In Touch: Delta's bid rigging on full display; and other developments

The latest in competition and consumer law 6 min read

Delta's bid rigging on full display

On 1 August 2023, Delta Building Automation Pty Ltd (Delta) and its sole director, Timothy Davis, were found to have attempted to rig a bid with one of Delta's competitors, Logical Electrical Solutions Pty Ltd (LES), in contravention of section 45AJ of the Competition and Consumer Act 2010 (Cth) (the CCA). 

The attempted bid rig related to a tender for a contract to supply a replacement building management system (BMS) for the National Gallery of Australia (the NGA) in Canberra.

A BMS is a computer-based system installed to manage and monitor a building’s equipment, such as air-conditioning, ventilation, lighting and power systems, and is typically used in larger commercial or government buildings.

The court found that, in December 2019, Mr Davis organised a meeting with the general manager of LES and, during that meeting, attempted to induce LES to enter into an arrangement or understanding that would make it more likely for Delta to be successful in winning the tender.

It found Mr Davis offered payment in exchange for LES agreeing to the proposed arrangement, although the attempted bid rig was unsuccessful because LES's general manager rejected the proposal.

Penalties will be determined at a later hearing. In addition to declarations, the ACCC is seeking pecuniary penalties and injunctions for Delta and Mr Davis, an order disqualifying Mr Davis from managing a corporation for three years, and orders for Delta to establish a trade practices compliance program for three years.

In bringing these proceedings, the ACCC did not allege any involvement by the NGA in the conduct of Delta or Mr Davis.

The Federal Court liability judgement is available here.

Hornet Industries hits the brakes on likely resale price maintenance 

Following an investigation by the ACCC, Hornet Industries Pty Ltd (Hornet), an importer and distributor of recreational bikes, admitted that it likely engaged in resale price maintenance in contravention of section 48 of the CCA.

Hornet admitted that from at least March 2021 to December 2022, it sought to enter into 42 agreements with independent resellers that prevented them from selling its recreational bikes at or below its specified minimum advertised price and directed them not to sell under that price.

Hornet provided a court-enforceable undertaking to the ACCC that it will not, regarding its independent resellers:

• offer to enter into any agreements that contain minimum price requirements;
• communicate minimum prices; and
• communicate retail prices without a statement to the effect of 'The price set out or referred to herein is a recommended price only and there is no obligation to comply with the recommendation'.

Hornet also undertook to send a corrective notice to its independent resellers, and establish a competition and consumer law compliance program.

A copy of Hornet's undertaking is available here. 

Potentially unfair contract terms unearthed by ACCC's investigation into fertiliser suppliers 

Following a number of complaints from farmers, the ACCC commenced an investigation into the standard form contracts of certain fertiliser suppliers. The regulator received complaints that these suppliers were using its contracts in a way that could disadvantage farmers.

In its investigation, the ACCC considered that a number of terms in the standard fertiliser supply contracts were potentially unfair, including those that:

• gave the supplier the unilateral right to vary the quantity of goods to be delivered to the buyer;
• gave the supplier the unilateral right to terminate the agreement if the supplier believed it would be unable to supply the goods; and
• restricted buyers' rights to raise issues about defects.

All of the fertiliser suppliers subject to the ACCC's investigation modified their contract terms to address the regulator's concerns.

The ACCC also noted that it will continue to monitor traders in the fertiliser industry and the agricultural sector more broadly.

ANZ / Suncorp appeal ACCC's determination 

Early in August 2023, the ACCC declined to authorise ANZ's proposal to acquire Suncorp Bank. On 25 August, the parties lodged an application with the Australian Competition Tribunal to review the regulator's decision.

The case is one of a recent line of merger authorisation applications reviewed by the ACCC, including the TPG / Telstra proposed spectrum sharing arrangement, Linfox Armaguard Pty Ltd / Prosegur Australia Holdings Pty Ltd proposed merger and the amalgamation of BPAY, eftpos and NPPA. The merger authorisation regime was first introduced in November 2017 and prior to 2021, only two applications were reviewed by the ACCC. This now brings the total number of merger authorisation applications reviewed by the ACCC to six. A further application is under consideration.

