ACCC & AER annual report 2016-17

Appendix 8: Undertakings accepted and infringement notices paid in 2016–17

Undertakings accepted by the ACCC are available in full on the undertakings public register on the ACCC website.

Strategy 1 Maintain and promote competition

Competition and Consumer Act 2010 s. 87B undertakings

Competition and Consumer Act 2010

To promote vigorous lawful competition and informed markets

Anti-competitive agreements and practices

Co-operative Bulk Handling Limited

s. 87B undertaking dated 17 October 2016

The ACCC has accepted a court enforceable undertaking from Co-operative Bulk Handling Limited (CBH) in relation to its supply of grain receival, storage and handling services in Western Australia.

CBH is a cooperative, 100 per cent owned by its 4200 grower members in Western Australia.

The ACCC considers that between 2013 and 2016, CBH engaged in exclusive dealing conduct that had the effect, or likely effect, of substantially lessening competition in the West Australian grain transport market. The conduct involved CBH:

  • requiring growers to opt out of its integrated Grain Express service within seven days of the grower delivering each parcel of grain to a CBH receival site
  • designating 31 (reduced to 30 in January 2015) of its up-country storage sites as ‘Grain Express Only’ sites so that those sites were not available to users of CBH’s unbundled Non Grain Express services, and
  • the price for the Non Grain Express service was set above the price of the Grain Express service (excluding transport charges) in most situations, with the price differential amounting to, in effect, a charge to opt out of the Grain Express service.

The ACCC considered that, in combination, the effect of these requirements was that growers and marketers would not, except to a limited extent, use the Non Grain Express services and acquire grain transport services from a competitor of CBH.

In 2016, CBH began offering new services for growers and marketers who use its storage and handling network including:

  • ‘CBH Site Select’—a service that will allow marketers to buy grain delivered to a CBH receival site and arrange a transport provider other than CBH to transport the grain to port or domestic customers, and
  • ‘CBH Integrated’—a fully integrated service managed by CBH from receival point to export or domestic markets

To address the ACCC’s concerns, CBH has undertaken to the ACCC that in offering its Site Select and CBH Integrated services it will, for the four harvest seasons commencing from the 2016–17 season:

  • offer the Site Select service at all CBH receival sites that CBH opens with the exception of 11 designated Integrated Only sites and any new Integrated Only sites CBH builds
  • allow growers and marketers up until 1 February in each season to opt their grain out of the CBH Integrated service (provided the receival site is not a designated Integrated Only site), and
  • price its Integrated and unbundled Site Select services as outlined in the undertaking and will only change its fees and charges for these services in accordance with the terms of the undertaking.

Merger remedy

Metcash Limited proposed acquisition of Home Timber and Hardware Group

s. 87B Undertaking dated 20 July 2016

The ACCC did not oppose Metcash Limited’s proposed acquisition of Home Timber and Hardware Group after accepting an undertaking from Metcash. The undertaking placed obligations on Metcash to not restrict hardware stores that it supplies from purchasing goods from other suppliers, and to not discriminate against hardware stores that it supplies that compete with hardware stores in which it holds an interest.

Merger remedy

Qube Holdings Limited proposed acquisition of a 50 per cent shareholding in Australian Amalgamated Terminals Pty Ltd

s. 87B Undertaking dated 23 November 2016

The ACCC did not oppose Qube Holdings’ proposed acquisition of a 50 per cent shareholding in Australian Amalgamated Terminals Pty Ltd (AAT) after accepting an undertaking from Qube and AAT. The undertaking places obligations on AAT and Qube (as relevant) not to discriminate between users of AAT port terminals, not prevent or hinder access to AAT terminals, to ring fence terminal users’ confidential information, and to comply with price and non-price dispute resolution processes.

Resale price maintenance

Withdrawal of undertaking due to business cessation

Peter McInnes Pty Ltd

s. 87B undertaking dated 20 October 2015

On 15 April 2014 the ACCC accepted an undertaking from Peter McInnes Pty Ltd ACN 000 445 269. The undertaking was given by Peter McInnes in relation to the ACCC’s concerns that Peter McInnes had engaged in conduct that constituted or was likely to constitute resale price maintenance, on four occasions, by inducing or attempting to induce retailers not to sell KitchenAid stand mixers supplied to them by Peter McInnes at a price less than the recommended retail price specified by Peter McInnes.

The undertaking required Peter McInnes to:

  • refrain from engaging in resale price maintenance for two years
  • write to all of its KitchenAid stand mixer customers informing them that they are free to set their own minimum prices for products supplied to them by Peter McInnes
  • issue directions to its employees that they should refrain from expressing to those customers any hostility or criticism about the customers discounting below the recommended retail price, and
  • implement and maintain a compliance program.

