ACCC & AER annual report 2016-17

Appendix 6: Competition and Consumer Act 2010 and other legislation

Competition and Consumer Act and key legislation

Airports Act 1996 (Cth)

Australian Postal Corporation Act 1989 (Cth)

Competition and Consumer Act 2010 (Cth)

National Electricity Law and Rules

National Gas Law and Rules

National Energy Retail Law and Rules

Telecommunications Act 1997 (Cth)

Water Act 2007 (Cth)

Water Market Rules 2009 (Cth)

Water Charge (Termination Fees) Rules 2009 (Cth)

Water Charge (Infrastructure) Rules 2010 (Cth)

Water Charge (Planning and Management Information) Rules 2010 (Cth)

Lawful competition and informed markets

Table A6.1: Parts of the Competition and Consumer Act 2010 dealing with competition

IV

Cartel conduct: price fixing; output restrictions; bid rigging; allocating customers, suppliers or territories

Other anti-competitive conduct: boycotts; agreements substantially lessening competition; anti-competitive disclosure of pricing and other information; misuse of market power; exclusive dealing; resale price maintenance; mergers substantially lessening competition

VI

Enforcement and remedies for anti-competitive conduct

VII

Authorisations and notifications

XIA

The Competition Code

Enforcement

The ACCC investigates cartel and other types of anti-competitive conduct—which are illegal for all businesses in Australia.

Court cases

The ACCC takes court action where, after considering all aspects of a matter, we see it as the best way to achieve our enforcement and compliance objectives. We are more likely to litigate where we see the conduct as particularly bad, where we are concerned about likely future behaviour or where the party involved fails to resolve the matter satisfactorily.

The ACCC may refer matters involving criminal cartel offences to the Commonwealth Director of Public Prosecutions for possible criminal prosecution.

For individuals, the cartel offence is punishable by imprisonment of up to 10 years and/or fines up to $360 000 per contravention. Corporations found guilty of a cartel offence may be fined up to $10 million, three times the value of the illegal benefit or, where the benefit cannot be calculated, 10 per cent of the corporate group’s annual turnover (whichever is the greater).

In relation to civil cartel prohibitions and other forms of anti-competitive conduct, the ACCC may initiate court action for contraventions of the Competition and Consumer Act 2010.

To enforce the civil provisions of the Competition and Consumer Act 2010 relating to anti-competitive conduct, the ACCC can seek:

  • declarations of contraventions
  • findings of facts
  • injunctions
  • damages and compensation
  • community service orders
  • probation orders
  • divestiture orders
  • disqualification of a person from managing corporations
  • adverse publicity orders
  • corrective advertising, public notices and disclosure
  • penalties of up to $10 million, three times the value of the illegal benefit or, where the benefit cannot be calculated, 10 per cent of the corporate group’s annual turnover (whichever is the greater) for companies; and $500 000 for individuals.
Enforceable undertakings

The ACCC often resolves alleged breaches of the Act by accepting court enforceable undertakings from the business involved. In these undertakings, which we record on a public register, the business usually agrees to:

  • make good the harm they have caused
  • accept responsibility for their actions
  • establish or review and improve their compliance programs and culture.

If the business later breaches the undertaking, we seek to have it enforced in the Federal Court of Australia.

We may also use court enforceable undertakings where we have competition concerns with a proposed merger or acquisition. In an enforceable undertaking a merger party may agree to action that addresses concerns about a substantial lessening of competition, allowing the merger or acquisition to go ahead.

The ACCC maintains a public register of enforceable undertakings.

Administrative resolution

In some cases—for example, where we assess the potential risk of harm to competition or consumer detriment from particular conduct as low—we may accept an administrative resolution. Administrative resolutions generally involve the business agreeing to stop the conduct, compensate those who suffered, and take other measures needed to prevent future recurrences.

Education and advice

We believe that preventing a breach of the Act is better than acting after a breach has occurred. Therefore, the ACCC runs regular educational campaigns to inform and advise consumers and businesses about their rights and obligations under the Act and to encourage compliance. Our campaigns aim to educate both big and small businesses.

The ACCC publishes targeted and general information, including tips and tools, to encourage businesses to comply with the Act. We use a wide range of channels to disseminate this information. We also liaise extensively with business, consumer and government agencies about the Act and our role in its administration.

Mergers

Section 50 of the Act prohibits mergers and acquisitions that substantially lessen competition in any market in Australia or are likely to do so.

