information deleted. The significant penalty imposed on the conduct involving personal information and the ACCC's media release on the decision highlight the ACCC's ongoing focus on misuse of consumer data.

Energy sector heating up: ACCC flags enforcement in the electricity market

ACCC Chair Rod Sims highlighted the ACCC's growing concerns regarding electricity and gas prices in a speech given on 25 August 2020 to the Energy Users Association. The speech focused on the affordability of gas and electricity, and competition in energy markets.

In his speech, Mr Sims addressed the significant reduction in wholesale electricity prices since mid-2019 and referred to the new Prohibiting Energy Market Misconduct laws, specifically the obligation on suppliers to pass on sustained and substantial reductions in the underlying cost of electricity supply to customers. Mr Sims said that if retailers are not passing on recent wholesale price reductions, they will need to explain why, otherwise the ACCC will take action. Mr Sims also indicated that the ACCC will be monitoring the conduct of electricity generators for any anticompetitive behaviour and breaches of the new misconduct prohibitions regarding wholesale market bidding and restricting offers of financial contracts.

The new misconduct prohibitions, which are now encompassed in Part XICA of the Competition and Consumer Act 2010 (Cth), were passed in late 2019 following recommendations made by the ACCC in its final report on the Retail Electricity Pricing Inquiry. Allens has previously written on the potential impact of the new laws, which came into operation on 10 June this year.

The ACCC is also continuing to monitor the supply of electricity in the National Electricity Market through the Electricity market monitoring inquiry and is expected to produce its next report to the Government on 29 September 2020.

Next chapter of the gas inquiry

The ACCC has released the ninth interim report of its inquiry into the demand for, and supply of, wholesale gas in Australia. The inquiry continues the trend of focusing on the east coast gas market. Key points the ACCC makes in the report are:

• oil and LNG prices have seen a decline, in part due to the COVID-19 pandemic, and this slight decline in prices in the domestic gas market has given short-term relief to domestic gas users, but presented a supply risk for the gas market over the medium to long term;
• although prices have declined, the average prices offered in the east coast gas market have remained higher than the ACCC's expected LNG netback prices, which prompted the ACCC to issue compulsory information notices to key suppliers to gauge pricing strategies; and
• commercial and industrial users have reported that suppliers in the gas market have been more responsive to requests for offers, with prices easing over the last six months.

Commenting on the ninth interim report, Rod Sims expressed concern over an observed widening gap between domestic and export parity prices, and the impact this may have on Australia's industrial sector. In its next report, the ACCC will continue to monitor and report on the effects of the COVID-19 pandemic on demand and revisit the 2021 demand-supply outlook.

Full steam ahead: Alstom's acquisition of Bombardier Transportation not opposed by the ACCC

The ACCC announced on 20 August 2020 that it would not oppose Alstom SA's acquisition of Bombardier Transportation. Both companies are global rail businesses with activities in the Australian market. The ACCC commenced its informal review of the acquisition on 11 May 2020, publishing a market inquiries letter which set out the key areas of overlap between the parties in Australia, including in the supply of:

• rolling stock (specifically mainline electrical multiple unit trains and trams/light rail vehicles);
• heavy rail signalling systems, components and maintenance for passenger rail networks and for industrial/freight rail networks; and
• maintenance services in respect of rolling stock.

A key focus for the ACCC in its investigation was that both companies have a significant presence in the Australian market for rolling stock. The ACCC found that there would continue to be competitive tension for tenders in future rail projects as there were other current and potential rolling stock suppliers with a strong global presence. The ACCC also noted that as the customers in rail tender processes tended to be commercially sophisticated and often included state governments, they were likely to structure tender processes to foster competition.

The global acquisition was also cleared by the European Commission on 31 July 2020, although given both companies have a strong position in the European rail transportation market, the clearance was conditioned upon the fulfillment of a set of commitments by Alstom, including divestiture of some of Bombardier's European assets, particularly in the area of very high-speed rolling stock.

ACCC announces a new inquiry into perishable agricultural products

The ACCC is opening a new inquiry into supply chains for perishable agricultural products in Australia. The scope of the inquiry encompasses trading along the whole domestic supply chain, including farmers, processors and retailers and includes products such as meat, fish, plants and chicken eggs, that are not already covered by a mandatory industry code.

The inquiry relates to a number of other market studies and inquiries that the ACCC has undertaken under its Agriculture Unit, established in 2016, to examine competition issues in agricultural supply chains. The ACCC has said it will use the knowledge accumulated in its work in the agriculture sector to inform its focus. In particular, the new inquiry comes after the introduction of the mandatory Dairy Code in January this year. The Code was a key recommendation of the ACCC in its Final Report in the Dairy Inquiry to address perceived bargaining power imbalances, in particular between processors and farmers. The Code sets out certain minimum standards for the contracting processes between dairy farmers and processors and prohibits conduct such as retrospective price step-downs. Similarly, the ACCC has taken recent action in relation to imbalances of bargaining power and unfair contract terms in wine grape supply agreements, announcing in June that a number of large winemakers had agreed to amend their supply contracts with grape growers after being contacted by the ACCC. The new inquiry continues the ACCC's focus on bargaining power in agricultural supply chains.

The ACCC also said the new inquiry will look at the role of market structures and regulations in delivering efficient and equitable outcomes. In particular, the Government has directed the ACCC to examine the effectiveness of the newly introduced Dairy Code and whether it adequately addresses issues arising from different levels of power between suppliers of dairy products.

The inquiry is expected to last for three months, with the ACCC to provide a report to the Government no later than 30 November 2020.

ACCC COVID-19 authorisation radar

The ACCC is continuing its work in granting urgent authorisations in light of COVID-19.

On 10 August 2020, an interim authorisation was granted to a group of chicken processors to cooperate to ensure sufficient supply of chickens and chicken meat due to concerns about the impact of heightened COVID-19 restrictions in Victoria on meat supply.

The ACCC is also seeking feedback on a draft determination that would allow various airlines, including Rex, Qantas and Virgin, to coordinate flight schedules on selected routes to manage the impact of COVID-19. Interim authorisation was first granted to the airlines on 26 March 2020. The proposed authorisation would extend to 20 June 2021.

Lastly, the ACCC has issued a draft determination which would allow the continued cooperation of the Australian Institute of Petroleum and major oil refineries on measures to ensure the supply of fuel nation-wide. The ACCC is seeking submissions from interested parties on the proposed authorisation until 14 August 2020.