On 4 August 2015 Peter McInnes Pty Ltd advised that it had sold its business and is no longer operating. Peter McInnes Pty Ltd subsequently sought withdrawal of its undertaking. As Peter McInnes Pty Ltd is no longer operating, the ACCC has provided its consent to withdraw the undertaking.

Anti-competitive agreements and practices

Eureka Operations Pty Ltd trading as Coles Express

s. 87B undertaking dated 15 December 2015

On 19 August 2014, the ACCC instituted proceedings in the Federal Court against Informed Sources and five petrol retailers (BP Australia Pty Ltd, Caltex Australia Petroleum Pty Ltd, Woolworths Ltd, 7-Eleven Stores Pty Ltd and Coles Express).

The ACCC alleged that the information sharing arrangements between Informed Sources and the petrol retailers, through a service provided by Informed Sources, has the effect or likely effect of substantially lessening competition in markets for the sale of petrol in Melbourne in contravention of s. 45(2) of the CCA.

On 15 December 2015, the ACCC accepted an undertaking from Coles Express:

  • not to enter into any price information sharing service agreement that is similar to the one operated by Informed Sources (Australia) Pty Ltd, and
  • not to give effect to any such arrangement at the expiration of the current term of its agreement with Informed Sources in April 2016.

The Federal Court also ordered, by consent, that the proceedings against Coles Express be discontinued and it noted the undertaking.

Anti-competitive agreements and practices

BP Australia Pty Ltd, Caltex Australia Petroleum Pty Ltd, Woolworths Ltd, 7-Eleven Stores Pty Ltd, Informed Sources (Australia) Pty Ltd

s. 87B undertaking dated 22 December 2015

On 19 August 2014, the ACCC instituted proceedings in the Federal Court against Informed Sources and five petrol retailers (BP, Caltex, Woolworths, 7-Eleven and Eureka Operations Pty Ltd trading as Coles Express).

On 15 December 2015, as outlined above, the ACCC accepted a court enforceable undertaking from Eureka Operations Pty Ltd t/as Coles Express in which Coles Express agreed to terminate its agreement with Informed Sources at the expiration of its current contract and to not enter into a similar petrol price information exchange service for the next five years. As a result, the ACCC consented to orders by the Federal Court that the proceedings be discontinued against it.

On 22 December 2015 the ACCC accepted an undertaking from:

  • BP Australia Pty Ltd (BP)
  • Caltex Australia Petroleum Pty Ltd (Caltex)
  • Woolworths Ltd (Woolworths)
  • 7-Eleven Stores Pty Ltd (7-Eleven), and
  • Informed Sources (Australia) Pty Ltd (Informed Sources).

The undertakings require that Informed Sources will not supply a petrol price information exchange service unless it makes available at the same time the retail petrol price information that it provides to petrol retailers to:

  • Australian consumers, and
  • third party information service providers, consumer organisations, motorist organisations, research organisations and regulatory agencies carrying on business or operating in Australia, on reasonable commercial terms.

The undertakings for BP, Caltex, Woolworths and 7-Eleven require that they will not enter into or give effect to any price information exchange service unless the petrol price information each receives is made available to consumers and third party organisations at the same time.

The Federal Court also ordered, by consent, that the proceedings against BP, Caltex, Woolworths, 7-Eleven and Informed Sources be discontinued.

Strategy 2: Protect the interests and safety of consumers and support fair trading in markets affecting consumers and small business

Competition and Consumer Act 2010 s. 87B undertakings accepted

Australian Consumer Law

’To encourage fair trading, protection of consumers and product safety’

Product safety

Ozsale Pty Limited

s. 87B undertaking dated 27 July 2016

The ACCC has accepted a court enforceable undertaking from Ozsale Pty Limited (Ozsale) in relation to Terms & Conditions displayed on its websites, including Ozsale.com.au, OO.com.au, BuyInvite.com.au, DealsDirect.com.au and TopBuy.com.au.

Ozsale has also paid a penalty of $10 800 following the issue of one Infringement Notice by the ACCC.

Ozsale is an unlisted Australian company which owns and operates the above mentioned websites. The websites operate as online stores offering consumers access to clearance-style sales for a range of products.

The ACCC was concerned that the Tterms and conditions displayed on Ozsale’s websites included a number of false or misleading representations to consumers regarding their consumer guarantee rights.

Ozsale has accepted that its conduct is likely to have given rise to the ACL concerns identified by the ACCC. To address the ACCC’s concerns, Ozsale has provided the ACCC with a s. 87B undertaking that it will:

  • publish a single refunds and remedies policy to be used across all online sales platforms operated by Ozsale that accurately reflects consumers’ relevant rights and remedies under the ACL
  • implement a compliance program, including compliance training and a complaints handling procedure, in order to minimise the risk of future contraventions and ensure its awareness of the ACL, and
  • implement a mystery shopper program in order to increase awareness of, and minimise the risk of Ozsale breaching, its ACL obligations.

