Empowering consumers against companies

| November 9, 2018

ACCC Chair Rod Sims has told the West Australian Australian-Israeli Chamber of Commerce in Perth that the ACCC will continue to give a voice to consumers and push companies to live up to their responsibilities.

“Our enforcement team here in Perth, for example, has taken a lead role in important areas in the last few years, including franchising matters and unfair contract terms impacting small business, as well as taking part in a number of high profile investigations,” Mr Sims said.

Cases spearheaded by the WA team include:

Heinz – Earlier this year, the Federal Court found that the food manufacturer Heinz had made misleading claims that its Little Kids Shredz products were beneficial for young children, when they contained approximately two-thirds sugar.

Nurofen – The ACCC took the company to court over misleading representations on the packaging of each of its four Nurofen specific pain products which represented that each was specifically formulated to treat a particular type of pain, when in fact each product contained the same active ingredient.

“The Federal Court ordered penalties of $6 million for Nurofen. But, we argue, for many large companies penalties of that magnitude are not enough to deter bad behaviour,” Mr Sims said.

“In our experience many companies behave badly at least occasionally, putting their short-term profit before the needs of their customers who they profess to serve by engaging in misleading or unfair conduct, anti-competitive conduct or cartel activities.”

“What is needed to provide greater deterrence are penalties so large that companies, their boards and shareholders must take our competition and consumer laws more seriously.”

“A bill to increase penalties for companies breaching Australian Consumer Law is before the Parliament when it resumes next month. We hope the parliament will agree that higher penalties are badly and urgently needed to improve the behaviour of companies and protect consumers.”

“Further, our recent electricity inquiry and our continuing residential mortgage pricing inquiry have both shown a trend that causes considerable friction between companies and their customers. We see loyal customers paying more than customers who are prepared to, and able to, challenge their bank or electricity provider and ask for a better price,” Mr Sims said.

“While companies are not breaching the law with this conduct, they are imposing a ‘loyalty tax’ on their customers who will then need to spend more time than they would like searching for better deals.”

“One answer, which is an excellent initiative already in train, is the consumer data right, also known as the open banking initiative, because it will first apply in banking.”

“It will give customers a right to their data to improve consumers’ ability to compare and switch between goods and services on offer and so reduce often wasteful search costs. We expect the scheme to encourage competition between service providers, leading not only to better prices for customers but also more innovation of products and services”

“Another focus area for the ACCC is the NBN, and only this morning we published our most recent report on broadband speed tests. While most consumers get good speeds on their NBN plans, there is an unfortunate few – about one in 13 test results – which indicate there is considerable room for improvement. Our monitoring program will enable consumers to choose wisely and encourage providers who offer customers a service which operates at the speeds they advertise.”

Finally, Mr Sims spoke about the ACCC’s Digital Platform Inquiry.

“Consumers are facing powerful platforms like Google and Facebook whose business model is based on immense data-gathering powers which many of us fail to fully understand. We are exploring the implications for our privacy, our society and our democracy.”

“Our inquiry will look at four key questions to work out how best to respond to the huge disruption posed by the emergence of these powerful platforms.”

Do digital platforms have market power and how is that being exercised, and does this damage competition?

Are digital platforms sufficiently transparent in the collection and use of consumer data? Are they complying with the Australian Consumer Law?

Do digital platforms have an unfair competitive advantage due to the unequal treatment of regulation?
Have digital platforms substantially changed media and advertising markets in Australia to the detriment of news, journalism and therefore Australia?

“It is clear that we need to look at the digital platforms through both a competition and consumer lens. Our experience as a competition and consumer regulator, and as a communication and general infrastructure regulator, and with the powers we have under this inquiry, means we have the right tools to complete this huge and fascinating task.”