The ACCC’s Compliance and Enforcement Objectives for 2019: Key Focus Areas

In his address at the annual Committee for Economic Development Australia (CEDA), Chair Rod Sims launched the ACCC’s 2019 Compliance and Enforcement Policy. We look at the key areas of focus for 2019 outlined in the speech.

 

CEDA Address

CEDA is an annual event where the Australian Competition and Consumer Commission (ACCC) outlines its priorities for the year.

In his address, Mr. Sims highlighted how in some cases, the motive for profit may lead companies and individuals to mislead consumers, mistreat suppliers and reduce competition in order to maximise profits.

The five priorities of the ACCC for 2019 were listed as:

  • Competition enforcement approach and objectives
  • Consumer law enforcement priorities
  • Key product safety focus
  • Current market studies
  • Current advocacy focus

 

Competition enforcement approach and objectives

The ACCC aims to have “two to three criminal cartel investigations come to conclusion and prosecutions commence each year”.

With increased budget support from the Government, the ACCC is able to experiment with different approaches to its investigations. An example is the SLC (substantially lessening of competition) project, which focuses on the early stages of an investigation to determine the exact nature and extent of the conduct of concern, before moving to an in-depth market analysis.

Mr. Sims also made reference to the Financial Services Royal Commission final report, in which an underlying theme was that “competition is not vigorous among the major banks or in some parts of the financial sector”.

In response, the ACCC has established a Financial Services Competition Branch and investigation team, in addition to a unit that focuses on market studies in the financial sector.

Mr. Sims stated that the ACCC is expecting the competition investigation team “to complete a number of in-depth investigations potentially resulting in court proceedings, as well as providing support for the CDPP prosecution of ANZ, Citigroup, Deutsche Bank and six senior officers”.

Another key sector of focus was identified as the commercial construction sector, with a dedicated unit looking at both competition and consumer issues in this sector.

 

Consumer law enforcement priorities

The ACCC handles high-profile consumer protection cases, such as:

  • Misrepresentation of consumer guarantees, including penalty outcomes in the Apple and Ford cases of $9 and $10 million respectively
  • Third party billing misconduct involving Telstra and Optus, resulting in $10m in penalties awarded against each

The ACCC’s advocacy efforts also contributed to the Commonwealth Parliament passing a law increasing the maximum penalty for contraventions of the Australian Consumer Law from up to $1.1 million to now be the greater of $10 million, or 3 times the benefit from the conduct or, where the benefit cannot be calculated, 10% of annual Australian sales turnover.

The ACCC’s key consumer enforcement priorities for 2019 were listed as:

  • Competition and consumer issues arising from customer loyalty schemes.
  • Consumer guarantee rights in the context of the large retailers and manufacturers that supply high value consumer goods, including whitegoods and electrical goods.
  • Advertising practices on social media platforms, and “subscription traps”.
  • Complexity and opacity of pricing in the energy and telecommunications sectors.

Other key areas of focus include the franchising sector, as well as a focus on business-to-business unfair contract term laws, particularly in the agricultural sector.

 

Key product safety focus

Mr. Sims stated the following relating to the ACCC’s focus on product safety:

“The ACCC will be releasing separate Product Safety Priorities at the Consumer Congress next month. From an enforcement and compliance perspective, two important product safety priorities stand out for the coming year. These are ensuring the effectiveness of the compulsory recall of vehicles with Takata airbags, and improving the safety of quad bikes.”

 

Current market studies

The ACCC conducts market studies to identify and find solutions to a range of competition and consumer issues. Some focus areas for 2019 include:

  • Determining why foreign exchange fees are so high.
  • Studies to effectively understand competition in banking.
  • A study into the wine grape production sector, in line with the ACCC focus on agriculture.
  • Studies on electricity affordability and over-complicated pricing structures.
  • Studying various enforcement issues relating to digital platforms.

Another key focus was identified as advancing the ACCC’s work on the Consumer Data Right (CDR). “This is not a market study, but is an important new right for consumers to freely access their data in a way that will enable them to readily compare products and services and choose those that best meet their needs”, said Mr. Sims.

 

Current advocacy focus

Advocacy is a key element of the ACCC’s activity. Key recent legislative reforms the ACCC has advocated for include:

  • Changes to section 46 of the Competition and Consumer Act which prohibits misuse of market power.
  • Significantly higher maximum penalties for breaches of consumer laws, bringing these penalties in line with the maximum penalties for anti-competitive conduct.

Key advocacy priorities for 2019 include:

  • Reforms to current unfair contract laws.
  • Advocating that the sale of unsafe goods should be prohibited.
  • Debating the adequacy of the laws against companies engaging in ‘harsh and unfair conduct’ towards consumers.
  • Advocacy in relation to recommendations from past studies, including “improving the existing wheat port code, working towards new codes to improve the bargaining position of dairy farmers and ensuring that vehicle manufacturers give access to information to independent vehicle repairers.”
  • Advocacy in relation to privatisation.
  • Airport regulation.
  • Road reform.

 

Conclusion

A key purpose of the ACCC is identified as ‘making markets work’ in the long term interest of consumers, and restoring trust in Australia’s market economy. The ACCC’s 2019 Compliance and Enforcement Policy will focus on enforcement of competition and consumer law priorities, product safety, new and continuing market studies, with a particular focus on advocacy.

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