Vulnerable and disadvantaged consumers

Easy Meals by Flavour Makers Pty Ltd

s. 87B undertaking dated 16 August 2016

The ACCC has accepted a court enforceable undertaking from EasyMeals by Flavour Makers Pty Ltd (EasyMeals) in relation to false or misleading representations and a failure to provide the required documents when entering into unsolicited consumer agreements, which is conduct that was likely to contravene the ACL.

EasyMeals sells ‘pre-packaged, shelf stable meals’ to customers, and promotes its products through its website (www.easymeals.net.au) and telemarketing.

EasyMeals purchases consumer contact details from third party marketing companies who use online surveys to gather those details.

In its five years of operation, EasyMeals has serviced approximately 120 000 customers and has 10 000 active customers.

From October 2014 to July 2015, during telephone calls to consumers, EasyMeals made false or misleading representations about the uses or benefits of the meals it supplies—namely that the meals are suitable for all diabetics, when, in fact, the suitability of the meals for diabetics depends upon the individual diabetic, their diet and the severity of their condition.

From July 2015 to March 2016, EasyMeals caused false or misleading representations to be made on its website and on third party websites that consumers could obtain a free EasyMeals meal by providing their contact details or entering a competition, when the consumer could only obtain a free EasyMeals meal if they purchased a meal from EasyMeals first.

From October 2014 to March 2016, EasyMeals contacted consumers, who had previously provided their details to third party marketing companies for the purpose of obtaining a free meal from EasyMeals, by telephone for the purpose of negotiating the sale of an EasyMeals meal(s) to the consumer. On each occasion that EasyMeals negotiated the sale of an EasyMeals meal(s) to a consumer in this manner, EasyMeals entered into an unsolicited consumer agreement, and when doing so, failed to provide an agreement document that included:

  • all the terms of the agreement
  • a notice on the front page of the agreement document that conspicuously and prominently informed the consumer of their right to terminate the agreement, and
  • an accompanying notice that may be used by the consumer to terminate the agreement.

To address the ACCC’s concerns, EasyMeals provided the ACCC with a s. 87B Undertaking that it will comply with the ACL, specifically in relation to:

  • representations about the suitability of its products for persons suffering diabetes
  • representations that consumers can obtain a free meal by providing EasyMeals, or a third party, their contact details if the consumer can only obtain a free meal by purchasing a meal from EasyMeals beforehand, and
  • the documentary requirements when entering into unsolicited consumer agreements, and
  • publish a corrective notice on its website indicating that it has contravened sections 29(1)(g), 29(1)(i) and 79 of the ACL, and
  • implement an ACL compliance program.

Small business and Horticulture Code of conduct

Young Sang & Co. (Aust.) Pty Ltd

s. 87B undertaking dated 14 September 2016

The ACCC has accepted a court enforceable undertaking from Young Sang & Co. (Aust.) Pty Ltd (Young Sang). Young Sang has admitted that it breached the Horticulture Code of Conduct (the Code) and s. 51ACB of the Act.

Young Sang operates a wholesale horticulture business out of the Melbourne Wholesale Fruit, Vegetable and Flower Markets and trades in tomatoes, eggplant, capsicum and zucchini.

  • Young Sang acts as an agent for a number of Queensland based horticulture produce growers.

During 2015, Young Sang:

  • traded in horticulture produce with all of its growers without Horticulture Produce Agreements (HPAs), and
  • failed to prepare, publish and make publicly available its terms of trade.

To address the ACCC’s concerns, Young Sang provided the ACCC with a s. 87B Undertaking that it will:

  • not engage with growers without HPAs or terms of trade;send a letter to all growers who it traded with since 2015 attaching a copy of the undertaking, its terms of trade and a draft HPA where applicable
  • place a corrective notice on its website for 90 days, and
  • implement and regularly review a code compliance program.

Misleading representations—truth in advertising

Monde Nissin (Australia) Pty Ltd trading as Menora Foods

s. 87B undertaking dated 8 November 2016

The ACCC has accepted a court enforceable undertaking from Monde Nissin (Australia) Pty Ltd trading as Menora Foods (Menora) in relation to claims about its oregano product, following an investigation into breaches of the ACL.

Menora is a food marketing and distribution company. Menora distributes products under the Menora brand and other brands. Menora distributes oregano to a number of retailers and food services across Vic, NSW, WA and SA. Menora’s oregano sales volume in 2015 was 61 480 units.

From 1 October 2015 to 1 March 2016, Menora made representations through statements on the packaging of its oregano product that the product contained only oregano, other than possible traces of tree nuts, peanuts, wheat, sesame seeds and soy. Test results indicate the substantial presence of olive leaves in the product.

The ACCC raised its concerns regarding the sale of Menora’s oregano product with Menora. In response, Menora:

put a hold on all oregano in its supply chain, and

proposed to obtain an independent certificate of analysis certifying that its current oregano is unadulterated.

