In Touch: ACCC institutes proceedings against Uber; and other developments

The latest in competition and consumer law 8 min read

ACCC institutes proceedings against Uber

The ACCC has instituted proceedings in the Federal Court against Uber in relation to cancellation warning messages and Uber Taxi fare estimates that Uber admits involved contraventions of the Australian Consumer Law (ACL).

Uber's rideshare app displayed a message to consumers who sought to cancel a ride to the effect that 'You may be charged a small fee since your driver is already on their way'. However, a cancellation fee may not have been payable if a request was made within a free cancellation period. Uber amended its cancellation messaging in September 2021.

Additionally, the Uber Taxi option in the Uber app displayed estimated fare ranges for a taxi, which for a period were often higher than the actual taxi fares. Uber discontinued the Uber Taxi option, which was only available in Sydney, in 2020.

Uber and the ACCC have agreed to jointly seek orders from the court, including declarations that Uber contravened the ACL, and that a $26 million penalty be imposed.

Government charging to introduce button safety standards

The ACCC has urged businesses to ensure that they comply with the new safety and information standards relating to button batteries which come into force on 22 June 2022 following an 18 month transition period.

In December 2020, the Federal Government introduced safety and information standards for button and coin batteries, and products that contain them. The ACCC has provided a fact sheet and guide for business to aid compliance with the standards.

The standards include requirements relating to the design and construction of products and product packaging, compliance testing as well as warnings and other information that must be provided in relation to such products. Individuals and corporations may face severe penalties for non-compliance with the standards.

Trivago to pay $44.7 million in penalties for making misleading representations

The Federal Court has ordered Trivago to pay $44.7 million in penalties for making misleading representations about hotel room prices on its website and in television advertising.

As previously reported, in January 2020, the Federal Court found that Trivago had contravened the Australian Consumer Law by representing that its website would help users to find the cheapest hotel room rates. The court found that Trivago's website rankings were determined by an algorithm that placed weight on hotel booking sites that paid Trivago the highest cost-per-click fee rather than the cheapest rates for consumers.

The court also found Trivago’s hotel room rate comparisons that used strike-through prices or text in different colours gave consumers a false impression of savings. This was because Trivago often compared a standard room offer with a luxury room offer at the same hotel.

In determining the appropriate penalties, the court noted that consumers paid in the order of $30 million more for hotel rooms by selecting Trivago's top-featured offer, rather than the cheapest offer. The court considered that this loss or damage to consumers called for a substantial penalty.

Honda faces allegations for misleading consumers about dealership closures

The ACCC has commenced proceedings against Honda for allegedly making false or misleading representations to consumers in relation to dealership closures.

The ACCC alleges that, from January to June 2021, Honda informed customers that two of its former dealerships had closed and would no longer service Honda vehicles. Honda allegedly directed customers to contact a Honda dealership or service centre for their next service. The ACCC alleges that, after Honda's franchise agreements with these two former Honda dealerships had been terminated, both continued to trade independently and service Honda vehicles.

The ACCC is seeking declarations, pecuniary penalties and costs.

ACCC highlights issues for consumers and sellers with online marketplaces

The ACCC has published the fourth report in its Digital Platform Services Inquiry. The report examined general online retail marketplaces and raised a range of issues in relation to how the ACCC perceives these services operate.

The ACCC acknowledged that online marketplaces can provide a low-cost way for sellers to enter the market and expand consumer choices. However, the report discusses concerns raised by consumers and sellers, including in relation to the way algorithms determine the display and rankings of products, the collection and use of consumer data, dispute resolution mechanisms and the need for greater consumer protections.

The ACCC stated that online marketplaces should be more transparent with consumers and sellers as to how they operate, including the factors that may influence the prominence with which products are displayed. In addition, the ACCC considers that consumers should be given more information about, and control over, how online marketplaces use their data. The report also refers to sellers' reliance on online marketplaces for data about consumers and how it may affect the ability of sellers to tailor their product offerings.

With respect to dispute resolution mechanisms, the ACCC supports a minimum internal dispute resolution requirement for digital platforms and the establishment of a dedicated ombudsman. The report also refers to the ACCC's continued support for an unfair trading practice prohibition, current proposed amendments to make unfair contract terms illegal and subject to civil penalties as well as reform options relating to the sale of unsafe products.

The report also discusses possible issues with 'hybrid marketplaces' which sell their own products and third-party products. The report raises ACCC concerns about the potential for such platforms to favour their own products to the detriment of third-party sellers and consumers.

While the report did not find that any online marketplace in Australia has reached a dominant position, the ACCC remains concerned that there is potential for the market to 'tip' in favour of a single marketplace having regard to network effects. The ACCC signalled that it considers it important to monitor developments in online marketplaces, including closely scrutinising mergers and acquisitions.

ACCC publishes statement of issues concerning THL's proposed acquisition of Apollo

The ACCC has published a statement of issues in relation to THL’s proposed acquisition of Apollo. THL and Apollo are tourism companies headquartered in New Zealand and Australia, respectively, and are both involved in the rental, sale and manufacture of recreational vehicles (RVs).

The statement of issues refers to THL and Apollo as the two largest suppliers of motorised RV rentals in Australia, and the ACCC is concerned that the proposed acquisition would remove THL's largest competitor in this area.

One particular issue the ACCC is examining is whether peer-to-peer platforms such as Camplify and Camptoo, which offer platforms for private RV owners to rent their RVs, can effectively compete with traditional RV rental suppliers.

The ACCC's final decision is expected on 21 July 2022. The New Zealand Commerce Commission is also reviewing the transaction.