ACCC Chairman discusses VW, mergers and industrial relations

13 October 2015

Australian Competition and Consumer Commission Chairman Rod Sims today addressed an event at the Brisbane Club, where he discussed three topics that illustrate the range of activities currently facing the ACCC.

First, he addressed the allegation that software installed in some Volkswagen, Audi and Skoda vehicles had been used to defeat emission testing regimes.

Mr Sims said: “This alleged behaviour is a clear example of the ACCC’s general concerns with truth in advertising. The ACCC treats truth in advertising as a priority for three reasons:

  • Consumer detriment: many consumers will value cars with low emission of nitrogen oxides
  • Competition: consumers may well have purchased another vehicle if they had known the facts, so competitors to VW, Audi and Skoda may have lost sales
  • Innovation: truthful advertising may well have forced more effort into research for lower emission engines”.

“We are still pressing VW Australia to understand the extent of consumer detriment. For example, without the defeat device, how do the actual emissions compare to the relevant Australian Standard? Further, what will be the impact of the proposed “fix” on the vehicles fuel economy and performance?”

“The ACCC’s enforcement investigation into potential breaches of mandatory standards and the Australian Consumer Law is well underway,” Mr Sims said.

Second, Mr Sims touched on the many current complex merger assessments facing the ACCC, including Brookfield’s proposed acquisition of Asciano; Royal Dutch Shell’s proposed acquisition of BG Group; Coles’ proposed acquisition of nine Supabarn supermarkets; Foxtel’s proposed acquisition arrangements with Ten Network Holdings; and Haliburton’s proposed acquisition of Baker Hughes.

“The ACCC has an unprecedented number of complex merger assessments before it. These are all transactions of significant importance to the Australian economy and it is therefore important that they are assessed carefully and correctly,” Mr Sims said.

The ACCC is due to announce its decision on Brookfield’s proposed acquisition of Asciano on Thursday. That decision may either be a final decision or the release of a Statement of Issues.

Third, Mr Sims discussed the ACCC’s enforcement of competition law as it applies to alleged union behaviour in the general industrial relations area, outlined current investigations and described difficulties with current laws.

“The ACCC has many union related issues on its plate; indeed, the ACCC may currently have more union-related major investigations than ever before,” Mr Sims said.

“Last year, in a major matter, we instituted proceedings against the CFMEU and certain of its officers alleging secondary boycott conduct and attempted secondary boycott conduct at 12 construction sites (section 45D of the CCA), an attempted agreement to prevent or hinder an existing supply situation (section 45E of the CCA), and undue harassment or coercion (section 50 of the Australian Consumer Law).”

“We also have other in-depth secondary boycott investigations underway,” Mr Sims said.

In response to allegations raised in the Royal Commission hearings in Canberra, the ACCC is investigating two instances of potential cartel behaviour in the ACT construction sector. The allegations, however, appear to also involve a wide range of restrictive behaviour beyond the specific allegations of price fixing.

“It is possible that in the past, the ACCC has not looked sufficiently into such additional restrictive behaviour that could amount to a contract, arrangement or understanding that has the purpose or effect of substantially lessening competition, thinking such matters were covered by various IR carve outs and exemptions from the CCA,” Mr Sims said.

“The alleged behaviour in Canberra may provide an avenue to do so in the context of investigating the alleged cartel behaviour. The ACCC is progressing this as a priority matter.”

“This type of alleged conduct can disrupt competitive markets, increase costs and impede productivity. In these circumstances we need to ensure that our competition law applies to such restrictive behaviour as it does to every other sector of the economy,” Mr Sims said.

“That said, it is important to understand that, no matter how concerning particular behaviour might be, for the ACCC to act the behaviour should and will need to amount to a substantial lessening of competition.”

Note to editors: There will not be a published speech

Release number: 
MR 193/15
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Media Team - 1300 138 917, media@accc.gov.au

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