To address the ACCC’s concerns, Menora has offered the ACCC a court enforceable undertaking that it will, for a period of three years:

  • not represent that a product it supplies or offers for supply is only oregano unless the product contains only oregano, other than traces of tree nuts, peanuts, wheat, sesame seeds and soy
  • annually, obtain written evidence which confirms a laboratory has tested one sample of the product supplied and represented by Menora as only oregano and found it contains only oregano, other than traces of tree nuts, peanuts, wheat, sesame seeds and soy
  • establish and implement a process for annual testing of the composition of random samples of herb or spice products supplied by Menora, other than oregano
  • retain for three years the test results obtained and if requested, provide the ACCC with a copy of those test results
  • not represent any of its herb or spice products are of a certain standard, quality, value, grade or composition without a reasonable basis for making such a representation
  • ensure that a regular practical training course on consumer law compliance will be provided to all employees whose duties could result in them being concerned with conduct that may contravene Part 3–1 of the ACL
  • notify retailers and consumers of the alleged conduct and the resolution agreed with the ACCC, and
  • publish on Menora’s website a corrective notice.

Amendment

With the consent of Menora, the first page of the undertaking was amended on 21 November 2016 to clarify the background to this matter.

Misleading representations—truth in advertising

ALDI Foods Pty Ltd

s. 87B undertaking dated 8 November 2016

The ACCC has accepted a court enforceable undertaking from ALDI Foods Pty Limited (ALDI) in relation to representations on its Stonemill branded oregano product, following an investigation into breaches of the ACL.

ALDI is a global supermarket chain and operates over 400 stores in New South Wales, Queensland, Victoria, South Australia and Western Australia. ALDI is the sole retailer of the Stonemill oregano in Australia. In 2015 it sold 126 809 units of Stonemill oregano.

During 2015, ALDI made representations through statements on the packaging of its Stonemill branded oregano product that the product contained 100 per cent oregano. These statements included the text ‘Oregano’ on the front of the package and the ingredients list on the back of the package which says ‘Ingredients: Oregano (100%)’. Tests results indicated the Stonemill branded oregano product contained ingredients other than oregano and the substantial presence of olive leaves.

In response to concerns raised by the ACCC, ALDI:

  • commissioned its own independent testing of its oregano product
  • removed its Stonemill oregano and mixed herb products from its shelves
  • offered refunds to consumers
  • put a notice in store and on its website apologising to customers
  • stated it will now ensure that all of its oregano is certified pure oregano, and
  • reviewed its supply arrangement, and has engaged an additional core range supplier for oregano.
  • ALDI also offered the ACCC a court enforceable undertaking that it will for a period of three years:
  • annually, obtain written evidence from a laboratory, which confirms that the laboratory has tested one sample of the product supplied and represented by ALDI as only oregano and found that each sample only contained oregano,
  • establish and implement a process for annual testing of the composition of random samples of herb or spice products supplied by ALDI, other than oregano, and
  • retain the test results obtained, and if requested, provide the ACCC with a copy of those test results.

Product safety

Zen Sensation Pty Ltd

s. 87B undertaking dated 23 November 2016

The ACCC has accepted a court enforceable undertaking from Zen Sensation (Zen) in relation to the supply of TS Blue and TS Gold cigarettes which did not comply with the mandatory Reduced Fire Risk Standard (the RFR Standard). Zen has admitted that this supply was likely to contravene s. 106(1) of the ACL. The undertaking also relates to Zen’s claims about the compliance of those cigarettes with the RFR Standard. Zen has also admitted that these claims were likely to contravene the ACL.

Zen was an importer and wholesaler of TS branded cigarettes, which were manufactured overseas under its instructions. Zen has stopped importing and supplying cigarettes and does not currently intend to enter that market again.

To comply with the RFR Standard, cigarettes are manufactured such that, when lit and left unattended, they go out by themselves. Some batches of TS Blue and TS Gold cigarettes failed laboratory testing for compliance with the RFR Standard, while others passed. All TS cigarettes, including the non-compliant cigarettes, were supplied in packets which stated that they complied with the RFR Standard (the compliance statement).

Zen supplied a total of 20 million TS Blue cigarettes and 4.5 million TS Gold cigarettes. The number of non-compliant cigarettes that Zen supplied is unknown. The manufacturer did not keep records which might have allowed the number of non-compliant cigarettes to be identified. Zen did not arrange laboratory testing of any TS cigarettes before being contacted by the ACCC. Zen voluntarily recalled all TS cigarettes.

To address the ACCC’s concerns, Zen has provided the ACCC with a s. 87B undertaking that it will not supply cigarettes unless:

  • the manufacturer keep records of how and when the cigarettes are manufactured
  • each packet of the cigarettes includes a batch number that can be matched to those records
  • samples of the cigarettes are laboratory tested for compliance with the RFR Standard before being supplied and at least every six months after that, and
  • Zen keeps records of the manufacturing, batch numbers and test results for at least three years after supplying the cigarettes.

