In Touch: Highest total penalty amount ever imposed under ACL; and other developments

The latest in competition and consumer law 5 min read

ACCC clears NAB's acquisition of Citi's Australian consumer business

The ACCC announced on 29 July 2021 that it will not oppose National Australia Bank Limited's (NAB) proposed acquisition of Citigroup Australia Pty Limited’s (Citi) Australian consumer business. Citi's consumer business consists of consumer banking services, as well as the funding of white label credit cards that are issued to end-customers via white label partners (eg supermarkets, retailers or banks). NAB provides similar services, including consumer banking products and services.

The ACCC's review focused on competition in the market for supply for credit cards, as the regulator considered that the proposed acquisition was unlikely to raise competition concerns in other markets (such as personal and home loans) on the basis that Citi's presence is small and there are a number of other competitors.

The ACCC decided not to oppose the deal on the basis that, following the proposed transaction, NAB would continue to face competition from other suppliers of credit cards. The market feedback the ACCC received suggested that Citi is not unique in its credit card offering, and that many alternative credit card suppliers would remain to ensure the market stays competitive. The regulator also considered vertical effects by assessing whether, post-acquisition, NAB would be able to leverage its position to offer less favourable terms to white label partners, with the aim of enhancing NAB's own branded credit cards. The ACCC concluded that NAB is unlikely to have an incentive to act in this way because such partners could invest in their own credit card issuing platforms and reduce their reliance on NAB.

ACCC clears Turnitin's proposed acquisition of Ouriginal

The ACCC announced on 25 November 2021 that it will not oppose Turnitin LLC's proposed acquisition of Ouriginal Group AB. This follows the decision of the UK's Competition and Markets Authority, which cleared the deal on 26 July 2021.

The ACCC concluded that the proposed acquisition is not likely to substantially lessen competition in the Australian market for anti-plagiarism software. While the regulator initially had concerns that Turnitin would face less competition and lose incentives to innovate, the ACCC ultimately found that Ouriginal is unlikely to provide a particularly significant competitive constraint on Turnitin at present or in the future. Additionally, Turnitin's incentives to innovate and develop its products are likely to continue to be driven by other international providers.

Court to drill into ACCC's resale price maintenance claims against Techtronic

The ACCC announced on 25 November 2021 that it has instituted proceedings against Techtronic Industries Australia Pty Limited, a major supplier of power tools in Australia, for allegedly engaging in resale price maintenance. This occurs when a supplier engages in conduct that prevents, or attempts to prevent, resellers of its goods or services from advertising or selling the goods or services below a specified minimum price.

The ACCC alleges that Techtronic engaged in this conduct by entering into 96 agreements with independent dealers and buying groups that restricted the sale of its power tools below a specified minimum price. The regulator also alleges that Techtronic enforced these agreements by issuing reminders, warning and breach notices to dealers; and that Techtronic withheld supply from two dealers who sold products below the specified price.

The ACCC is seeking penalties, declarations, injunctions, a compliance program order, an order for corrective advertising and costs.

ACCC will not oppose proposed acquisition of Rivalea by JBS

The ACCC announced that it will not oppose JBS Australia Pty Ltd’s proposed acquisition of Rivalea Holdings Pty Ltd and Oxdale Dairy Enterprise Pty Ltd (together, Rivalea). Rivalea is owned by Singapore-based QAF Limited.

JBS processes and supplies fresh pork, value-added pork products and pork smallgoods (through its subsidiary, Primo Smallgoods and various other brands) to wholesalers and retailers, and operates one pig abattoir and processing facility in South Australia. Rivalea is a pig producer, and also operates a processing facility in Corowa and is the majority owner of the Diamond Valley Pork processing facility in Laverton, Victoria. It supplies fresh pork and value-added pork products to wholesalers and retailers in Australia.

The ACCC’s investigation focused on the impact the proposed acquisition would have on service kill customers (ie third parties acquiring slaughtering services) at Diamond Valley Pork, and the flow-on implications for pork wholesalers, retailers and smallgoods producers.

The ACCC also found it unlikely, however, that JBS will have the incentive to foreclose or frustrate access to service kills at Diamond Valley Pork post-acquisition, given the importance of third party service kills to Diamond Valley Pork. It also found that, following the acquisition, affected downstream parties would have access to fresh pork and smallgoods alternatives.

Allens acted for QAF in the transaction.

Compass Matin provides a lesson in using unfair contract terms

Education software supplier Compass Matin Pty Ltd and its contract manager EduCollect Pty Ltd have admitted to using unfair contract terms in the supply of their CAMI and iTutor home tutoring programs.

Compass Matin admitted that the following terms were unfair:

• a requirement to pay the full amount of the contract if the customer wanted to terminate it early; and
• a requirement to pay an amount equivalent to six months of subscription fees in order to terminate early.

Compass Matin has also admitted that it made false or misleading representations to consumers about free tutoring lessons, in breach of the Australian Consumer Law (the ACL).

Compass Matin has undertaken to provide full refunds to some consumers who were misled and partial refunds to others. It will also provide some consumers with the option to exit their contracts early without penalty.

AIPE learns fate in misleading and deceptive conduct case

The Federal Court has ordered penalties totalling $153 million against the Australian Institute of Professional Education Pty Ltd (in liquidation) (AIPE).

The court had previously found that AIPE misled vulnerable and disadvantaged consumers by representing that their courses would be free, even though they would each incur a VET FEE‑HELP debt of up to around $20,000. AIPE also enticed potential students by offering inducements such as ‘free’ laptops to enrol.

AIPE received more than $210 million from the Federal Government for approximately 16,000 enrolments during the relevant period under the VET FEE-HELP scheme; and had previously been ordered to repay approximately $142 million to the Government, in compensation for funding it should not have received.