ACCC & AER annual report 2016-17

Analysis of performance: Working with partners

Deliverable 2.2: Enhance the effectiveness of the ACCC’s compliance and enforcement initiatives through partnerships

The ACL is a single national set of consumer protection laws. Because the ACL is applied nationally, the ACCC is involved in partnerships to ensure the laws are consistently coordinated and enforced in Australia and that Australian consumer regulators can work collectively on broader issues.

We work with other government agencies (such as Treasury, ASIC and state and territory consumer protection agencies) as well as consumer groups, industry associations and businesses.

We also work with regional and international partners to develop and promote effective competition and consumer protection regimes around the globe.

This year, under Deliverable 2.2 we supported our priority areas by:

  • partnering with specific Australian organisations to advance our priorities
  • engaging with overseas agencies and regulators
  • contributing to legislative development in Australia and liaising with government, including parliamentary committees.

Australian partnerships

We enhance the effectiveness of our compliance and enforcement initiatives by working with Australian businesses, industry associations and consumer groups to promote awareness of the ACL. We also engage with specific stakeholders, including peak industry associations, to promote industry-wide compliance with the requirements of the ACL.

Much of the coordinated work is carried out through interagency and other committees. This year we continued our work with:

  • ACL regulators, via Consumer Affairs Australia and New Zealand (CAANZ) including through:
    • the Education and Information Advisory Committee (EIAC)
    • the Compliance and Dispute Resolution Advisory Committee (CDRAC)
    • the Policy and Research Advisory Committee
    • the Fair Trading Operations Group
    • the Product Safety Operations Group (PSOG)
  • public stakeholders through our consultative committees, including:
    • the Consumer Consultative Committee
    • the Small Business and Franchising Consultative Committee
    • the Council of Australian Governments (COAG) Legislative and Governance Forum on Consumer Affairs.

Education and Information Advisory Committee

One of our major tasks is consumer education on and awareness of ACL. To achieve this, we work with EIAC—a national body that promotes cooperation and coordination of education and information activities relating to the ACL and consumer issues more generally. We are members of the committee along with other Australian, state and territory ACL regulators.

This year the committee has been involved in:

  • the campaign to raise awareness among older men of the dangers of unsafe use of ladders. The campaign aims to reduce injuries over time by influencing a positive behavioural change
  • the national EIAC campaign to raise awareness of the dangers of unstable furniture and televisions and encourage parents to secure them.
  • the 14-week campaign which ran over summer 2016–17 to raise awareness of safety during summer holiday activities
  • communicating with consumers with disability about their rights in preparation for the rollout of the NDIS. The ACCC also worked with the National Disability Insurance Agency and many stakeholders in the disability sector on this project
  • leading an EIAC project to bring together five ACL regulator education materials and align these with the new National Consumer and Financial Literacy Framework for Australian schools for years five to 10. These resources will help teachers to identify how they can incorporate these resources into their curriculum programs. The resources can be accessed via the ACL website.

Compliance and Dispute Resolution Advisory Committee

The Compliance and Dispute Resolution Advisory Committee aims to ensure that compliance and dispute resolution across Australia is coordinated, efficient, responsive and, where appropriate, consistent. It is currently chaired by NSW Fair Trading and its members include representatives of all ACL regulators. The committee supports broader and targeted approaches to consumer law enforcement and, with the Fair Trading Operations Group, day-to-day liaison on enforcement issues.

Research conducted by the ACCC suggested non-compliance with the mandatory standard for household cots in the online sector. In 2016–17, in conjunction with a dedicated CDRAC working group, the ACCC coordinated an Integrated Product Safety Strategy for Household Cots through CAANZ to conduct surveillance and testing activities for cots supplied online. A number of non-compliant cots were identified through the strategy, and suppliers have recalled those products.

Policy and Research Advisory Committee

The Policy and Research Advisory Committee aims to ensure that consumer protection research, policy development and legislative reform are best practice and undertaken in a nationally consistent and cooperative manner. The committee is chaired by the Treasury and has members from all ACL regulators.

The committee has participated in a number of national projects to improve policy coordination and research activities and supports the operation of CAANZ.