To assist business, the ACCC has an informal clearance process that enables parties that are planning a merger to seek the ACCC’s view on whether a proposed acquisition is likely to have the effect of substantially lessening competition. Businesses may also apply to the ACCC for formal clearance of acquisitions which, if granted, provides statutory exemption from s. 50.

There is no legislation underpinning the informal process; rather, it has developed over time so that merger parties can seek the ACCC’s view before they complete a merger.

The ACCC assesses mergers that come to our attention where they potentially raise concerns under s. 50. These mergers are generally notified by the merger parties via a request for informal clearance. Alternatively, the ACCC may become aware of a proposed or a completed acquisition by monitoring media reports, from complaints or through referrals from Australian and overseas regulators.

We use the information available to us to determine whether a public review is required. Where we are satisfied that there is a low risk of a substantial lessening of competition based on an initial assessment, we may decide that a public review of the merger is unnecessary. These mergers are described as being ‘pre-assessed’. A significant proportion of the mergers we assess are pre-assessed. Clearing mergers by pre-assessment enables the ACCC to respond quickly where there are no substantive competition concerns.

Both public and confidential mergers can be pre-assessed, without conducting a public review, on the basis of the information from the parties, other information before us and in some cases information from targeted inquiries (in the case of non-confidential mergers).

Where pre-assessment is not considered suitable or possible, the ACCC conducts a public review for non-confidential mergers.

Authorisations and notifications

The Act primarily aims to prevent conduct that damages or is likely to damage competition. However, if markets are not working efficiently and they are failing to maximise welfare, some restrictions on competition may be allowed in the public interest.

Authorisation provides businesses with statutory immunity from legal action to engage in potentially anti-competitive arrangements. Where businesses consider proposed conduct is likely to result in a public benefit, they can apply to the ACCC for an authorisation. If the ACCC is satisfied that the public benefit will outweigh the public detriment, it can authorise the proposed arrangement or conduct.

The ACCC can authorise:

  • anti-competitive arrangements, including cartel provisions (such as price fixing, controlling output, sharing markets or collective bargaining) and exclusionary provisions (such as an agreement to limit or restrict the supply or acquisition of goods or services to particular people)
  • disclosures of pricing and other information in the banking sector
  • a secondary boycott, where two or more parties prevent a third party such as a potential customer or supplier from doing business with a target
  • exclusive dealing (where a person trading with another imposes restrictions on the other’s freedom to choose with whom, in what or where they deal)
  • resale price maintenance (where the supplier specifies a minimum price below which goods or services may not be resold)
  • dual-listed company arrangements that affect competition.

Notification is an alternative to authorisation for certain arrangements. Like authorisation, the notification process provides protection from legal action under the Act if the conduct is in the public interest.

However, notification can be a more streamlined procedure than authorisation. It can only be used for:

  • collective bargaining (where two or more competitors get together with a supplier or a customer to negotiate terms, conditions and prices)
  • exclusive dealing
  • private price disclosures to competitors outside the ordinary course of business.

Both the notification and authorisation processes are public. The ACCC publishes the applications, public submissions and ACCC decisions on the public register on our website.

Fair trading and consumer protection

Table A6.2: Parts of the Competition and Consumer Act 2010 (including the Australian Consumer Law) dealing with fair trading and consumer protection

Competition and Consumer Act 2010

IVB

Industry codes of conduct—the franchising, horticulture, oil and unit pricing codes are mandatory codes prescribed under Part IVB

Australian Consumer Law—Schedule 2 to the Competition and Consumer Act 2010

Chapter 2

General protections: misleading or deceptive conduct; unconscionable conduct; unfair contract terms

Chapter 3

Specific protections: unfair practices: unsolicited supplies; pyramid selling; pricing; consumer guarantees; unsolicited consumer agreements; lay-by agreements; product safety and information

Chapter 4

Criminal conduct relating to fair trading and consumer protection

Chapter 5

Enforcement and remedies for contraventions of the Australian Consumer Law

Enforcement

To enforce the civil provisions of the Competition and Consumer Act 2010 (including the Australian Consumer Law) relating to fair trading and consumer protection, the ACCC can seek:

  • declarations of contraventions
  • findings of facts
  • injunctions
  • damages and compensation, including for non-party consumers
  • community service orders
  • probation orders
  • disqualification of a person from managing corporations
  • adverse publicity orders
  • corrective advertising, public notices and disclosure
  • penalties of up to $1.1 million for companies and $220 000 for individuals, per contravention.

