In Touch: Merging into a new era and more in competition law

The latest in competition and consumer law 11 min read

Australia passes merger reform legislation 

On 28 November 2024, the Treasury Laws Amendments (Mergers and Acquisitions Reform) Bill 2024 (the Merger Reform Bill) passed both houses of Parliament with no amendments and now awaits Royal Assent. This bill was introduced on 10 October 2024.

The Merger Reform Bill's passage heralds a significant departure from Australia's longstanding voluntary informal merger clearance framework. Transactions completing on or after 1 January 2026, even if signed before that date, will now be subject to a single mandatory and suspensory administrative regime. Under the new framework, acquisitions that involve a 'change of control', meet certain monetary thresholds and are not otherwise exempt must be notified and cannot proceed without obtaining clearance from the Australian Competition and Consumer Commission (ACCC), otherwise they will be void. In addition, Treasury is expected to require mandatory notification of acquisitions of interests of more than 20% in private companies where the monetary thresholds are satisfied.

Transitional arrangements will begin from 1 July 2025, allowing merger parties to voluntarily notify the ACCC of proposed transactions under the new regime ahead of its formal commencement. New merger authorisation and informal clearance applications will no longer be able to be submitted after 30 June 2025 and 31 December 2025, respectively. For more information on the details of the new regime, see our recent Insight here. The reforms will also have considerable practical implications for public takeover bids and surprise hostile takeovers, explored in this Insight.

Unfair play: Treasury's next move on trading practices

In October 2024, the Federal Government announced plans to reform unfair trading practices prohibitions under the Australian Consumer Law (ACL). Following this, on 15 November 2024, Treasury issued a Supplementary Consultation Paper providing further information about the proposed general and specific prohibitions against unfair trading practices.

The proposed general prohibition seeks to tackle unfair trading practices that harm consumers but are not currently addressed under the ACL and is designed to capture a business' conduct where it unreasonably distorts or manipulates consumer decisions or behaviours and causes material consumer detriment. Examples of conduct which may be captured by this prohibition include omitting material information, providing 'unclear, unintelligible, ambiguous or untimely' material information, obstructing consumers from exercising contractual and other legal rights and employing design features that 'unduly pressure, obstruct or undermine' consumers in digital interfaces.

The proposed specific prohibitions will target conduct arising from evolving business practices, particularly those related to e-commerce. Treasury's areas of focus include tackling unfair subscription-related practices, drip and dynamic pricing strategies, requirements for customers to create online accounts and provide unnecessary personal information to make a purchase, and obstacles customers face in accessing support after purchasing a good or service.

Treasury is seeking feedback on the proposed reforms by 13 December 2024 in relation to their design, how penalties should apply, potential benefits for consumers and compliance implications for businesses if enacted.

For more detail, see our recent Insight.

Calling out Optus: ACCC alleges unconscionable conduct

The ACCC has initiated proceedings in the Federal Court against Optus Mobile Pty Ltd (Optus), accusing the telecommunications provider of engaging in alleged unconscionable conduct involving inappropriate sales and debt collection practices directed towards vulnerable or disadvantaged consumers. These consumers, many of whom were First Nations Australians from regional or remote areas, included people with mental disabilities, diminished cognitive capacity or learning difficulties, or those who had limited English proficiency or financial literacy. The specific conduct Optus is alleged to have engaged in includes:

• subjecting vulnerable consumers to undue pressure or influence, including inducing those consumers to purchase a large number of goods and services the consumers often did not want, did not need and/or could not afford;
• selling goods and services to vulnerable consumers that they did not want or could not use, including failing to have regard to whether the consumer would have coverage where they lived;
• selling goods and services that Optus knew or should reasonably have known that vulnerable consumers could not afford following a credit check;
• failing to explain terms and conditions of contracts for sale to vulnerable consumers in a manner they could understand or at all, resulting in these consumers being unaware of their ongoing payment obligations;
• misleading vulnerable consumers that goods were 'free' or of no additional cost; and
• pursuing debt collection for such contracts, including when Optus knew contracts were created fraudulently.