Consumer product safety

Since the introduction of the harmonised national product safety system, the ACCC has continued to strengthen relationships with state and territory counterparts. We interact on a formal basis through CAANZ and its subject matter committees.

Product Safety Operations Group

PSOG is a key forum through which the ACCC and state and territory fair trading agencies collaborate on a range of emerging product safety issues. It was established in September 2016 to replace the Product Safety Consultative Committee. It meets via teleconference on a monthly basis.

The group is made up of representatives of product safety regulators from all Australian states and territories. The Queensland Office of Fair Trading chairs the group.

We have also worked in partnership with other federal agencies to deliver and coordinate actions that ensure better safety outcomes. We build relationships with organisations including the Department of Immigration and Border Protection and the Australian Border Force, the Department of Health, the Department of Infrastructure and Regional Development, Kidsafe, the Royal Life Saving Society, various industry associations, Standards Australia and state and territory fire safety agencies. In 2016–17 we worked closely with suppliers of products containing lithium coin cell (that is, button) batteries to develop a voluntary industry code to improve safety of these products. We also continued to work closely with state and territory electrical safety regulators and industry on the Infinity cable recall (see page 117).

Consumer Consultative Committee

The Consumer Consultative Committee provides a forum through which consumer protection issues can be addressed collaboratively between the ACCC and consumer representatives. It is co-chaired by Catriona Lowe and ACCC Deputy Chair, Delia Rickard.

Its current members are the Adult Multicultural Education Service, the Australian Communications Consumer Action Network, Brotherhood of St Laurence, CHOICE, Consumer Action Law Centre, the Consumers Health Forum, the Council on the Ageing, Financial Counselling Australia, the Indigenous Consumer Assistance Network, the Public Interest Advocacy Centre and the Youth Action and Policy Association NSW.

In 2016–17 Consumer Consultative Committee members continued to inform the ACCC’s consumer protection work by:

  • identifying current consumer issues
  • providing input into ACCC priority projects
  • supporting ACCC initiatives through their networks and communities.

Members also actively assisted the ACCC in developing the National Consumer Congress program.

Examples of the way in which the ACCC engages in partnership with small business to enhance the effectiveness of our compliance and enforcement initiatives are described on page 104.

Asia-Pacific Region and other international partnerships

The ACCC recognises the benefits that efficient regional and international markets deliver to Australian consumers and businesses. This is particularly important in a global economy.

To achieve our aims under our priority areas, we work through our regional and international partnerships by:

  • engaging and sharing information with overseas regulators
  • helping to combat anti-competitive conduct in our region
  • cooperating with international investigations and proceedings.

Regional engagement

The ACCC works actively in our Asia-Pacific region to promote the development of effective competition and consumer protection regimes.

Our regional engagement activities in 2016−17 included participation in the following events:

  • 6th ASEAN Competition Conference, Bangkok
  • 9th Seoul International Competition Forum and the East Asian Top Level Competition Officials Meeting, Seoul
  • Product Safety Buyers Training, Ningbo and Guangzhou, China
  • 12th Annual Seoul International Conference on the Electricity Market
  • Asia Pacific Energy Regulators Forum, Seoul
  • Institute of South East Asian Studies / Competition Commission of Singapore symposium on ‘e-commerce and competition law in ASEAN’, Singapore
  • Malaysia Competition Commission Annual Conference and 7th ASEAN Competition Conference, Kuala Lumpur
  • a forum on competition law, SMEs and the retail sector in Chang Mai, Thailand
  • a series of seminars on ACCC activities for officials of the Taiwan Fair Trade Commission, Taipei
  • various regional capacity-building workshops.

Full details of our regional engagement and participation are detailed in our quarterly report, ACCCount, on our website.

We are also involved in numerous programs and committees, including:

  • the Competition Law Implementation Program (CLIP)
  • PSOG (previously the Product Safety Consultative Committee)
  • The Australasian Consumer Fraud Taskforce.

Competition Law Implementation Program

Throughout 2016–17 we continued to partner with our ASEAN counterparts to strengthen cooperation among regional competition authorities in support of enhanced regional economic interaction and development.

We contribute to ASEAN goals through our work to deliver CLIP. CLIP provides targeted capacity-building assistance to ASEAN member states to help develop effective national competition laws and policies. It is funded under the framework of the ASEAN–Australia–New Zealand Free Trade Agreement Economic Cooperation Work Program.