Product safety

Philip Morris Ltd

s. 87B undertaking dated 23 November 2016

The ACCC has accepted a court enforceable undertaking from Philip Morris Ltd (PML) in relation to the supply of Choice Signature Bold and Choice Signature Classic cigarettes (the Choice cigarettes) which did not comply with the mandatory Reduced Fire Risk Standard (the RFR Standard).

PML has admitted that this supply was likely to contravene s. 106(1) of the ACL. The undertaking also relates to PML’s claims about the compliance of those cigarettes with the RFR Standard. PML has admitted that these claims were likely to contravene the ACL.

PML is an importer and wholesaler of various brands of cigarettes, including Marlboro, Peter Jackson, Alpine and Longbeach. In September 2015 it launched two new brand variants, the Choice cigarettes. To comply with the RFR Standard, cigarettes are manufactured such that, when lit and left unattended, they go out by themselves. In laboratory testing, sample Choice cigarettes failed to comply with the RFR Standard.

Due to a number of oversights, PML did not test the Choice cigarettes until after a number of the non-compliant cigarettes had already been sold to consumers. PML has since changed its inventory system to ensure that cigarettes cannot be supplied to retailers until they have passed testing. PML supplied a total of 306 000 non-compliant Choice cigarette packets, of which 192 000 packets were successfully recalled. The non-compliant cigarettes were available at retail from 1 September 2015 to 14 October 2015. All the non-compliant cigarettes were supplied in packets which featured a statement that they complied with the RFR Standard.

To address the ACCC’s concerns, PML provided the ACCC with a s. 87B undertaking that it will, for a period of three years:

  • ensure that no cigarettes are supplied that do not comply with the RFR Standard
  • ensure that no cigarettes are supplied without samples first passing laboratory testing for compliance with the RFR Standard.

PML will also make a donation of $300 000 to the NSW Rural Fire Service.

Misleading representations—truth in advertising

Anchor Foods Pty Ltd trading as Spencers Gourmet Trading

s. 87B undertaking dated 15 December 2016

The ACCC has accepted a court enforceable undertaking from Anchor Foods Pty Ltd trading as Spencers Gourmet Trading (Spencers) in relation to claims about its oregano product, following an investigation into possible breaches of the ACL.

Spencers is incorporated in Australia and is based in Western Australia. It specialises in the sale of grocery foods and in particular herbs and spices. Spencers is a distributor of oregano in Australia and supplies to major retailers in Western Australia. Its oregano sales volume in 2015 was 100 000 units. During the relevant period, Spencers acquired its oregano from Spice Masters Australia Pty Ltd.

In 2015, Spencers made representations through statements on the packaging of its oregano product that the product contained only oregano. These statements included the text ‘Oregano’ on the front of the package and the text on the back of the package which says ‘Closely related to marjoram, oregano is a small perennial (Origanum vulgare), native to the Mediterranean region where it has been cultivated since ancient times…’. However, test results indicated the substantial presence of olive leaves in the Spencers oregano product.

The ACCC raised its concerns regarding the Spencers’ oregano product with Spencers. In response, Spencers stated it had:

  • issued a public statement apologising to consumers
  • offered a refund or replacement product to consumers
  • contacted its supplier to trace the adulterated batch of product
  • began a detailed review of the supply chain for all Spencers herb and spice products
  • worked with supermarket retailers to trace and recover suspected adulterated batches, and
  • developed a testing regime where Spencers works with suppliers to conduct routine testing.

To address the ACCC’s concerns, Spencers has offered the ACCC a court enforceable undertaking that it will, for a period of three years:

  • annually, obtain written evidence from a laboratory, which confirms that the laboratory has tested one sample of the product supplied and represented by Spencers as only oregano and found each sample was a product containing only oregano
  • establish and implement a process for annual testing of the composition of random samples of herb or spice products supplied by Spencers, other than oregano, and
  • retain the test results obtained, and if requested, provide the ACCC with a copy of those test results.

Unconscionable conduct

Australian Vocational Learning Centre Pty Ltd

s. 87B undertaking dated 22 March 2017

The ACCC has accepted a court enforceable undertaking from Australian Vocational Learning Centre Pty Ltd (AVLC) in relation to its marketing practices and enrolment of consumers to its VET FEE-HELP courses.

AVLC is a provider of vocational education and training courses to consumers. Since 2014, it has provided VET FEE-HELP accredited Diploma courses in marketing, business, management and accounting.