Court enforceable undertakings

To protect consumers and resolve matters under investigation, we can accept enforceable undertakings where a breach, or a potential breach, might otherwise justify litigation.

Under an enforceable undertaking, a company or an individual will generally agree to:

  • remedy the harm caused by the conduct
  • accept responsibility for their actions
  • establish or review and improve their compliance programs and culture.

The ACCC may seek:

  • corrective advertising in the print and electronic media
  • refunds to affected customers
  • community service remedies
  • industry-wide education programs funded by the company providing the undertaking.

Infringement notices

Where we believe that a breach of the Act requires a more formal sanction than an administrative resolution but we consider that a resolution is possible without going to court, we can issue an infringement notice.

Administrative resolutions

In some cases—for example, where we assess the potential risk as low—we may accept an administrative resolution.

Depending on the circumstances, administrative resolutions can range from a commitment by a trader in writing to a signed agreement between the ACCC and a trader setting out detailed conditions.

Administrative resolutions generally involve the trader agreeing to stop the offending conduct, compensate those adversely affected and take other measures necessary to ensure that the conduct does not recur. If a trader re-offends after they have accepted an administrative resolution, we are likely to resolve the new matter differently.

Infrastructure services and markets where competition is limited

Table A6.3: Parts of the Competition and Consumer Act 2010 dealing with regulated industries and prices surveillance

IIIA

Access to the services of essential national infrastructure facilities such as rail tracks and grain port terminals

VIIA

Price inquiries and surveillance in relation to industries or businesses as directed by the Australian Government

X

Limited exemptions for anti-competitive conduct in relation to international liner cargo shipping

XIB

Anti-competitive conduct in telecommunications

XIC

Access to services for telecommunications

Regulation

The ACCC or AER have regulatory responsibilities in relation to a number of key infrastructure services in the economy, including energy, telecommunications, rail, water, fuel, bulk wheat export, postal services, ports and airports. As the infrastructure in each of these sectors is generally provided by one or a small number of suppliers, regulation by the ACCC/AER will promote the economically efficient operation, use and investment in Australia’s key infrastructure. The effect of competition and investment will therefore enhance community welfare and promote the long-term interest of Australian consumers.

The ACCC/AER regulates access to monopoly infrastructure services and the price for that access.

The AER regulates the electricity and gas industries. The AER sets the amount of revenue that network businesses can recover from customers for using networks (electricity poles and wires and gas pipelines) that transport energy. The AER regulates the costs of electricity network services in eastern and southern Australia, and electricity networks in the Northern Territory. The AER regulates access prices for covered pipelines in jurisdictions other than Western Australia. The AER also monitors the wholesale electricity and gas markets to ensure suppliers comply with the National Electricity Law and Rules and the National Gas Law and Rules.

The AER also has monitoring and enforcement roles and functions under the National Energy Retail Law and the National Energy Retail Rules in the ACT, Tasmania, South Australia, New South Wales and from 1 July 2015, Queensland. These functions include authorising retailers to sell energy and administering the national retailer of last resort scheme aimed at protecting customers and the market in the event of a retail business failure.

Legislative amendments in 2016−17

Amendments to the Competition and Consumer Act 2010

Statute Update Act 2016—commenced 21 October 2016
  • This act amends paragraphs 10.68(2)(a) and 10.68(2)(b) of the Competition and Consumer Act 2010 to substitute dollar amounts with penalty units. It also amends sections 90A(9) and 93A(8) of the Competition and Consumer Act 2010 to substitute ‘evidence’ with ‘prima facie evidence’.
Competition and Consumer Amendment (Country of Origin) Act 2017—commenced 23 February 2017
  • This act alters the definition of substantial transformation as it applies to the safe harbour provisions of the ACL by simplifying the tests used to justify a country of origin ‘made in’ claim by clarifying what substantial transformation means and removing the ‘50 per cent production cost’ test.

Amendments to the Competition and Consumer Regulations 2010

Treasury Laws Amendment (Professional Standards Schemes) Regulations 2017—commenced 25 May 2017
  • The regulations prescribe a number of new professional standards schemes that have capped civil liability for misleading or deceptive conduct under the Competition and Consumer Act 2010 which are listed in the Competition and Consumer Regulations 2010.

