24 February 2016

2016 means big business for the ACCC

In his first public address for the year, ACCC Chairman Rod Sims has unveiled the ACCC’s 2016 Enforcement and Compliance Policy.

The Policy sets out the considerations and priorities that guide the ACCC in its work. While common themes prevail, each year the ACCC reviews its priorities and identifies areas of focus, seeking input from consumer groups, industry ombudsman, regulators and, this year for the first time, the general public.

In 2016 we can expect to see a greater focus on big business, industry codes, advocacy and market studies as well as a new addition to the ACCC’s list of enduring priorities. The agriculture, supermarket and health sectors get a special mention, and the ACCC undertakes to be more transparent in its work.

Our insights

We think that many subject areas of focus for the ACCC for 2016 come as no great surprise, for example:

  • unfair contract terms given the recent extension of the regime to small business;
  • the Grocery and Franchising Codes of Conduct which were recently introduced (Grocery) or amended (Franchising) and have already been the subject of ACCC action;
  • the agriculture industry, in the wake of last year’s Agriculture White Paper and the newly established unit;
  • product safety, which has given the ACCC a recent big court win, and was introduced as an enduring priority last year; and
  • other enduring priorities like cartel conduct that make the list every year.

That said, the return of extended warranties as an area of focus is somewhat surprising, especially since the ACCC has already had enforcement action success in this area.

Despite repeat appearances on the ACCC’s hit list over the past few years, the telecommunications and energy sectors have not rated a mention for 2016, and the food sector attracted only a passing reference in the context of misleading health claims. The successful enforcement record of the ACCC, particularly against the energy retailers, is probably why the regulatory spotlight can now turn away from these sectors. Instead, the ACCC is looking at relatively new additions – such as the health sector and new car retailing - as well as focusing on conduct that is not sector specific, such as unfair contract terms, scam disruption and industry codes.

The ACCC’s enforcement priorities for 2016 certainly continue to give consumer law enforcement a high profile, a trend that has increased each year since the Australian Consumer Law (ACL) came into force in 2010. In this respect the ACCC’s priorities sounds a warning to big business, who are clearly in its sights for enforcement action. Inter-related to this, we think the ACCC will be a very strong advocate for increased penalties for breaches of the consumer law provisions (and possibly the introduction of penalties for a breach of the general misleading conduct provision (section 18 )) as part of this year’s broad ACL review by Consumer Affairs Australia and New Zealand.

It will be interesting to observe how the ACCC implements its priorities. In earlier years, Mr Sims has taken a very firm line on taking court action or “strong enforcement”. This ‘no-holds barred’ approach seems to have dropped away from this year’s priorities such that we may see a greater willingness by the ACCC to resolve investigations by way of infringement notices, undertakings or administrative resolutions.

Some further details about the 2016 priorities are outlined below.

Big business [beware]

The ACCC will be ramping up its focus on big business this year. Mr Sims made it quite clear that the ACCC’s enforcement efforts will be focused on larger companies ahead of smaller businesses because ‘larger companies are often seen as benchmarks for behaviour and compliance and accordingly have a disproportionate influence on market place behaviour’.

Unfair contract terms will continue to be a priority ahead of the extension of the existing unfair contract terms regime to small businesses in November this year (blogged about here).

Mr Sims also flagged a ‘crackdown’ on big businesses who mislead consumers about their consumer rights, especially those who mislead customers into paying extra for protections they are already entitled to under the Australian Consumer Law, such as extended warranties.

New priorities: industry, advocacy & market studies

Mr Sims said he wants to see the ACCC do more competition advocacy and market studies, commenting that ‘pro market reform should not wait for a Hilmer or a Harper review… when a market or sector is not working well [studies] help us identify what we or other agencies or government can do to improve the workings of the market.’

A new priority in 2016 will be the agriculture industry. The ACCC has established a dedicated unit and is planning a number of specific market studies in this area, with today’s appointment of Mick Keogh as the new Commissioner with responsibility for agricultural issues. Enforcement of the Horticulture Code of Conduct will also be a priority.

For franchisees and those in the supermarket industry – the Food and Grocery Code of Conduct and the Franchising Code of Conduct will also be on the ACCC’s watch list.

Following on from the ACCC’s report on the private health insurance industry last year, the health and medical sector will also remain a priority and the ACCC will continue to address incomplete, confusing and misleading policy information as well as misleading health food claims.

Other investigations on foot include the public inquiry into Australia's East Coast Gas Market and a number of studies in regional petrol markets.

Enduring priorities

The ACCC’s enduring priorities- cartel conduct, anti-competitive agreements, misuse of market power and product safety - will continue, but this year the ACCC will add one more to this list: indigenous consumer protection. Although not new, its elevation to enduring status reflects a significant policy change. Mr Sims said the ACCC will prioritise work in this area so long as indigenous consumers continue to face challenges in asserting their consumer rights.

Cartels will remain a major focus for the ACCC and its international counterparts, with a number of matters before the courts and around 20 cartel investigations currently underway. Likewise for anti-competitive conduct. We can also expect some criminal prosecutions and continued focus on bid rigging in government procurement.

In the product safety space, Mr Sims said its recent enforcement activity should serve as ‘a warning to companies that they must do more to detect unsafe products and remove them from their shelves.’

In his closing remarks, Mr Sims said that the ACCC will this year be looking to provide greater transparency in its work, by improving explanations of its decisions and setting out the factors it considers when deciding to take action – a welcome development.

All in all, a busy year ahead for the ACCC and an early warning to those companies operating in the priority areas identified by the ACCC.

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