Transcript
Check Against Delivery
Welcome to the IBA’s 9th Competition Mid-Year conference. I hope you feel at home in Sydney; I expect you will, after all NSW is home to some 26,000 lawyers1.
Can I particularly welcome our distinguished colleagues from the ACCC’s sister competition agencies.
The ACCC enjoys excellent relations with each of the agencies represented here. For example, for many years we have worked together with the EC and JFTC as part of the leadership group of the Cartel Working Group in the International competition Network. We have also recently partnered with the FAS in a project to enhance information sharing among competition agencies. Cross appointments and close operational arrangements, of course, characterise our relationship with the NZCC. Welcome:
- Vice President Almunia,
- Chairman Berry, and
- Commissioner Odagiri.
As competition regulators we play a vital role in ensuring markets work. A successful and well functioning market economy needs the incentives for innovation and dynamism that only competition can bring, and it needs the clear boundaries for commercial behaviour provided by effective competition and consumer law.
This is more important than ever in the post GFC world.
This is demonstrated, for example, by the LIBOR investigation. Some of our sister agencies overseas, as well as financial regulators, have taken swift action in response to the discovery of the manipulation of benchmark interest rates, including the LIBOR and EURIBOR. Such action provides confidence that action will be taken when certain boundaries are crossed, so that people can have faith in the integrity of markets.
As for the ACCC, we have made it clear that there are some forms of conduct that are so detrimental to consumer welfare and the competitive process that we will always assess them as a priority. This includes:
- cartel conduct
- anti-competitive agreements, and
- misuse of market power
I will very briefly outline our recent activities in each of these areas.
Cartels
After many years of building support, amendments criminalising cartel conduct came into force in Australia in July 2009, introducing the possibility of jail sentences up to 10 years per offence.
When combined with the ACCC’s immunity policy for cartel conduct, which offers immunity to the first to disclose and cooperate, there has never been a greater combination of threat and incentive to deter and break open cartels.
Since the launch of our cartel immunity policy in 2005, the ACCC has now received over 100 approaches, and this continues to be the lead source of information for cartel investigations and proceedings.
We also focus on deterrence. In 2012, we produced a short film, ‘The Marker’, which I sent to the chief executives of Australia’s top 300 companies. We have undertaken a range of awareness activity, and we have also strengthened our pro-active cartel detection capabilities.
The ACCC particularly recognises that international cooperation among enforcement agencies is fundamental. We are committed to various forums in our region. We have also been very actively involved for many years in the work of the Cartel Working Group within the International Competition Network.
Cartels, or alleged cartels, operating across international borders are highly represented in recent court actions taken by the ACCC.
Proceedings continue against the two airlines defending proceedings in relation to alleged cartel conduct in respect of price fixing surcharges on international freight carriage. To date, 13 airlines have been ordered by the Federal Court to pay a total of $98.5 million in penalties.
We also have our latest cartel proceeding in the Federal Court instituted against Yazaki Corporation, a Japanese company, and its Australian subsidiary, Australian Arrow Pty Ltd.
The case arose out of the global auto components investigation.
The ACCC has more than 10 in-depth cartel investigations underway, some are confined to local conduct and others relate to international conduct.
Misuse of market power
These types of forums provide us with a good opportunity to share our common interests and compare our differences.
As many of you would be aware, abuse of dominance is described as ‘misuse of market power’ in Australia. Under our law, a corporation with a substantial degree of power in a particular market cannot take advantage of that power for one of the anti-competitive purposes set out in the Act.
The use of a purpose test differs from the effects-based approach adopted in a number of other jurisdictions. Under an effects-based approach, a regulator may examine the likely impact on the market by the conduct of a dominant firm without regard to purpose; while in Australia taking advantage of market power for a proscribed purpose remains part of the ACCC's evidentiary burden.
The ACCC has recently taken court action against Visa Inc and some of its related companies. Our proceedings allege that Visa, the operator of the world's largest retail electronic payments processing network misused its market power for the purposes of:
- preventing the expansion of Dynamic Currency Conversion (DCC) to new merchant outlets in Australia, such as retail stores, and
- preventing businesses in Australia from supplying DCC services on ATMs in competition with Visa’s own currency conversion service.
We currently have in the order of 10 in-depth investigations underway in relation to misuse of market power.
Anti-competitive agreements
Early last year, the ACCC instituted proceedings against Flight Centre Ltd alleging the company attempted to induce competitors to enter into price fixing arrangements. It is alleged that on six occasions between 2005 and 2009, Flight Centre attempted to induce international airlines Singapore Airlines, Malaysian Airlines and Emirates to agree to stop offering their international airfares directly to the public at prices less than Flight Centre offered.
The growth of the online environment presents new challenges. There are now more sources of information available to consumers and more places they are able to go to source the best deal possible.
The case I highlighted with Flight Centre may have affected the ability of consumers to obtain the cheapest airline fare available.
Conclusion
Overall, the ACCC has in the order of 30 in-depth competition investigations underway covering many fascinating issues. The program for this conference also promises to deal with challenging and exciting issues.
I welcome the International Bar Association to our wonderful city, which I hope you will find to enjoy, and wish you a productive and informative conference.
Endnote
1. NSW Law Society Profile February 2013 http://www.lawsociety.com.au/resources/surveysandstatistics/index.htm