24 February 2017

ACCC’s Big Bucket List for 2017

This article was written by Trish Henry, Peta Stevenson, Hannah Luxford and Aarthi Sridharan.

Today, ACCC Chairman Rod Sims delivered his first public address of the year, discussing the ACCC’s newly released Compliance and Enforcement Policy for 2017. The Policy sets out the areas which the ACCC will prioritise for investigation and enforcement activity this year.

Mr Sims commented on the ACCC’s limited resources and the need for it to make choices as to the areas in which it will focus its enforcement activities. However, the list of priority areas for the ACCC keeps growing, with few of last year’s focus areas being left off the list.

Our predictions

This year we expect to see:

  • scrutiny of the commercial construction sector by a newly established team focussed on competition issues, as well as on the energy and telecommunications sectors;
  • a push for higher penalties in both competition and consumer law matters, possibly at the expense of agreed settlements;
  • an emphasis on the conduct of big business;
  • further enforcement activity in the private health insurance sector;
  • more attention on recently reformed areas such as unfair contract terms, country of origin labelling requirements and payment surcharges;
  • a focus on consumer guarantees such as those provided by the airline, telecommunications and motor vehicle industries;
  • monitoring of commission-based sales, with the ACCC taking a closer look at misleading behaviour driven by sales commissions;
  • an interest in arrangements which impose ‘price parity’ obligations; and
  • a renewed focus on substantial lessening of competition cases.

The following areas remain on the ACCC’s watch list:

  • cartel conduct;
  • consumer issues in the health sector;
  • competition and consumer issues in the agriculture sector;
  • product safety issues which have the potential to cause serious harm to consumers;
  • anti-competitive agreements and practices and misuse of market power; and
  • conduct which impacts indigenous, vulnerable and disadvantaged consumers.

Our insights

Higher penalties to come

Rod Sims reiterated once again that the ACCC will be seeking higher penalties this year, even going so far as to say that this approach might lead to fewer agreed settlements.

He said there were signs that the Federal Court expected higher penalties for larger companies to guarantee deterrence. He then referred to the ACCC’s success last year in the ‘Nurofen’ Reckitt Benckiser appeal on penalty (in which the Full Court imposed the $6 million penalty sought by the ACCC in place of an original penalty of $1.7 million, and noted that even $6 million was at the bottom of the appropriate range) and the comments of Wigney J in the ANZ Bank and Macquarie Bank proceedings (that he would have ordered a much higher penalty had there not been an agreed penalty).

Big business should watch out

The ACCC will prioritise enforcement action against larger companies, on the basis that conduct by big business has the potential for the greatest consumer detriment and influence on other market participants.

Cases taken by the ACCC in 2016 in relation to allegations of misleading consumers were cited as an example of this approach:

  • Kimberly-Clark and Pental (in relation to ‘flushable’ wipes);
  • Volkswagen (in relation to emissions testing);
  • Heinz (concerning marketing of toddler food); and
  • Medibank Private (in relation to communications with members about limiting benefits).

Sectors under the microscope

While many of the areas identified by the ACCC have been targeted in previous years, additional sector-specific focuses have also been identified for 2017. This year, the sectors to watch out for are:

  • Commercial Construction – the ACCC has set up a newly established team to focus on this industry and has already indicated that there are some ‘serious allegations of anti-competitive conduct’ that needs to be investigated. This follows a string of recent investigations and actions by the ACCC in the sector including:
    • proceedings against the Construction, Forestry, Mining and Energy Union in relation to alleged secondary boycott conduct; and
    • an investigation into alleged price fixing conduct in the ACT construction industry.
  • Energy – this sector makes a return to the ACCC’s watch list this year. Two significant investigations are already underway following on from the East Coast Gas Inquiry.
  • Telecommunications – the telecommunications sector has also found its way back onto the ACCC’s radar with a focus on broadband speed and performance claims, including new principles for advertising speeds available on retail fixed line broadband plans.
  • Agriculture – agriculture remains a focus with multiple market studies having been undertaken and a new inquiry into the dairy industry.
  • Health – the ACCC recently completed its market study into the private health insurance industry, examining how consumers were informed as their policies changed. We expect to see further enforcement action coming out of this.
  • New car retailing – this was a relatively new area of focus last year, which continues to remain on the ACCC’s radar in 2017, with the final report from its market study due to be released in late 2017.

2017 is shaping up to be another busy year for ACCC, particularly with the Harper law changes coming before Parliament and the Australian Consumer Law Review.

All companies need to take care to ensure that they comply with Australia’s competition and consumer laws. The guidance given in the Policy and Mr Sims’ comments should be of particular interest to those involved in the various ‘priority sectors’, as well as to larger businesses who may find themselves subject to enforcement action and the call for larger penalties.

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