The ACCC also alleges that:

• Optus made one or more false or misleading representations to vulnerable consumers in contravention of sections 18 and 29(1) of the ACL;
• that senior management at Optus was aware of these practices but failed to take corrective action in a timely manner. For instance, the ACCC alleges that despite knowledge of the deficiencies in Optus' sales systems, management did not implement necessary changes or undertake remediation efforts until after prolonged delays and external prompting from the Telecommunications Industry Ombudsman; and
• Optus continued debt collection activities even when the impugned contracts were subject to investigation and senior management was aware the contracts had been created without the affected customers' knowledge.

This case parallels ACCC v Telstra,¹ in which the Federal Court in 2021 ordered Telstra to pay $50 million in penalties for unconscionable conduct in selling mobile contracts to over 100 First Nations consumers. These cases underscore the importance of employee training to prevent unconscionable conduct and having systems in place to address consumer harm. For more on ACCC v Telstra, see our Insight.

Steering the course: High Court clarifies assessing damages for breaches of the acceptable quality guarantee 

The High Court recently delivered judgment in two prominent automotive consumer class action appeals, Toyota v Williams² and Ford v Capic,³ offering guidance on how damages should be assessed for breaches of the ACL's acceptable quality guarantee.

Section 271(1) of the ACL allows for an action for damages against a manufacturer where there has been a failure to comply with the acceptable quality guarantee set out in section 54 of the ACL. In addressing the nature and calculation of 'reduction in value' damages under section 272(1)(a) of the ACL, the High Court held:

• this form of damages is a 'performance-based remedy', representing the monetary difference between the value the consumer expected and what they actually received;
• reduction in value damages do not focus on any actual loss suffered by the claimant, but rather on the position of a hypothetical 'reasonable consumer' at the time of supply;
• damages are assessed by having regard to all that is known at the time of trial about the ‘state and condition of the goods’ at the time of their supply, including the nature of the defects and the likely availability, timing, effectiveness, cost and inconvenience of any repairs; and
• if a good is not of acceptable quality due to a risk or propensity for defect at the time of supply, whether or not the defect actually materialises is irrelevant to the assessment of reduction in value damages (although it may be relevant to the assessment of consequential loss under s 272(1)(b)).

While not central to the determination of the appeals, the High Court also confirmed that the right to claim damages under section 272(1)(a) against a manufacturer will reside with the title or ownership of the goods. This would mean that if a consumer sells the goods, the original purchaser would lose the right to claim reduction in value damages (but not consequential loss), but the subsequent purchaser may be able to bring a claim for breach for reduction in value damages.

For further information about this decision, see our recent Insight.

Prescription issued: ACCC clears Sigma and Chemist Warehouse merger 

Since our October In Touch, the ACCC has confirmed that it will not oppose Chemist Warehouse's proposed ‘reverse acquisition’ of Sigma Healthcare subject to Sigma's compliance with enforceable undertakings.

The three obligations proposed by Sigma in the draft undertaking are largely consistent with those in the court enforceable undertaking executed on 6 November 2024, including:

• for a period of three years, Sigma must not prevent or hinder franchisees who entered into arrangements before 1 January 2024 from terminating their contracts with Sigma if they so choose;
• Sigma must remain a participating pharmaceutical wholesaler under the Commonwealth Government’s Community Service Obligation arrangements for at least five years, which includes compliance with service standards for the wholesaling of prescription medicines; and
• if a Sigma customer terminates their agreement within three years of completion of the transaction, Sigma must:
  • within two business days of receipt of the termination notice, ensure that only approved personnel have access to the customer's confidential information for approved purposes only;
  • within 10 business days of termination, destroy the customer's confidential information unless a limited exception applies (eg, legal retention requirements) and de-identify any data relating to the customer;
  • if a customer wishes to continue purchasing from Sigma post-termination, ensure only non-ringfenced personnel can access necessary confidential information, subject to the customer's consent; and
  • maintain secure information technology systems and security measures to safeguard the customer's confidential information from unauthorised access, use, copying or disclosure.