ACCC 2022 in Review | Introduction
And just like that… another year has passed, and it’s time to publish our annual Australian Competition and Consumer Commission (ACCC) Year in Review. In this report, we look at the ACCC’s leading cases and other policy and regulatory activities throughout the year and then evaluate how well the ACCC performed against its 2022 and other ongoing enforcement priorities. In 2022, against a backdrop of a new Federal Government, heightened global volatility and various knock-on effects in the Australian economy, the ACCC was also in transition, adjusting to the change in its Chair from the long-serving Rod Sims to new Chair, Ms Gina Cass-Gottlieb. For most of the year, it adopted a ‘business as usual’ approach to its regulatory and enforcement activities, delivering a solid year for the ACCC without any major surprises except in one significant respect. The exception concerns its decision to settle the long-running litigation against global food and beverage company Retail Food Group, which we speculate may portend a major change in approach for the ACCC in coming years.
The past 12 months also saw a remarkable turnaround for cartel prosecutions by the ACCC. Together with the Commonwealth Department of Public Prosecutions (CDPP), it successfully prosecuted and obtained convictions against numerous companies and individuals (though notably with guilty pleas in each instance). In doing so, for the first time in Australia, the ACCC obtained orders for the incarceration of several people (though the terms were suspended subject to good behaviour). The end of the year also saw a raft of new civil and criminal Court proceedings for cartel conduct, suggesting that any delays for the ACCC caused by the previous year’s collapse of the ‘Banking Cartels’ case (see our 2021 ACCC Year in Review for further information) have been well and truly put behind it. We also finally started to see the ACCC applying the Competition and Consumer Act 2010 (CCA) concerted practices provisions, which will provide helpful guidance to businesses that are still grappling with understanding the types of conduct prohibited by these provisions.
2022 was a blockbuster year for mergers, with the ACCC considering more mergers in 2022 than the average over the last five years, and a significant increase on those considered in 2021. It’s no surprise then that there is a great deal of interest in whether or not the ACCC (under its new leadership) will dust off the merger reform proposals published while former ACCC Chair, Mr Rod Sims, was still at the helm. Given recent comments in the media by Mr Sims and also having regard to various public statements by Ms Cass-Gottlieb, we think that it is highly likely that merger reform will be back on the agenda. However, the reform proposals propounded by Ms Cass-Gottlieb will not be entirely the same as those proposed by her predecessor, given their different backgrounds and the lukewarm reception that Mr Sims’ proposals received when they were first released in late 2021.
Among the usual grab bag of consumer protection prosecutions last year, the most significant trend involves the application by the ACCC of the Australian consumer law (ACL) to tech giants and the digital marketplace. We have already commented on the significance of the two Google decisions, but the other notable court action brought by the ACCC involves its prosecution of Meta Platforms Inc. (Meta) for its alleged knowing involvement with the publication of scam cryptocurrency advertisements. The case will have dramatic repercussions for digital platforms if the ACCC successfully holds Meta responsible for content published on Facebook by a third party.
This edition of our Year in Review has an entire section devoted to the unfair contract terms regime. Of particular note are the changes to the definition of ‘small business’ and the introduction of penalties for breaches of the regime. As a result of these changes, many more businesses will now be protected by the regime, due to the thresholds for a ‘small business’ having been increased to include one with fewer than 100 employees (an increase from 20 employees) and a turnover of less than 10 million. Importantly, the contract value threshold has been removed entirely.
A significant development that all Australian businesses need to be cognisant of is the soon to be introduced increase of the maximum penalty for breaches of the Australian consumer law to the greatest of:
- up to $50 million (up from $10 million) per breach
- three times the value of the benefit derived from the unlawful conduct, or
- 30% of the adjusted turnover during (up from 10%).
Consumer law breaches can no longer be regarded as merely the cost of doing business in Australia.
As always, the ACCC had significant involvement in regulating Australia’s telecommunications, particularly in considering the spectrum–sharing arrangement unsuccessfully proposed by Telstra and TPG. The ACCC opposed the transaction on the grounds that it would have ’profoundly affected‘ consumers in regional Australia. Telstra and TPG were clearly disappointed that their proposed behavioural undertakings were not sufficient to get their deal over the line, so much so that they have taken the somewhat unusual step of appealing to the Australian Competition Tribunal.
