ACCC’s 2020 enforcement priorities – what you need to know
Rod Sims, Australian Competition & Consumer Commission (ACCC) Chairman, threw in some unexpected wild cards when launching the ACCC’s 2020 Compliance and Enforcement policy today.
Identified as its ‘number one' priority this year was the longstanding issue of the failure by retailers and manufacturers to comply with Australia’s consumer guarantee regime. One surprise was the identification by the ACCC of the funeral industry as a hotbed of anti-competitive and exploitative behavior – who knew that such a seemingly conservative industry could give rise to so many concerns. Finally, the ACCC also appears set to return in force to the area of health-related claims, particularly those linked to food.
In addition to these wildcards, Mr Sims’ speech at the annual Centre for Economic Development of Australia ‘Enforcement Priorities’ lunch also focused on many of the ACCC’s enduring priorities, such as cartels, misuse of market power and protection of vulnerable consumers. Equally unsurprising was Mr Sims’ defence of the ACCC’s role in protecting free and well-functioning markets in Australia and, in doing so, the need for the ACCC to make judgement calls about when that role requires it to act – seemingly responding to recent sustained criticism aimed at the ACCC given its failure to block the merger of Vodafone and TPG.
"Many here today may disagree with our judgement calls. We understand that. But let’s recognise that enforcing our competition and consumer laws involves making decisions where outcomes are uncertain. Facts that can be clearly proven one way or the other reduces this uncertainty, but cannot eliminate it. Judgements must be made."
Rod Sims, ACCC
Funeral industries – the unexpected wildcard
While the protection of vulnerable consumers has long been at the heart of the ACCC’s consumer protection work, today’s announcement by Mr Sims at the launch of the ACCC’s 2020 Compliance and Enforcement policy that the ACCC intends to turn its attention towards the funeral industry to protect vulnerable consumers and stamp out wide spread unlawful conduct was unexpected.
Mr Sims observed that the funeral industry is a concentrated sector with some players having significant market power which can lead to anti-competitive conduct. He also remarked that, on the consumer side, many consumers have little or no experience with the sector until they need to arrange a funeral, leaving them vulnerable to exploitation through unfair contract terms, hidden fees and other misleading conduct connected to add-on services and price exclusions. Consequently, the ACCC will focus on the sector and is aiming to eliminate the many examples of unlawful conduct regularly reported to the ACCC.
2020 Enforcement Priorities
Mr Sims also outlined the ACCC’s other enforcement priorities for 2020.
As outlined in the final report of its 2019 Digital Platforms Inquiry, the ACCC has concerns about consumers being misled over the collection and the use of their personal data, as well as a range of important competition issues. Mr Sims said that its vital that the ACCC devotes considerable resources to these issues given their dominance in all our lives and their effect on economic activity. Mr Sims reported that the ACCC is advancing many investigations in this area (with one matter already before the Court) and is working closely with its foreign counterparts.
Prices and selling practices of essential services
Mr Sims noted that the pricing and selling practices of essential services (including electricity and telecommunications) continues to be an area of concern for the ACCC, and has been retained as a priority in 2020. He also noted that anti-competitive conduct and failures to pass through cost reductions will also be targeted through the Commonwealth Government’s new energy market misconduct laws. The ACCC will have a crucial role in monitoring conduct. This work will commence in 2020, with the current and anticipated falls in wholesale electricity prices likely to be a particular focus.
Misleading claims in food marketing
Consumers have long called for the ACCC to take a more active role in preventing misleading representations in the marketing of food products. Mr Sims said today that the growing community attention to health-related issues such as obesity has been paralleled by rising mistrust of claims by many food producers of purported health or nutritional benefits and that misleading claims about health or nutritional benefits harms consumers as it often results in paying a higher price for products, without receiving any benefits from them. Mr Sims said that the ACCC is concerned that some businesses either confuse consumers or deliberately make misleading claims to gain an advantage in the market over suppliers who make honest claims about their products.
Franchising and small business
Franchising has been a focus for the ACCC for many years. In light of the findings of the recent Parliamentary inquiry into the franchising sector, Mr Sims noted that the ACCC is particularly concerned many franchisees cannot freely operate their business because of the prevalence of some questionable industry practices. In particular, Mr Sims said that the ACCC has a number of important cases it expects to bring before the Courts this year, which will highlight some of the significant problems in the sector.
Mr Sims also confirmed the ACCC’s ongoing focus on some of its enduring priorities.
Mr Sims noted that there are currently five criminal cartel matters before the Courts (two of which are in the financial sector) and that he expects at least two new cartel cases to be put before the courts this year. In addition, Mr Sims noted that, as a result of the revised cartel immunity and cooperation policy released last year (with the new anonymous hotline for whistle-blowers), there is now a small number of active investigations in an early stage.
Misuse of market power
Following the ACCC’s commencement of proceedings against TasPorts in December 2019, Mr Sims stated that he was keen to ensure that the ACCC is more ‘efficient and speedy’ in its approach to anti-competitive conduct investigations. Interestingly, he specifically referred to the use of injunctions to aid the ACCC in this process. He expects there to be at least 4 new competition cases instituted during 2020.
This is one of the ACCC’s most enduring and important priorities. Following the record penalties obtained in 2019 (see our analysis here), Mr Sims said the ACCC’s focus is not just on court outcomes, but also on its outreach work with consumer groups, including many Indigenous communities, as being an important way in which the ACCC seeks to help consumers and prevent misconduct from occurring.
What else for the year?
In addition to the ‘big-ticket’ priorities set out above, Mr Sims announced that the ACCC would:
- focus on conduct affecting competition and poor trading practices in the commercial construction sector, including conduct impacting small businesses and large public and private projects
- work closely with dairy farmers and processors to ensure a smooth implementation of the Dairy Industry Code of Conduct (which came into effect on 1 January 2020)
- prioritise the work of the Button Battery Taskforce to review whether industry actions to mitigate the risks posed by button (or coin cell) batteries were sufficient and to consider what regulatory options might be available
- finalise the long-running Takata airbags recall.
Policy and advocacy
Of particular note, Mr Sims said there are ‘advanced Government processes’ underway to consider laws covering unfair contract terms and in connection with a broader global push to prohibit unfair practices. Based on the ACCC’s recent work in this area, we assume Mr Sims is referring to an express prohibition (and penalty) for unfair contract terms to deter businesses from continuing to use and rely on them. Given that there are currently no penalties for unfair contract terms (such terms are considered void), this is a significant development.
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