Australian Competition Law update
In an attempt to avoid going a whole year without a blog update, let’s review what’s been happening since the last post in June 2018 …
Criminal charges ramp up
The ACCC has announced three new criminal prosecutions in relation to cartel conduct in the past 12 months (these are prosecuted by the Commonwealth Department of Public Prosecutions):
(11 April 2019) against money transfer business, Vina Money Transfer, and five individuals for allegedly fixing the Australian dollar / Vietnamese dong exchange rate and fees they charge their customers’ (media release). The committal mention has been set for July 18.
(August 2018) against CFMMEU and its ACT branch secretary alleging that they attempted to induce ‘suppliers of steelfixing services and scaffolding services to reach cartel contracts, arrangements or understandings containing cartel provisions in relation to services provided to builders in the ACT in 2012 to 2013’.
(June 2019) against ANZ, Citigroup and Deutsche Bank (and several senior executives) alleging ‘cartel arrangements relating to trading in ANZ shares held by Deutsche Bank and Citigroup.’
In addition, on 13 March 2019 the Country Care Group, its Managing Director and a former employee were committed to stand trial in the Federal Court in respect of the cartel charges laid against them early in 2018. This represents the first criminal prosecution against an Australian company and the first involving individuals.
Gun jumping
In July 2018 the ACCC instituted proceedings against Cryosite for alleged cartel conduct relating to an asset sale agreement with Cell Care Australia. It alleged the agreement took place before an acquisition and that this ‘gun jumping’ amounted to ‘cartel conduct because it restricted or limited Cryosite’s supply of cord blood and tissue banking services and allocated potential customers from Cryosite to Cell Care’.
On 13 February 2019 the Federal Court ordered Cryosite to pay $1.05m in penalties for this conduct.
Digital Platform Inquiry
It’s been full steam ahead on the ACCC’s Digital Platform Inquiry, initiated in December 2017 by then Treasurer, currently Prime Minister, Scott Morrison.
The Preliminary Report was sent to the Government as expected on 3 December 2019 and released to the public a week later. Running to a mere 375 pages it made several recommendations. These include:
Mergers
[recommendation 1] Amendments to the merger provision that would require courts to consider the following factors when determining whether a merger would substantially lessen competition:the likelihood that an acquisition would result in the removal of a potential competitor; and
the amount and nature of data which the acquirer would likely have access to as a result of the acquisition
[recommendation 2] Requesting commitment from large digital platforms to provide advance notice of acquisitions of any business with activities in Australia (Australia currently does not require pre-merger notification)
New regulatory authority to ‘monitor, investigate and report’
[recommendations 4 and 5] Establishing a regulatory authority to
‘monitor, investigate and report on whether digital platforms, which are vertically integrated and meet the relevant threshold, are engaging in discriminatory conduct (including, but not limited to, conduct which may be anti-competitive) by favouring their own business interests above those of advertisers and potentially competing businesses’ and
monitor, investigate and report on the ranking of news by digital platforms.
[Facebook and Google have both expressed considerable dissatisfaction with this proposal]
Mandatory standard regarding copyright infringements
[recommendation 7] Recommending a Mandatory Standard regarding digital platforms’ take-down procedures for copyright infringing conductChanges to the Privacy Act
[recommendation 8] Changes to the Privacy Act to better enable consumers to make informed decisions over (and have greater control over) privacy and collection of personal information
For a great overview and brief critique of these recommendations see Katharine Kemp, ‘ACCC wants to curb digital platform power – but enforcement is tricky’ (The Conversation, 11 December 2018)’.
Plenty of submissions on the Preliminary report were published in March this year along with summaries of several roundtables. The ACCC also published commissioned research on The impact of digital platforms on news and journalistic content and two consumer law surveys. All can be found at the Inquiry’s website or from my website, which includes links to media and commentary.
A final report is due by 30 June 2019.
Mergers
Most mergers cleared, some more controversially than others. The biggest headline merger for 2018 was the Nine-Fairfax merger, which the ACCC announced it would not oppose in November. More than 1,000 submissions were received. The ACCC concluded that significant new entry had already occurred into the Australian market and growth in online news now provided some degree of competitive constraint. In addition, the ACCC found that ‘Nine’s television operations and Fairfax’s main media assets generally do not compete closely with each other’.
New Guidelines
It’s always exciting when we get new guidelines – and in the second part of last year several new ACCC guidelines were released. These now account for the changes brought about by the 2017 Harper Reforms, including most notably to the misuse of market power and concerted practices prohibitions.
Special leave denied
We were denied any exciting High Court competition cases for the foreseeable future when, on 19 October 2018, the High Court refused special leave to the ACCC in relation to the Full Federal Court’s decision in Pfizer (misuse of market power and exclusive dealing) and refused special leave to Yazaki in relation to the $46m penalty it received for cartel conduct. Earlier (on 8 August) the High Court also refused special leave for Prysmian in relation to its appeal against a finding of cartel conduct.
IP exemption: going, going, gone …
The Harper Report recommended removing the IP exemption contained in s 51(3) of the Competition and Consumer Act and in October 2018 a Bill was introduced (in disguise … the Treasury Laws Amendment (2018 Measures No 5) Bill 2018) designed to do just that.
That Bill eventually passed both Houses in February and received Royal Assent on 12 March 2019. The removal of the exemption will take effect from 13 September 2019 (six months after receiving Royal Assent).
The ACCC has announced it is preparing guidelines relating to the removal of this exemption.
First RPM notification unopposed
The Harper Reforms introduced the ability to ‘notify’ resale price maintenance conduct. Unless opposed by the ACCC, notified conduct can take place without contravening the Act. The first notification was by Tooltech (which had previously been the trailblazer with an RPM authorisation in 2014) and in July the ACCC announced it would not challenge the notification.
No Adverse Orders for Part IV litigation
The Treasury Laws Amendment (2018 Measures No. 5) Act 2019 introduced provision for assistance by the Ombudsman in relation to Part IV actions involving small business or family enterprises (via amendments to the Australian Small Business and Family Enterprise Ombudsman Act 2015) and provides for ‘no adverse costs orders’ in relation to Part IV actions affecting small business or family enterprises.
To facilitate the no adverse costs orders change, s 82 will be amended to allow the court to order that an applicant is not liable for the costs of the respondent, regardless of the outcome. Certain criteria must be satisfied before the court can make such an order (including that the action raises a reasonable issue for trial). The change will apply to actions brought on or after 1 July 2019.
Air Cargo continued
In June 2018 Air NZ was penalised $15m for its role in the global air cargo cartel.
ACCC awards
Last but not least, the ACCC was awarded the 2019 Government Agency of the Year at the Global Competition Review 9th Annual Awards in Washington DC.