The ACCC’s ‘world first’ inquiry into competition and consumer issues for digital platforms continued last year. The ACCC examined online marketplaces and social media services, culminating in two interim reports. Of significant concern to the ACCC was the lack of transparency in online marketplaces, specifically, the algorithms that dictate the display and ranking of products; the possibility that one online marketplace might grow to dominate the market; and the risks that hybrid marketplaces might promote and prioritise their own products, or use the data they collect to gain an unfair advantage over their retail competitors. The critical development for social media is the ACCC’s recommendation that the Government introduce targeted and mandatory industry codes to address anti-competitive conduct, unfair treatment of small business users and barriers to entry and expansion for other social media platforms.
Google and consumer data
We also saw two very interesting and (at first glance) contradictory decisions involving Google and its disclosures to consumers in connection with the use by Google of different types of consumer data. We say contradictory as the ACCC won the first of those disputes but lost the second. While this mixed result might seem surprising, in our view, Google’s approach to disclosure and obtaining consumer consent was far better in the second case than in the first. As such, Google’s approach in the second case could be a road map for other businesses seeking to defensibly change their privacy policies, especially where those changes are primarily for the benefit of those businesses.
Retail and franchising
There were four genuinely meaningful developments in the retail and franchise sector last year: the introduction of the Franchise Disclosure Register; the introduction of significantly higher penalties for breaches of the Franchising Code of Conduct; the significant expansion of the unfair contract terms regime; and the ACCC’s settlement of the long, running action against Retail Food Group. These regulatory changes will profoundly impact the Australian franchise sector in the coming years. It is a ‘brave’ franchisor that doesn’t take the opportunity over the next 12 months to get their ‘house in order’ before most of these changes take effect.
In contrast, our views on the Retail Food Group settlement are mixed. On the one hand, the settlement delivers a quick, positive financial outcome for a reasonable number of small franchise operators impacted by Retail Food Group’s conduct. On the other hand, the decision to settle the allegations concerning misuse of marketing funds and the provision of financial information on the sale of company stores is a major missed opportunity. These two issues are highly significant for the sector and have been in dire need of judicial consideration for many years. While no doubt pragmatic, the decision by the ACCC to settle the matter (without obtaining any admissions from Retail Food Group) rather than establish a helpful precedent for the franchise sector can only be regarded as very disappointing.
2022 was a challenging time for the energy sector – both retailers and consumers – due to higher gas and coal prices, reduced generator availability and the impact of the continuing transition of the economy towards a zero-carbon future. While the ACCC continued and completed several inquiries into the electricity and gas markets, one of the most surprising things for many Australian consumers was the lack of actual power that the ACCC currently has to directly impact wholesale and retail energy prices. This was demonstrated by the direct intervention by the Federal Government in several markets to introduce price caps in 2022 and continuing into 2023.
In 2022, the ACCC was very focussed on detecting, investigating and stopping anti-competitive behaviour and unfair business practices in the development and construction sector. As part of this push, the ACCC announced that it intended to concentrate on public sector procurement, given departmental processes that actively encouraged cooperation on government tenders by competing businesses and the obvious heightened risk for anti-competitive conduct it caused. As discussed in our Cartels section, the ACCC also brought a number of civil cartel matters in the development and construction sector before the Courts, notably being successful in its enforcement against the CFMMEU and Hutchinson.
And one final thing…
Ms Cass-Gottlieb has been in the role of ACCC Chair for less than a year, and so it is genuinely too early to assess the impact that this will have on the ACCC. However, in our view, there is a hint that the approach of the ACCC is starting to shift towards quicker, more pragmatic outcomes than under the watch of her predecessor Mr Sims. It strikes us that this change in approach mirrors the change that we saw in 2003 when Professor Alan Fells AO handed over the reins at the ACCC to Mr Graeme Samuel AC. Mr Samuel was famously uninterested in the ACCC’s role in taking test cases to Court to help define the scope of the law – focusing more on negotiated outcomes.
Admittedly, Ms Cass-Gottlieb confirmed in September 2022 the ACCC’s role in taking and being prepared to lose test cases. However, its decision to settle the Retail Food Group case and a review of the cases commenced in the past six months support the view that may have been a change in approach to settle for undertakings (rather than admissions and penalties) in an effort to resolve proceedings time and cost efficiently while also delivering outcomes for affected parties.
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