Telecommunications legislation

Amendments to the Telecommunications Act 1997

Enhancing Online Safety for Children Amendment Act 2017—commenced 23 June 2017

  • The Act makes several minor, consequential amendments to the Telecommunications Act 1997 to reflect the new title of the head Act and title of the statutory office and some necessary transitional and savings provisions.
Determinations made under the Telecommunications Act 1997

Telecommunications (Service Provider—Identity Checks for Prepaid Mobile Carriage Services) Determination 2017—commenced 7 April 2017

  • Determination under ss. 99(1) of the Telecommunications Act 1997.
  • This instrument sets out the regulatory framework for the supply of prepaid mobile services by carriage service providers and repeals the Telecommunications (Service Provider—Identity Checks for Prepaid Mobile Carriage Services) Determination 2013.

Telecommunications (Approving Body) Determination 2017—commenced on 28 February 2017

  • Determination under ss. 410(1) of the Telecommunications Act 1997.
  • This instrument determines that the Joint Accreditation System of Australia and New Zealand is an approving body for the purposes of s. 410 of the Telecommunications Act 1997.

Telecommunications (Carrier Licence Charges) Act 1997—Determination under paragraph 15(1)(b) No. 1 of 2017—dated 1 June 2017

  • Determination under se. 5(1)(b) of the Telecommunications (Carrier Licence Charges) Act 1997.
  • This instrument determines that the proportion of the ACCC’s costs for the 2015–16 financial year that is attributable to the ACCC’s telecommunications functions and powers is $13 641 023.

Telecommunications (Fibre-ready Facilities—Exempt Real Estate Development Projects) Instrument 2016—3 December 2016

  • Instrument made under paragraphs 372K(1)(b), (c), (d), (e) and (f) of the Telecommunications Act 1997.
  • This instrument exempts real estate development projects situated outside of a NBN fixed line rollout region from the requirements to install fibre-ready pit and pipe under Part 20A of the Act, provided the project satisfies certain other conditions relating to the average size of the street frontages and utility infrastructure.

Amendments to Record Keeping Rules

Telstra Exchange Facilities Record Keeping Rule (RKR)

  • The record keeping rule requires Telstra to report monthly on a number of metrics in relation to access to its exchanges including the number of exchanges with queued access seekers and exchanges that are ‘capped’ (out of space).
  • Following a review of the rule in June 2017, the ACCC allowed the RKR to expire on 14 July 2017.

NBN services in operation (NBN SIO) record keeping rule (RKR).

  • This rule requires NBN Co to provide information on the number of wholesale Access Virtual Circuit (AVC) services in operation, the amount of Connectivity Virtual Circuit (CVC) capacity being acquired and average CVC utilisation over the NBN.
  • In June 2017 the ACCC commenced a public inquiry into whether the NBN Services in Operation RKR (and associated Disclosure Direction) should be extended, varied or allowed to expire. The review is ongoing.

Water Legislation

Amendments to the Water Act 2007

Water Amendment (Murray-Darling Basin Agreement) Regulations 2017—commenced 23 May 2017

  • The Regulations amend the Murray-Darling Basin Agreement (the Agreement) to allow the Murray-Darling Basin Authority to prepare a high-level corporate plan to fulfil the requirements of the Public Governance Performance and Accountability Act 2013 (PGPA Act), the PGPA Rule and the Act, while maintaining a detailed work plan under the Agreement for operational purposes.

Water Determinations under the Water Charge (Infrastructure) Rules 2010

  • Nil.

Wheat Legislation

Amendments to the Competition and Consumer (Industry Code—Port Terminal Access (Bulk Wheat)) Regulation 2014
  • Nil.

National Electricity Law and National Gas Law

Amendments to National Electricity Law and National Gas Law Rules

National Electricity (South Australia) (Australian Energy Regulator—Wholesale Market Monitoring) Amendment Act—commenced 15 December 2016
  • Provides the AER with power to monitor the markets on a regular and systematic basis and report at least every two years on performance, including whether there is effective competition and any features that may be detrimental to competition.
Statutes Amendment (National Electricity and Gas Laws—Information Collection and Publication) Act 2016—commenced 15 December 2016
  • Amends the NEL and NGL to ensure the AER has sufficient and clear powers to collect and publish data necessary to benchmark the performance of electricity and gas NSPs.
  • Clarifies that the AER must prepare performance reports if required by the NER or the NGR. It also clarifies that performance reports published by the AER, (Regulatory Information Instrument) may deal with the financial or operational performance of a NSP in relation to the efficiency of the network service provider in providing the services.

It places the onus of claiming confidentiality of information requested in a Regulatory Information Instrument on the NSP, and importantly, information provided to the AER in response to a Regulatory Information Instrument, which is not subject to an express claim of confidentiality under the new process, is not regarded as being confidential.