The ACCC was concerned, and AVLC has admitted, that between 1 July 2014 and 30 April 2015 (the relevant period), AVLC, through the conduct of certain marketing agents:

  • engaged in misleading or deceptive conduct and made false or misleading representations to certain consumers by falsely representing that VET FEE-HELP courses offered by AVLC were:
    • free or free unless the consumer’s income was of an amount which they were unlikely to earn on completion of a course, or at all
    • government funded or paid for by the government, and/or
    • specifically for low income individuals
  • engaged in unconscionable conduct with respect to some consumers by:
    • pressuring certain consumers into enrolling in courses that were not suitable for their education levels and personal backgrounds
    • appearing to target disadvantaged and vulnerable consumers, including Indigenous consumers in rural areas and those with low levels of literacy and numeracy skills
    • failing to adequately explain the nature of the debt incurred by consumers when enrolling in AVLC VET FEE-HELP courses, and
    • entered into unsolicited consumer agreements with some consumers without disclosing certain information required for such agreements, such as the consumer’s right to terminate the agreement within a cooling off period.

During the relevant period, AVLC received and processed approximately 225 students for enrolment in AVLC’s courses under the VET FEE-HELP scheme. Approximately 195 of these students were subsequently enrolled and incurred a debt to the Commonwealth. AVLC received a total of $2 173, 730 from the Commonwealth in relation to these students.

Of these students, AVLC has since cancelled 30 student enrolments and repaid or partially repaid to the Commonwealth amounts totalling $225 940 in relation to these cancellations.

To address the ACCC’s concerns, AVLC provided the ACCC with a s. 87B undertaking that it will:

  • implement a consumer redress program under which consumers who may have been misled may approach AVLC to have their enrolment and debt cancelled
  • inform potentially affected consumers by mail and email, on its website and at its campus about the consumer redress program and the steps to be taken by a consumer should they wish to make a claim under the program
  • establish and implement an ACL compliance program, including training for staff and regular reviews, and
  • not engage in the conduct of concern in the future.

Online consumer issues

Sensis Pty Ltd

s. 87B undertaking dated 11 May 2017

The Australian Competition and Consumer Commission (ACCC) has accepted a court enforceable undertaking from Sensis Pty Ltd (Sensis) following an investigation into its automatic renewal and cancellation processes.

Sensis provides print and online advertising and marketing services to Australian businesses including under the Yellow and White Pages brands.

From at least January 2015 to August 2016, Sensis represented on its website that its Yellow Pages and White Pages bundled print directory and online packages had a monthly fee with a 12 month minimum contract period, but failed to adequately disclose that:

  • these bundled packages automatically renewed for a further 12 months unless cancelled by the customer, and
  • the customer may be charged a cancellation fee equal to the remaining cost of the contract if they tried to cancel an automatically renewed contract after a certain date.

The ACCC also considered that Sensis failed to adequately disclose these automatic renewal and cancellation terms in certain communications to customers both during and after the contracting process.

To address the ACCC’s concerns, Sensis has provided a court enforceable undertaking which includes an acknowledgement that its conduct may have contravened the Australian Consumer Law prohibitions on misleading conduct, and has undertaken to:

  • refund affected customers who have not already been refunded by Sensis
  • publish a corrective notice on the Website
  • maintain changes to its contracting systems and processes to minimise the risk of customers being misled
  • appoint an internal compliance officer to ensure appropriate training, to monitor compliance with Sensis’ contracting processes, and report any compliance issues to Sensis’ senior management, and
  • appoint a suitability qualified independent external party (‘reviewer’) to review Sensis’ compliance with the undertaking and report any deficiencies to Sensis’ senior management and, where required, the ACCC.

Consumer guarantees

Domestic and General Services Pty Ltd

s. 87B undertaking dated 11 May 2017

The ACCC has accepted a court enforceable undertaking from Domestic & General Services Pty Ltd (DGSP). This follows the ACCC’s review of extended warranty selling practices and engagement with participants in the extended warranty industry.

DGSP is a company incorporated in New South Wales, Australia. It provides administrative, claims management and other services to retailers who offer their own extended warranty products to consumers who purchase electronics, domestic appliances and white goods.

The ACCC is concerned about marketing practices that have occurred in the extended warranty industry, including the content of extended warranty plan brochures provided to consumers at the point of sale.

Specifically, the ACCC is concerned about the following practices which have the potential to confuse or in some cases mislead consumers:

  • Insufficient disclosure of:
    • the degree of overlap between some contractual rights obtained by purchasing an extended warranty and the rights and remedies already available to consumers under the Australian Consumer Law (ACL), in the event that goods are faulty, and
    • the contractual rights that go beyond those rights available under the consumer guarantees.

The use of representations to the effect that:

  • the extended warranty provides some benefits which may overlap with the consumer guarantees—in circumstances where those benefits do overlap
  • extended warranty rights are additional to rights and remedies available to consumers under the ACL—in circumstances where those features overlap with those ACL rights and remedies, and
  • the price of the extended warranty does not include any cost attributable to the rights and remedies available to consumers under the ACL—in circumstances where certain costs may have been for rights that overlap with the rights and remedies already available under the consumer guarantees.