CLIP focuses on practical skills and knowledge transfer to strengthen regional competition law enforcement.

In 2016–17 we expanded our program of CLIP activities in response to increased demand from ASEAN countries. We provided significant support to ASEAN to build its capacity to enforce competition laws and to promote a ‘competition-aware’ region.

The second phase of CLIP remains focused on delivering practical, hands-on capacity-building assistance, drawing on the experience we have developed over 40 years of competition law enforcement in Australia. In addition to delivering workshops and supporting secondment programs, our staff have spent time working alongside officials in Cambodia, Laos, Myanmar and the Philippines to build individual and organisational capacity to develop, promote and enforce competition laws.

The cooperative relationships we are developing in South-East Asia are a vital part of our international engagement. It is clear that the long-term cooperation that is developing now will be the platform from which future cross-border enforcement cooperation will grow.

International engagement

In 2016–17 we were involved in numerous international forums, including:

  • international regulators dealing with investigations and merger assessments
  • organisations that deal with product safety
  • the International Competition Network
  • the OECD
  • the International Consumer Protection Enforcement Network (ICPEN).

Engagement with international regulators

Sharing Australian information about investigations and experience in best practice facilitates international enforcement, develops the capacity of counterpart agencies and strengthens relationships. Receiving information from other regulators helps us to stay abreast of international best practice and increases the efficiency and effectiveness of our merger and enforcement investigations.

We regularly engage and exchange information with other regulators internationally on investigations and merger assessments. In 2016−17 we:

  • received and responded to, or made requests to agencies in Belgium, Brazil, Canada, Chile, China, Colombia, Denmark, France, Germany, Hong Kong, India, Israel, Italy, Japan, Kenya, Korea, Malaysia, Mongolia, the Netherlands, New Zealand, Pakistan, Peru, Singapore, South Africa, Spain, Sweden, Taiwan, Thailand, Ukraine, the United Kingdom, the United States and Vietnam
  • hosted study visits by officials or delegations from Canada, China, Malaysia, Korea, Bhutan, Taiwan, Vietnam, New Zealand, Japan, the Philippines and Indonesia
  • prepared reports and made presentations on Australian competition, consumer and regulatory law developments at many international events
  • hosted staff on secondment from competition authorities of Indonesia, the Philippines and Vietnam, as well as staff from the Independent Electricity System Operator (Canada) to the AER
  • seconded experts to Myanmar, Cambodia and Laos to assist in the development and implementation of their respective competition laws (funded under the ASEAN–Australia–New Zealand Free Trade Agreement)
  • seconded expert staff to the ASEAN Secretariat in Jakarta.

Product safety

Recognising the impact of global marketplaces, we cooperate with the international safety community to address emerging safety hazards and harmonise regulatory approaches. Our international partners include:

  • the United States Consumer Product Safety Commission
  • the European Union and Commission
  • Health Canada
  • the New Zealand Ministry of Business, Innovation and Employment
  • the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China.

For more information on our product safety work this year, see page 115.

International Competition Network

The ACCC collaborates with international counterparts through forums such as the International Competition Network (ICN). The ICN provides competition authorities with a specialised yet informal venue for maintaining regular contacts and addressing practical competition concerns. Our ongoing work within the ICN in 2016–17 included:

  • co-chairing two working groups and performing the Horizontal Coordinator role
  • presenting at a number of ICN conferences and teleseminars
  • organising and presenting at international workshops and teleseminars on competition issues, including mergers, cartels and unilateral conduct
  • leading consultation on future ICN work on the topic of competitive effects of vertical restraints
  • contributing significantly to preparations for, and participating in, the 2016 Cartel Workshop
  • contributing to a scoping study for future cartel work; work to improve engagement by younger agencies in the work of the ICN; and work to improve coordination between the five working groups and the ICN’s Steering Group
  • playing an active role in the Merger Working Group to update and revise the Merger Remedies Guide and the Recommended Practices for Merger Notification and Review Procedures and for Merger Analysis.

Throughout the year we continued to expand our capacity-building assistance to countries in South-East Asia through the Competition Law Implementation Program (see further information on page 107).