National Electricity Rules

National Electricity (South Australia) (Australian Energy Regulator—Wholesale Market Monitoring) Amendment Act—commenced 15 December 2016
  • Provides the AER with power to monitor the markets on a regular and systematic basis and report at least every two years on performance, including whether there is effective competition and any features that may be detrimental to competition.
Statutes Amendment (National Electricity and Gas Laws—Information Collection and Publication) Act 2016—commenced 15 December 2016
  • Amends the NEL and NGL to ensure the AER has sufficient and clear powers to collect and publish data necessary to benchmark the performance of electricity and gas NSPs.
  • Clarifies that the AER must prepare performance reports if required by the NER or the NGR. It also clarifies that performance reports published by the AER, (Regulatory Information Instrument) may deal with the financial or operational performance of a NSP in relation to the efficiency of the network service provider in providing the services.

It places the onus of claiming confidentiality of information requested in a Regulatory Information Instrument on the NSP, and importantly, information provided to the AER in response to a Regulatory Information Instrument, which is not subject to an express claim of confidentiality under the new process, is not regarded as being confidential..

National Gas Rules

  • Retailer insolvency costs and pass through arrangements—commenced 9 February 2017.
  • Retailer-distributor credit support requirements—commenced 9 February 2017.
  • DWGM-AMDQ allocation—Schedule 1 commenced 25 October 2016.
  • Rate of Return Guidelines review (gas)—commenced 20 October 2016.
  • Enhanced information for gas transmission pipeline capacity trading—commenced 6 October 2016.

National Energy Retail Rules

Improving the accuracy of customer transfers (retail)—Schedule 2 commenced 2 February 2017.

New standard

Country of Origin Food Labelling Information Standard 2016—commenced 1 July 2016
  • The Information Standard changes Australia’s country of origin food labelling laws and applies to all food sold or offered for retail sale in Australia. The Information Standard has a two year transition period, during which businesses can continue to comply with existing country of origin food labelling requirements or can adopt labelling in accordance with the Information Standard. The Information Standard requirements will become mandatory on 1 July 2018.

Under the Information Standard, most foods that are produced, grown, made or packed in Australia will need to display a label with the kangaroo in a triangle symbol (only if they were produced, grown or made in Australia), a statement indicating that the food was grown, produced, made or packed in Australia and the minimum proportion, by ingoing weight, of Australian ingredients, indicated by a percentage amount and shown in a bar chart. The ACCC will educate business on the application of the Information Standard and how to comply with it, take enforcement action where appropriate and conduct market surveillance.

Amendments to standards

Consumer Goods (Bean Bags) Safety Standard Amendment 2015; Consumer Protection Notice No.4 of 2015—commenced 14 July 2015
  • The instrument makes minor and machinery changes to the Consumer Goods (Bean Bags) Safety Standard 2014 to permit goods complying with that standard to be sold from the date this instrument is registered and allow goods complying with the superseded standard to be sold up to 1 July 2016.
Australian Consumer Law Safety Standard (Protective Helmets for Motor Cyclists) Revocation Notice 2015—made 20 November 2016.

This Notice revokes Trade Practices Act 1974—Consumer Protection Notice No. 9 of 1990—Consumer Product Safety Standard: Protective Helmets for Motor Cyclists.

New ban order

Australian Consumer Law Imposition of Interim Ban on Hoverboards that do not meet Specific Safety Requirements—Consumer Protection Notice No. 3 of 2016—commenced on 19 March 2016
  • This instrument prohibits the supply of hoverboards that do not meet certain specific safety requirements set out in International Electrotechnical Commission (IEC) standards, IEC 62133 and IEC 60335–1 or Underwriters Laboratories Inc (UL) standard, UL 2272.
  • Consumer Protection Notice No. 1 of 2016—Safety warning notice (Hoverboards)—made 12 January 2016.
  • Consumer Protection Notice No. 2 of 2016—Hoverboards s. 132J Notice (Certification)—made 18 March 2016.
  • Consumer Protection Notice No. 4 of 2016— Hoverboards interim ban conference notice—made 18 March 2016.
  • Consumer Protection Notice No. 5 of 2016—Extends the interim ban on hoverboards that do not meet specific safety requirements by 30 days—made 5 May 2016.
  • Consumer Protection Notice No. 6 of 2016—Extends the interim ban on hoverboards that do not meet specific safety requirements by 30 days—made 13 June 2016.