In response to the ACCC’s invitation to participate in the industry wide outcome, DGSP provided the ACCC with a s. 87B undertaking that it will:

  • revise extended warranty brochures to include information which will allow a consumer to compare the features of the extended warranty against the rights and remedies available for free under the ACL
  • provide ACL compliance training materials to retailers who sell extended warranties administered by DGSP, and
  • develop and implement with retailers a program for monitoring and if necessary improving retailers’ extended warranties selling practices.

Consumer guarantees

Yoogalu Pty Ltd

s. 87B undertaking dated 11 May 2017

The ACCC has accepted a court enforceable undertaking from Yoogalu Pty Ltd (Yoogalu). This follows the ACCC’s review of extended warranty selling practices and engagement with participants in the extended warranty industry.

Yoogalu is a company incorporated in New South Wales, Australia. It is part of the Harvey Norman group of companies.

Yoogalu was involved in planning, designing and creating ‘Product Care’. ‘Product Care’ is an extended warranty product which consumers can add to purchases of certain electronic goods, domestic appliances or white goods at shopping complexes and online stores branded with the trade marks Harvey Norman, Domayne and Joyce Mayne (Franchisees).

The ACCC is concerned about marketing practices that have occurred in the extended warranty industry, including the content of extended warranty plan brochures provided to consumers at the point of sale.

Specifically, the ACCC is concerned about the following practices which have the potential to confuse or in some cases mislead consumers:

  • Insufficient disclosure of:
    • the degree of overlap between some contractual rights obtained by purchasing an extended warranty and the rights and remedies already available to consumers under the Australian Consumer Law (ACL), in the event that goods are faulty, and
    • the contractual rights that go beyond those rights available under the consumer guarantees.

The use of representations to the effect that:

  • the extended warranty provides some benefits which may overlap with the consumer guarantees—in circumstances where those benefits do overlap
  • extended warranty rights are additional to rights and remedies available to consumers under the ACL—in circumstances where those features overlap with those ACL rights and remedies, and
  • the price of the extended warranty does not include any cost attributable to the rights and remedies available to consumers under the ACL—in circumstances where certain costs may have been for rights that overlap with the rights and remedies already available under the consumer guarantees.

Yoogalu provided the ACCC with a s. 87B undertaking that it will:

  • provide Franchisees with new ‘Product Care’ brochures that include information which will allow a consumer to compare the features of the extended warranty against the rights and remedies available for free under the ACL
  • provide to Franchisees ACL compliance training specific to extended warranties, and
  • continue a program for monitoring and if necessary improving Franchisees’ extended warranties selling practices.

Misleading representations—

truth in advertising

Optus Mobile Pty Ltd

s. 87B undertaking dated 1 June 2017

The ACCC has accepted an undertaking from Optus Mobile Pty Ltd (Optus) in relation to alleged misrepresentations about the amount and period of validity of data, calls and texts provided with certain prepaid products and services.

Optus is a supplier of telephone and internet services to consumers in Australia and offers various prepaid mobile broadband devices, prepaid mobile phones and prepaid mobile plans for sale (together, the Optus Prepaid Products).

Beginning in 2013, Optus advertised various promotions that offered consumers a certain amount of data, calls and/or texts valid for a specified period of time (the inclusions) from when they either activated or recharged the SIM card that was supplied with the purchase of an Optus Prepaid Product.

From 2015, Optus decided to change the inclusions that were provided upon activation or recharge of the SIM card supplied with the Optus Prepaid Products. These changes included reducing the inclusions, and/or reducing the length of time before the inclusions would expire. In some instances the inclusions were increased but the expiry period was reduced.

Consumers who purchased one of the Optus Prepaid Products before the implementation of these changes, but activated the SIM card after the changes, received the reduced inclusions and/or shorter expiry period. Optus did not notify these consumers about the changes or advise them that they should activate their SIM card before a certain date in order to receive the full inclusions and expiry that they purchased. These consumers therefore received less inclusions and/or a shorter expiry period than they were promised.

To address the ACCC’s concerns, Optus provided the ACCC with a s. 87B undertaking that:

  • for a period of three years it will not, in trade or commerce, reduce the amount of data and/or other inclusions advertised as available upon activation of a prepaid SIM card (including a prepaid SIM card bundled with another product) unless certain conditions have been met
  • it will contact affected consumers and provide them with a credit
  • in recognition of the loss to those consumers whom Optus is unable to provide redress, Optus will donate any money it is unable to refund to an appropriate organisation to be agreed with the ACCC
  • it will publish notices in Optus and third party stores, and on the Optus website, informing affected consumers that they may be entitled to a credit
  • it will update its compliance program and an internal staff template to ensure Optus considers its obligations under the ACL before updating or implementing similar promotions in the future.