We continued to engage closely with competition counterparts around the world by participating in and presenting at a number of seminars dealing with a range of matters, including product safety, consumer and competition investigations and regulatory developments.

With an increasing number of cross-border transactions occurring globally and many of these requiring review by the ACCC, we continued to engage closely with other agencies on merger review of cross-border transactions.

Organisation for Economic Co-operation and Development

We continued to provide input to the OECD through a variety of fora.

We also work with the OECD to improve regulatory practice and policy.

In 2016–17 we:

  • continued to advocate for international cooperation in competition investigations and proceedings
  • contributed to several papers on competition issues that impact on Australia and the region and attended two meetings of the OECD Competition Committee
  • attended two meetings of the OECD Regulatory Policy Committee, which included roundtables examining best practice principles for the governance of regulators and how productivity and economic growth potential can be unlocked through better regulatory policies
  • participated in the OECD Committee on Consumer Policy and face-to-face meetings of the OECD Working Party on Consumer Product Safety
  • participated in a coordinated international campaign to promote the safety of corded internal window coverings
  • coordinated an international online product safety sweep to assess the extent to which banned consumer goods are available for sale online. A total of 25 countries participated, inspecting over 1800 products online.

International Consumer Protection Enforcement Network

ICPEN comprises consumer protection authorities from over 60 countries. Its main objective is to protect consumers’ economic interests around the world, share information about cross-border commercial activities that may affect consumer welfare, and encourage global cooperation among law enforcement agencies.

This year we continued our long engagement with ICPEN, presenting at conferences, co-chairing the Intelligence Steering Group, as a member of the network’s Advisory Group and as the ICPEN Webmaster.

Other ICPEN work over the year included:

  • gathering intelligence on consumer protection priority areas and emerging issues from members and preparing the twice-yearly intelligence report
  • participating in the annual ICPEN online product safety sweep. This year, the sweep focused on the role of online reviews and endorsements and the policies made available to participants. Fifteen countries participated in the coordinated sweep, reviewing 956 websites.

Case study: Redevelopment of the ICPEN website and members’ extranet

During the year the ACCC, in its role as ICPEN Webmaster, agreed to lead a project work group to develop a proposal to refresh ICPEN’s public-facing website (www.icpen.org) and member extranet to deliver a contemporary, secure and sustainable digital presence for the future.

The ICPEN website is used by staff of member organisations and promotes ICPEN’s mandate by sharing information and collaborating on consumer protection enforcement matters.

The ACCC successfully secured the necessary funding from ICPEN members and engaged a leading Australian web development firm specialising in the open source website platform Drupal.

The redeveloped www.icpen.org site was relaunched on 3 July 2017 and will make it easier for consumers to find advice when they are seeking to lodge national and international transaction disputes.

However, the biggest benefit is realised in the addition of a secure member’s extranet area, where information about misleading, deceptive and fraudulent commercial practices can be quickly shared amongst international enforcement authorities.

Legislative developments and government liaison

Legislative developments

Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015

The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Act 2015 (Cth) extends the current protection afforded to consumers against unfair contract terms in standard form contracts to small businesses. It received Royal Assent on 12 November 2015. The protections came into effect in November 2016. The ACCC has continued to engage with businesses so that they are ready to comply with the new laws.

See page 132 for information about the ACCC’s work to support small businesses to comply with the new law.

Country of origin labelling

The Country of Origin Food Labelling Information Standard 2016 commenced on 1 July 2016. It establishes a new system for country of origin labelling of food products sold in Australia. The Standard requires certain foods offered or suitable for retail sale in Australia to carry country of origin labelling identifying where the food was ‘made’, ‘grown’, ‘produced’, or ‘packed’). Businesses that sell or supply food suitable for retail sale in stores, markets, online or from vending machines have up to two years to transition to the revised labelling requirements before they become mandatory on 1 July 2018.

The labelling requirements for food products will vary depending on whether the food is classified as a ‘priority’ or ‘non-priority’ food and whether the food was grown, produced, made or packed in Australia or in another country.

