This article was written by Natalie Stianos, Paula Mucha, Caroline Coops.
In his annual address to the Committee for Economic Development Australia on 23 February 2021, Chair Rod Sims announced the ACCC's Compliance and Enforcement Priorities for 2021. A full copy of the speech can be found on the ACCC website.
Why is this important?
The ACCC's priorities are consistent with their update on 31 August 2020 (see previous KWM InCompetition blog post here). While the new priorities take into account the impact of COVID-19, it is clear that the ACCC continues to focus its attention on the various competition and consumer protection matters it has taken to court, as well as potential avenues for law reform in relation to mergers and unfair practices.
This alert provides guidance on the ACCC's likely activities for this upcoming year: sectors which are being closely monitored, and issues on which the ACCC is more likely to take enforcement action. Better understanding these matters will help businesses consider how to best direct their regulatory compliance resources, and better understand the policy objectives of the ACCC.
ACCC 2021 Compliance and Enforcement Priorities
As set out on the ACCC website, Mr Sims announced the following strategic priorities for 2021:
- The impact of the COVID-19 pandemic on the travel and aviation sectors (including the domestic air travel market and issues relating to the cancellation of travel and events);
- Pricing and selling of essential services (particularly energy and telecommunications).
- Boycott and cartel behaviour in the commercial construction sector;
- Investigations into anti-competitive conduct in the finance sector, including following through on recommendations made in the Home Loan Inquiry final report;
- Digital platforms, with the ACCC working closely with overseas counterparts and considering possible enforcement issues;
- Small business (particularly on the issues of franchising and fair trading);
- Agricultural sector (including compliance with the Dairy Code of Conduct, the Horticulture Code of Conduct and the Perishable Goods Inquiry);
- Competition issues in the funeral sector;
- Consumer guarantees in motor vehicles and caravan sales; and
- Product safety, particularly button batteries as well as quad bikes.
Many of these priorities build on the priorities announced in 2020 (see previous blog post here).
Mr Sims emphasised that whilst the Digital Platforms Inquiry was mentioned last in his speech, this focus area was taking up a lot of its resources, with a number of investigations and inquiries currently ongoing. Mr Sims did not discuss the Digital Platforms Inquiry or the News Media Bargaining Code, which had dominated the media, and instead drew attention to its other priorities.
2020: Year, interrupted
Mr Sims emphasised the need to be flexible around its priorities, which required re-adjusting in 2020 in light of COVID-19. In particular, he pointed to unanticipated workstreams including:
- granting urgent interim exemptions to businesses who ordinarily wouldn't be allowed to coordinate;
- a significant rise in complaints stemming from various COVID-19 restrictions (including a 500% increase in complaints and reports about the travel sector);
- undertaking investigations into Flight Centre, Qantas and Etihad; and
- taking action against businesses who sought to exploit consumers by making representations about products or services that claimed to "protect" consumers from the virus, such as Lorna Jane's 'Anti-virus Activewear'.
2021: Back to "the new normal"
Enduring COVID-19 impacts on travel industries continue to be closely scrutinised
The COVID-19 Enforcement Taskforce maintains its close vigilance over sales practices by travel and events businesses, including caravan operators. The ACCC is monitoring any behaviour that could damage competition in the aviation industry, as well as noting with interest regional operator Rex's plans to enter major domestic routes between Melbourne, Sydney and Brisbane (with a focus on Rex's ability to access slots at Sydney Airport).
Enforcing the public interest in 2021
Separately from its COVID-19 workstream which continues from last year, the ACCC has a number of significant proceedings on foot in 2021:
- Cartel matters involving the CFMMEU, Country Care, Vina Money Transfer, Bluescope and various banks will be heard across different courts this year. Earlier this month, the ACCC achieved combined penalties of $83.5 million through the Roll on Roll Off Shipping criminal cartel conviction;
- The ACCC continues to test a number of different provisions across the CCA, including against Peters Icecream (s 47), Tasmanian Ports (the new s 46), and CFMMEU (boycotts); and
- A number of consumer and fair trading cases are also underway including franchising (Retail Food Group, Megasave), motor vehicles (Mazda), digital platforms (Google and Facebook) and unconscionable conduct (Telstra).
In reflecting on its consumer cases in 2020 and in particular its unsuccessful actions against the Kimberly Clark flushable wipes and Jayco Caravans, Mr Sims mentioned the evidentiary difficulties of litigation faced by the ACCC. He reiterated that the ACCC will continue to take on cases it believes are in the public interest.
Mergers continue to be an important feature of the ACCC's work
Mr Sims reflected that the ACCC's work in the mergers space is largely reactive. He also reflected that the economic impact of COVID-19 had not resulted in any significant increase in the acquisition of "failing firms". On the issue of "failing firms", Mr Sims warned such firms against seeking to be acquired by their closest competitor as a quick exit strategy, noting that the ACCC will closely consider any such mergers particularly where the closest competitor appears to be willing to pay a premium for the failing firm.
The enduring priority of product safety and essential services
In response to the concerns that emerged during the pandemic (for example, standards regulating the supply of hand sanitisers), the ACCC has reprioritised its product safety work. It has since undertaken considerable work on the Takata compulsory recall and safety standards for button batteries and quad bikes.
The pandemic also tested the capabilities of the NBN network. A key priority for the ACCC in 2021 will be to set up a regulatory framework for the NBN.
Towards the end of his address, Mr Sims also noted that the ACCC concluded a number of major inquiries including in relation to the cost of insurance of Northern Australia, home loan interest rates, perishable agricultural goods and the water market in the Murray Darling Basin.
What's next: Law reform and beyond
Mr Sims concluded by flagging the ACCC's desire for law reform in a number of areas. In the consumer space, Mr Sims flagged the need for an unfair practices prohibition, and to render unfair contract terms and breaches of the consumer guarantees illegal. Separately, he explicitly expressed dissatisfaction with:
- the operation of Part IIIA: noting that it doesn't adequately regulate standalone monopoly assets, but rather is designed to deal with vertically integrated monopolies; and
- the current state of merger control. Specifically, Mr Sims articulated the concern that the merger control regime is no longer fit for purpose and doesn't achieve the balance required to ensure good outcomes for consumers and the economy. In particular he mentioned too much focus on the counterfactual by merger parties and courts, which he considered susceptible to manipulation, as well as over-reliance on the factors in section 50(3), both of which risk overlooking anti-competitive effects of the merger. The ACCC is exploring merger law reform options in 2021 to rebalance the test so that it is no longer in favour of mergers being cleared.
It remains to be seen how the ACCC will go about its many different priorities, but it is clear that 2021 will be another very active year for the Commission.