Infringement notices paid

Category

Trader

Date paid and amount

Consumer online

Palace Cinemas Pty Ltd

4 July 2016

one notice totalling $10 800

Consumer health

The Smith’s Snackfood Company Pty Ltd

7 July 2016

one notice totalling $10 800

Product safety

Ozsale Pty Limited

26 July 2016

one notices totalling $10 800

Truth in advertising

Felton Grimwade & Bosisto’s Pty Ltd

7 September 2016

one notice totalling $10 800

Truth in advertising

Charles Tyrwhitt LLP OC 305896 (UK)

15 September 2016

one notice totalling $10 800

Truth in advertising

Lumo Energy Australia Pty Ltd

16 February 2017

one notice totalling $10 800

Truth in advertising

Hoyt Food Manufacturing Industries Pty Ltd

2 March 2017

one notice totalling $10 800

Franchising

Domino’s Pizza Enterprises Ltd

4 May 2017

two notices totalling $18 000

Truth in advertising

Lumo Energy Australia Pty Ltd

1 June 2017

one notice totalling $10 800

Vulnerable consumer issues

Sprint Telco Pty Ltd

8 June 2017

one notice totalling $10 800

Section 288 National Energy Retail Law undertakings

Notification to Life Support Customers

Ausgrid

s. 288 undertaking dated 28 April 2017

The AER has accepted an undertaking from Ausgrid relating to rules 90A and 125(2)(d) of the National Energy Retail Rules.

The undertaking provides for Ausgrid to improve its systems and processes for managing its life support obligations.

Sale of electricity without a retail exemption or authorisation

Energy Intelligence

s. 288 undertaking dated 26 August 2016

The AER has accepted an undertaking from Energy Intelligence relating to sections 88 and 298 of the National Energy Retail Rules.

The undertaking provides that Energy Intelligence will ensure that any client it assists in the operation or creation of an embedded network holds, or is in the process of obtaining, a valid retail exemptions. Assurances will be sought and provided in writing. The undertaking further provides for Energy Intelligence to appoint a compliance officer to report any non-compliance to the AER.

Infringement notices paid under National Energy Retail Law and Rules

Trader

Date paid and amount

Ausgrid

19 July 2016

Three notices totalling $60 000

Energex

19 July 2016

One notice totalling $20 000

SA Power Networks

19 July 2016

Two notices totalling $40 000

Stockland

13 September 2016

Five notices totalling $100 000

Endeavour Energy

19 December 2016

One notice totalling $20 000

Ergon Energy

19 December 2016

One notice totalling $20 000

SA Power Networks

19 January 2016

Four notices totalling $80 000

Simply Energy

24 January 2017

Three notices totalling $60 000

Origin Energy LPG Limited

4 April 2017

One notice totalling $20 000

Ausgrid

7 June 2016

Five notices totalling $100 000

Strategy 3: Promote the economically efficient operation of, use of, and investment in infrastructure; and identify market failure

Water Act 2007 section 163 undertakings

No undertakings were accepted under s. 163 of the Water Act 2007.

Water Act 2007 section 156 infringement notices

No infringement notices were issued under s. 156 of the Water Act 2007.

Water Act 2007—Administrative actions

In October 20016, the ACCC accepted an administrative resolution from Murrumbidgee Irrigation after it admitted to a breach of the Water Charge (Infrastructure) Rules 2010. Murrumbidgee Irrigation had not included its Home Garden Licence charge on its schedule of charges, since 2011.

Australian Energy Regulator

Section 59A National Electricity Law undertakings

National Electricity Law and National Gas Law

Pricing in NSW and the ACT fro8

As a result of the Australian Competition Tribunal’s decision in Public Interest Advocacy Centre Limited and Ausgrid [2016] ACompT 1, it was not clear what network charges would apply from 1 July 2016 or how the ACT and NSW service providers should meet their 2016–17 pricing compliance obligations.

Ausgrid, Endeavour Energy and ActewAGL

The undertakings for these businesses established ‘revenue targets’ for 2017–18, by applying two years of CPI to revenue targets from their 2015–16 pricing proposals. These revenue targets were established to facilitate implementation of the tariff structure statements.

Essential Energy

The undertaking for Essential Energy established ‘revenue targets’ for 2017–18, by applying one year of CPI to forecast revenue for 2016–17. This revenue target was established to facilitate implementation of its tariff structure statement.

Jemena Gas Networks (JGN)

JGN’s undertaking required prices for 2017–18 to be derived according to the tariff variation mechanism in its access arrangement. The undertaking specified the X factor (and CPI adjustment) to be inputted into the tariff variation mechanism.

All five distribution network services business also gave undertakings which provide for all non-price components of the distribution determinations and access arrangement (e.g. connections policies, classification of services, provision of alternative control services and reference service agreements) to be maintained.

Infringement notices paid under National Electricity Law and Rules

Trader

Date paid and amount

AGL Hydro Partnership

13 January 2017

One notice totalling $20 000

Energy Australia

13 January 2017

Two notices totalling $40 000