The Standard sets out three broad country of origin labelling options for food, each with its own mandatory requirements:

  • three component standard mark—a graphic and text-based label which is mandatory for priority food items grown, produced or made in Australia.
  • two component standard mark—a graphic and text-based label which is mandatory for most priority food items packed in Australia. It may also be used for imported priority foods that contain Australian ingredients
  • country of origin statement—a text-only label which is used for non-priority food items. Imported priority foods must also, as a minimum, carry a country of origin statement in a clearly defined box.

Further, on 1 September 2016 the Assistant Minister for Industry, Innovation and Science introduced the Competition and Consumer Amendment (Country of Origin) Bill 2016 to amend the ACL’s ‘safe harbour defences’ for country of origin claims.

The safe harbour defences provide certainty to businesses that, if they satisfy certain criteria, their country of origin claim will not be considered to be false, misleading or deceptive. The amendments remove the 50 per cent production cost test for ‘made in’ claims and clarify what amount of transformation is required to constitute a ‘substantial transformation’.

The bill was passed by parliament on 8 February 2017 and received Royal Assent on 22 February 2017.

On 24 April 2017 the ACCC published its updated guidance on country of origin labelling.

Competition and Consumer Amendment (Payment Surcharges) Act 2015

The Competition and Consumer Amendment (Payment Surcharges) Act 2015 (Cth) took effect for large merchants on 1 September 2016. A large merchant is one that satisfies two or all of the following thresholds:

  • consolidated gross revenue for financial year ending 30 June 2015 of $25 million or more
  • value of consolidated gross assets at 30 June 2015 of $12.5 million or more
  • 50 or more employees (whether full-time, part-time, casual or otherwise) at 30 June 2015.

The amendment will apply to all other merchants from 1 September 2017.

These amendments have the effect of prohibiting merchants from applying a surcharge to payments by credit card that exceeds the merchant’s cost of acceptance for that card system. This prohibition applies to EFTPOS (debit and prepaid), MasterCard (credit, debit and prepaid), Visa (credit, debit and prepaid) and the American Express companion card systems.

In the lead up to 1 September 2016 the ACCC raised awareness of the forthcoming prohibition by engaging with many large businesses to ensure they are aware of their obligations and publishing guidelines and information. The ACCC is responsible for ensuring that businesses comply with these obligations.

Horticulture Code of Conduct review

The final independent review of the Horticulture Code of Conduct was released in February 2016. During 2016–17 the ACCC collaborated with an interdepartmental committee of Australian Government agencies to develop the government response to the review’s recommendations, and made a submission on how the code should be amended. The amended Horticulture Code of Conduct came into effect on 1 April 2017. There is a 12-month transition period before some changes take effect. Key changes include:

  • an end to grandfathering of pre-code contracts
  • the addition of penalties for key provisions
  • the addition of an obligation to act in good faith.

The ACCC is working with relevant horticulture market participants to ensure that growers and traders of horticultural produce are aware of their rights and obligations under the amended code.

Competition Policy Review (Harper review)

The ACCC made a number of submissions on the government’s proposed changes to the Act that followed a comprehensive review of Australia’s competition laws (the Harper review).

On 1 December 2016 the first Harper review bill, the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016, was introduced into parliament to amend the misuse of market power provisions in s. 46 of the Act. The bill was referred to the Senate Economics Legislation Committee for inquiry. On 10 January 2017 the ACCC made a short submission to the inquiry. The committee recommended that the bill pass with minor amendments and that a review of its impact should take place at least five years after the bill is implemented. On 14 August 2017 the bill was passed by the Senate and on 15 August 2017 the bill was passed by the House of Representatives.

The government introduced the second Harper review bill, the Competition and Consumer Amendment (Competition Policy Review) Bill 2017, on 30 March 2017. The bill aims to simplify, clarify and strengthen a range of the Act’s provisions, including:

  • those relating to cartels—confining the application of the provisions to cartel conduct affecting competition in Australian markets; and changing the scope of the joint venture exceptions to more appropriately exempt legitimate joint ventures
  • introducing a prohibition on concerted practices which substantially lessen competition that have the purpose, effect or likely effect of substantially lessening competition
  • increasing penalties for secondary boycotts in line with other competition law penalties
  • extending the ACCC’s s. 155 powers to cover contraventions of s. 87B undertakings and merger determinations
  • increasing the penalty for non-compliance with a s. 155 request and giving the ACCC the ability to seek a civil compliance order for a party to comply
  • providing for a ‘reasonable search’ defence to a breach of s. 155
  • providing the ACCC with a new power to issue class exemptions (where a class exemption has been issued, businesses will not need to make individual applications to the ACCC for authorisation or notification)
  • changes to the collective bargaining notification process to make it more flexible for small businesses
  • amending the National Access Regime under Part IIIA of the Act to ensure that it better addresses the economic problem of an enduring lack of effective competition in markets for nationally significant infrastructure services.

