Yesterday, Rod Sims, Chair of the Australian Competition and Consumer Commission (ACCC) announced the ACCC's 2021 compliance and enforcement priorities in his address to the Committee for Economic Development Australia (CEDA) in Sydney.
Many of the priorities build on those identified in 2020, but the continuing impact of COVID-19 is apparent in the prioritisation of competition in the domestic air travel market and consumer rights relating to the promotion and sale of products such as travel and event cancellations. Promoting competition and investigating allegations of anti-competitive conduct in the financial services sector is also a new priority for 2021.
Key priorities and activities for the ACCC for the year include:
- monitoring compliance with the new ‘big stick’ energy legislation, with the ACCC actively monitoring electricity costs and whether reductions in costs are passed on to consumers;
- continuing to investigate the practices of the digital platforms, flagging that there are more cases to follow in this space;
- progressing the ACCC’s inquiry into digital advertising services, calling out adtech and apps as key areas of focus;
- commencing proceedings in two or three new cartel cases this year, which may be civil or criminal prosecutions; and
- setting up a regulatory framework for the multi-technology nbn network that allows the most efficient utilisation of the public investment in the nbn.
An adjusted enforcement and compliance approach in 2020
Mr Sims reflected on the effectiveness of the ACCC’s response to COVID-19. He commended the ACCC staff teams for their ability to consider and grant a large number of authorisations in very short timeframes, which allowed businesses to cooperate in ways that would not have been allowed absent the pandemic. The ACCC’s COVID-19 Taskforce has responded to complaints relating to changes in the supply of services due to COVID-19 restrictions, saying complaints and reports about the travel sector rose by 500% in 2020. Mr Sims said that over the past year, the ACCC became more active in responding to public complaints and working with business to resolve issues proactively, rather than taking an investigatory and enforcement approach. He suggested that, given the success of this strategy and that the public perceives the ACCC as a ‘complaints handling body’, this may be a practice that is continued in 2021.
Enduring priorities – essential services, the funeral services sector, commercial construction, protecting small businesses and compliance with industry codes
The ACCC has affirmed that many of its 2021 compliance and enforceable priorities are a continuation of its 2020 priorities, including:
- competition and consumer issues relating to digital platforms;
- competition and consumer issues relating to the funeral services sector;
- the pricing and selling of essential services, especially energy and telecommunications;
- competition issues in the commercial construction sector;
- protecting small business under the competition and fair-trading laws, including franchising; and
- ensuring compliance with mandatory industry codes of conduct in the agricultural sector, specifically the Dairy Code of Conduct and the Horticulture Code of Conduct.
In relation to the pricing and selling of essential services, Mr Sims emphasised that the ‘big stick’ energy legislation requires electricity retailers to adjust their prices to reflect sustained reductions in wholesale electricity costs. He said that the ACCC is actively monitoring electricity retailers’ pricing responses and asking for justification of certain prices. The ACCC has signalled it expects to see significant price reductions:
‘Consumers saw their electricity prices rise enormously over many years; now they need to see them fall considerably. This is only fair.’
The ACCC also remains concerned with issues in the funeral services sector, especially given their significant market power to bundle services and block new entrants.
The impact of COVID-19 on travel and the aviation industry
A new focus for the ACCC is on issues arising from the impact of COVID-19 on travel. Mr Sims said they would be:
- looking at the sales practices of travel businesses when promoting forward-booking of services and products;
- continuing to monitor the Australian domestic aviation sector through its Airline Taskforce, which was established at the Treasurer’s direction in 2020; and
- closely considering competition in the domestic aviation industry, in particular ensuring access to slots at Sydney Airport for new entrants in the light of Rex’s plans to enter major domestic routes.
Digital platforms – further cases and ‘adtech’ and ‘apps’ inquiries
Mr Sims noted that the ACCC will be bringing ‘more cases’ from its investigations into the practices of digital platforms, in addition to the current consumer law proceedings underway against Facebook and Google.
Meanwhile, the ACCC is also progressing its inquiry into digital advertising services looking at adtech and apps.
Developing an nbn regulatory framework for the multi-technology network
With the current commercial framework in place until December 2022, Mr Sims stated that a key priority of the ACCC’s will be to establish a regulatory framework for the multi-technology nbn network that allows for the very significant public investment in the nbn to be most efficiently utilised. He noted that industry and stakeholders will be given ample opportunity to express their views on this framework.
Advocacy for merger reform
Mr Sims flagged that the ACCC’s approach to merger control needs to be ‘rebalanced’ and that the ACCC will be exploring merger law reform options in 2021. Mr Sims expressed concerns that under the current merger regime, the uncertainty inherent in the forward-looking merger test which focuses on the counterfactual of what will happen in the future both with and without the acquisition ‘in many cases risks overlooking the likely anticompetitive effects of the merger itself’.
He also noted that the regime is ‘skewed towards clearance’, presenting challenges for the ACCC to prevent anti-competitive mergers:
‘It appears that insufficient weight is placed on the risks to competition, such as potential competition being lost, barriers to entry being raised or competitors being foreclosed.’
Other reforms that the ACCC will continue to advocate for in 2021 include:
- reforms to address deficiencies in the consumer guarantees regime, especially in light of the outcome of its case against Jayco Caravans;
- the introduction of an unfair trading practice prohibition, which the ACCC recommended following its Digital Platforms and Perishable Goods inquiries; and
- a national safety provision as part of Australia’s consumer product safety framework.
Mr Sims’ speech to CEDA is available on the ACCC website: ACCC 2021 Compliance and Enforcement Priorities and the ACCC’s Compliance and Enforcement Policy PDF is available at: 2021 ACCC Compliance and Enforcement Priorities.