ACCC to increase enforcement efforts

| August 4, 2018

The Australian Competition and Consumer Commission will further increase its enforcement action, expand its work on data, algorithms and digital platforms, and increase the use of its powers to gather evidence in complex merger investigations over the next 12 months.

ACCC Chair Rod Sims made the pledge to members of the Law Council of Australia at their annual Business Law Section general meeting held in Sydney.

The ACCC has recently won three significant consumer protection penalties: $10m for Telstra; $10m for Ford; and $9m for Apple.

Competition penalties have also been increasing, with a maximum penalty of $46 million for Yazaki, although this is currently under appeal.

“The ACCC is increasing its enforcement activities, and taking a firmer stance on sanctions and penalties with a view to making an even greater impact on compliance,” Mr Sims said.

“We have been vocal in our advocacy for imposition of meaningful penalties that look not only at the conduct in question but also, crucially, the relative size of the company.”

“We must alter incentives; it must matter a lot more to companies and their senior executives that they avoid breaching the Competition and Consumer Act.”

“In consumer protection, we hope Federal Parliament will this month pass legislation that will see penalties increased nine-fold from $1.1 million to $10 million, with the further framework of options for three times the gain or ten per cent of turnover, to get this key deterrence,” Mr Sims said.

The ACCC is playing an increasing role in regulation in relation to the digital economy, with it leading the consumer data right implementation, and the digital platforms inquiry (DPI).

“Algorithms are fundamental to getting the most out of data and play a key role in how consumers benefit from the wealth of data now available. But they also raise competition and consumer issues for the ACCC to consider,” Mr Sims said.

“We have already made a small start at looking at the impact of algorithms on the consumer experience. For example, our past action against Google, and we are looking at comparator sites to see whether results are based on price and consumer benefit, or on commissions.”

The ACCC was also aware of the entry of dominant platforms into various ‘vertical’ businesses and the EU case against google for abusing its dominant position to require mobile manufacturers to install its search app and app store, he said.

“The ACCC is turning its mind to such issues. The changes implemented since the Harper reforms give us the tools to do this, which we did not have before,” Mr Sims said.

Mr Sims also outlined the change in the ACCC’s approach to the merger review process for the growing number of complex and contentious transactions that require a public review.

“The most obvious change is our increasing use of our powers to obtain information, documents and evidence to improve our evidence gathering. In the last financial year we issued 89 notices, significantly more than the 44 in the previous financial year. These were concentrated in the relatively small number of mergers where our concerns warranted increased evidence gathering to be used for possible litigation.”

“With the PN/Aurizon review now moving to litigation, our decision and our approach to evidence will again be tested in the Federal Court,” Mr Sims said.

“Merger parties should be aware that we do not just take a narrow merger assessment during our reviews and will consider any other related agreements to determine whether they would, combined with the acquisition, be likely to substantially lessen competition or whether separately they potentially breach other provisions in the Competition and Consumer Act.”

The ACCC is currently reviewing a number of significant mergers, including Transurban/WestConnex, CKI/APA, and the Nine/Fairfax merger.

“Despite the noise and commentary, I think that those of you who deal with us on a regular basis know well that our processes are consistently applied and our end game is getting the right decision,” Mr Sims said.