Australian banks allowed to collaborate on scam safety

The Australian Banking Association (the ABA) and its member banks have been granted interim authorisation by the ACCC to participate in discussions to develop an industry standard to detect and prevent scams affecting individual and small business customers.

On 10 July 2023, the ABA sought authorisation on behalf of its members to permit participation in coordinated discussions for the purpose of developing potential industry initiatives to prevent, detect and respond to scams.

On 3 August 2023, the ACCC granted interim authorisation for a period of 12 months, with conditions, while the ACCC considers the substantive application.

In making the announcement, ACCC Deputy Chair Catriona Lowe said, 'We have acted quickly on this interim authorisation because the proliferation of scams is causing significant detriment to consumers and businesses alike, and the banking sector has a key role in combating scams and recovering losses.'

The interim authorisation allows for the authorised parties to:

1. engage in discussions and exchange information solely for the purpose of developing a banking industry standard in relation to the prevention of, disruption to, and response to, scams that will or may affect individual and small business customers; and
2. reach in principle agreement on the form and content of the industry standard.

If an agreement is reached in relation to an industry standard, the authorised parties will be required to file a separate application for ACCC authorisation for entering and giving effect to the industry standard.

The interim authorisation also imposes strict reporting and transparency conditions, to manage the risk of coordination between the banks.

The granting of the interim injunction follows the Federal Government's recent announcement that a legislated cross-industry scam safety Code will be introduced for banks, telcos, social media platforms and others in the near term.

The ACCC's draft determination on the ABA application is due in September 2023.

ACCC releases its new Gas Market Code 

On 15 August 2023, the ACCC released its compliance and enforcement guidelines for the new Gas Market Code (the Code), which commenced on 11 July this year. The Code is made under the Competition and Consumer Act 2010 (Cth) (the CCA), and applies to gas producers and their affiliates that sell gas to customers in the east coast gas market that connects Queensland, the Northern Territory, South Australia, New South Wales, the ACT, Victoria and Tasmania.

The ACCC will commence enforcement of the Code from mid-September 2023, giving the gas industry a two-month transition period to prepare for the changes and new obligations under it.

The Code has a number of key requirements regarding:

• price rules – it contains a gas price cap, initially set at $12 per gigajoule, and prohibitions on supply over the price cap;
• good faith obligations – it contains minimum conduct and process obligations to encourage good faith dealings between gas producers and users regarding supply arrangements;
• negotiations – it stipulates requirements for the stages of negotiation with customers, including expressions of interest, offers and agreement; and
• transparency – it includes record keeping, reporting and publication obligations for suppliers.

The Code also includes a number of deemed exemptions for suppliers who meet certain criteria. The guidelines note that suppliers should take particular care when assessing their eligibility for a deemed exemption and seek legal advice in relation to their circumstances.

A contravention of the Code is deemed to be a contravention of the CCA. The CCA provides for a range of enforcement options, including infringement notices and public warning notices, court enforceable undertakings and financial penalties. The Code has three penalty tiers, and provides that the maximum penalty for non-compliance is up to the greater of $50 million; three times the value of the benefit obtained; or, if that value cannot be determined, 30 per cent of the company's turnover during the period in which it engaged in the conduct.

The ACCC will separately publish information about the record keeping, reporting and publication obligations of the Code.

The compliance and enforcement guidelines for the Gas Market Code are available here.

The Competition and Consumer (Gas Market Code) Regulations 2023 are available here.

ACCC's expectations for corporations making green claims

In July, the ACCC published its draft guidance to improve businesses' environmental claims.

While the guidance remains open for consultation until 15 September 2023, at the General Counsel Summit earlier this month, Deputy Chair of the ACCC Catriona Lowe reinforced the importance of the regulator's guidance and its approach to enforcement in relation to potential greenwashing.

It was noted:

In determining whether to take enforcement action in respect of environmental claims, the ACCC will consider whether genuine efforts and appropriate steps were taken by the business to verify the accuracy of any information that they relied on.

The scope and extent of due diligence undertaken will vary depending on the size of the business.

… we direct our resources to matters that may result in widespread harm to consumers, competition, or small businesses.

… I would encourage you treat these guidelines as guard rails for your business’ green claims. If you follow the eight principles, you can safely assume you’re on solid ground for making a genuine green claim.