The ACCC is currently preparing guidance on some of the key changes arising from these amendments.

Information standard for free-range eggs

On 31 March 2016 Commonwealth, state and territory consumer affairs ministers directed CAANZ to develop a national information standard for free-range eggs for consideration by the Legislative and Governance Forum on Consumer Affairs at a later date.

On 14 November 2016, the Minister for Small Business, the Hon. Michael McCormack MP, announced public consultation on the draft text of a national information standard (NIS) for free-range egg labelling. As well as the NIS, the government consulted on a draft explanatory statement. The consultation closed on 9 December 2016.

The information standard was registered on 26 April 2017 and will come into effect after a 12-month transition period. It prohibits the use of the words ‘free range’ on packaging for eggs (for example, on cartons) unless the eggs were laid by hens that:

  • had meaningful and regular access to an outdoor range during the daylight hours of the laying cycle
  • were able to roam and forage on the outdoor range
  • were subject to a stocking density of 10 000 hens or fewer per hectare and the actual outdoor stocking density must be prominently disclosed.

The NIS will also prohibit unpackaged eggs being represented as ‘free range’ unless in addition to all the factors above:

  • there is a sign containing the words ‘free range’ which is prominently displayed
  • the sign prominently discloses the actual outdoor stocking density.

The government has foreshadowed that it will introduce a bill into parliament to amend the ACL to provide a safe harbour defence for those complying with the standard. If the parliament provides a safe harbour defence, it can be expected that, if a producer can demonstrate that they have complied with the NIS, they will have an absolute defence against misleading or deceptive conduct for use of the words ‘free range’. Egg producers would still have to comply with the ACL in relation to all other representations.

The ACCC is in the process of updating its public enforcement guidance to reflect the standard. If the parliament provides a safe harbour defence, the ACCC will update its guidance again.

Sugar Code of Conduct

The Competition and Consumer (Industry Code–Sugar) Regulations 2017 (the Sugar Code of Conduct) came into effect on 5 April 2017. The code governs certain conduct by growers, mill owners and marketers relating to the supply of cane and on-supply of sugar, including by way of an obligation upon the parties to act in good faith and establishing a process for pre-contractual arbitration. The code also contains a provision relating to grower choice of marketing entity for the sugar produced from the cane supplied by the grower.

Policy developments

Australian Consumer Law Review

The Australian Consumer Law Review commenced in June 2015 and has considered the effectiveness of the current law. The Australian Consumer Law final report was released on 19 April 2017. The ACCC provided advice and support to the ACL review secretariat in the development of the final report, alongside Treasury and state and territory counterparts.

The final report recommended 19 legislative proposals, four non-legislative actions and seven items for future investigation. The key proposals include:

  • specifying that consumers are entitled to a refund or replacement without proving a ‘major failure’
  • clarifying that multiple non-major failures can amount to a major failure
  • introducing a requirement that traders must ensure the safety of a product before it enters the market
  • applying unfair contract terms protections to certain insurance products.
  • In its consumer law enforcement and administration study, the Productivity Commission (PC) separately examined the multi-regulator enforcement and administration arrangements underpinning the ACL. The PC released the Consumer Law Enforcement and Administration: Productivity Commission research report on 12 April 2017. It concluded that the multi-regulator model is working reasonably well and made a number of findings and recommendations in areas of, for example, product safety and enforcement tools and remedies.
  • The ACCC, its state and territory counterparts, and other Commonwealth agencies are currently considering each of the final report’s proposals and findings and developing recommendations on next steps. These recommendations will be presented to consumer affairs ministers in August 2017.

Product safety

The ACCC provides product safety policy advice to the Minister for Small Business. This includes advice on regulating new and emerging product hazards and reviewing existing product safety regulations.