In Touch: attempted cartel on exhibition in relation to National Gallery tender; ACCC takes a bite of Epic v Apple jurisdiction appeal; no take-off for Qantas/Japan Airlines alliance as ACCC proposes to deny authorisation; and other developments

The latest in competition and consumer law 5 min read

Attempted cartel on exhibition in relation to National Gallery tender

The ACCC has commenced proceedings against building management company Delta Building Automation Pty Ltd (Delta) and its sole director, Timothy Davis, for involvement in an attempt to rig a bid for a tender process run by the National Gallery of Australia (the NGA) for the replacement and ongoing maintenance of a building management system.

The ACCC is alleging that Mr Davis, acting for Delta, attempted to make, or attempted to induce the making of, an arrangement or understanding with a competitor to fix the price of the bids to be submitted by Delta and its competitor, to ensure that Delta was more likely to be successful in winning the tender. The NGA was not aware of this conduct.

Ultimately, the proposed arrangement or understanding was not made because the competitor rejected the approach by Mr Davis. Nonetheless, it is an offence to attempt or induce cartel conduct, which is the focus of the ACCC's allegations.

Telstra to pay $50 million penalty for unconscionable conduct

The Federal Court has ordered Telstra to pay $50 million in penalties for engaging in unconscionable conduct when it sold mobile contracts to Indigenous consumers. This is the second-largest penalty imposed under the Australian Consumer Law.

The ACCC brought proceedings against Telstra in November 2020 regarding the sale of post-paid mobile products to Indigenous consumers. Telstra admitted it engaged in unconscionable conduct in breach of the Australian Consumer Law when it sold these mobile contracts to more than 100 Indigenous consumers, which they did not understand and could not afford.

The conduct included Telstra store staff failing to provide a complete explanation of the consumers' financial exposure under the contracts and manipulating credit assessments. The consumers ended up with an average debt of more than $7,400.

The ACCC has also accepted a court-enforceable undertaking in which Telstra undertakes to provide remediation to affected consumers, improve its existing compliance program, review and expand its Indigenous telephone hotline and enhance its digital literacy program for consumers in some remote areas.

ACCC agrees to discontinue proceedings against NIB following changed practices

The ACCC and NIB have agreed to discontinue the ACCC's Federal Court proceedings against NIB, which alleged it engaged in misleading or deceptive conduct and unconscionable conduct, and made false or misleading representations, by failing to inform policy holders of its decision to remove coverage for certain eye procedures from its 'MediGap Scheme' in 2015. As a result of the changes, the ACCC alleged, NIB members who underwent certain eye procedures would likely incur increased out-of-pocket expenses. NIB members were not given advance notice of the changes.

NIB has taken steps to address the ACCC's concerns. Since the proceedings were commenced in mid-2017, it has been notifying members of changes that negatively affect their benefits ahead of them being implemented. NIB has also provided compensation to consumers affected by the issue the subject of the proceedings.

ACCC takes a bite of Epic v Apple jurisdiction appeal

The ACCC has applied for, and been granted, leave to intervene as a non-party at the hearing of Epic Games' appeal to the Full Federal Court against an earlier decision to stay Epic's proceedings against Apple. Epic brought proceedings alleging that Apple engaged in anti-competitive conduct by not allowing alternative app stores on its iOS for Apple mobile devices and by charging app developers a 30% commission on in-app purchases.

Apple sought, and was granted, a stay of the proceedings because the commercial agreement between Apple and Epic requires all disputes between the parties to be determined in courts in the Northern District of California in the United States.

Epic has appealed that decision, and 9 June 2021 has been set as the date for a Full Federal Court hearing. The ACCC will make submissions about public policy in favour of disputes involving Australia's competition laws being heard and determined by Australian courts. Google has also applied for leave to intervene in the appeal.

No take-off for Qantas/Japan Airlines alliance as ACCC proposes to deny authorisation

The ACCC has published its draft determination proposing to deny authorisation for Qantas and Japan Airlines to coordinate flights between Australia and Japan for three years.

The ACCC's draft decision centres on the lack of competition on key routes between Australia and Japan. Before the COVID-19 pandemic, Qantas and Japan Airlines were the only two airlines offering direct flights between Melbourne and Tokyo, and were two of the three airlines offering direct flights between Sydney and Tokyo.

The ACCC considers that granting the authorisation would eliminate competition between the airlines on these routes and would make it more difficult for another airline to seek to launch flights on them. The ACCC took into account the potential short-term benefits from the proposed agreement in light of the impact of the COVID-19 pandemic on the aviation sector; however, it found that these are outweighed by the severe harm to competition.

The ACCC is seeking submissions on the draft determination by 27 May 2021 and will make a final decision after it considers those submissions.

ACCC looks under the hood of agricultural machinery markets

The ACCC has recently published a report from its detailed study of agricultural machinery markets in Australia. As part of the study, the ACCC consulted with agricultural machinery purchasers, manufacturers, and the retailing and repair industry.

The ACCC's report finds that restricted access to software tools, technical information and service manuals and parts held by manufacturers is limiting competition in repair markets. As a result, the ACCC has recommended that agricultural machinery be considered for future inclusion in the motor vehicle service and repair information sharing scheme, and be included in any broader 'right to repair' scheme in Australia.

The ACCC also identified issues with purchasers having a poor understanding of the terms of warranties when purchasing agricultural machinery. The ACCC recommends that manufacturers and dealers provide clear and concise information to purchasers about warranties at the earliest practical opportunity in the sales process and before the point of sale. To assist purchasers further, the ACCC will also develop materials to help them understand their business and consumer rights in relation to agricultural machinery.