A report of the Australian Competition and Consumer Commission’s activities



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Overview


1.The Australian Competition and Consumer Commission (ACCC) works to enhance the welfare of Australians by promoting competition and fair trading. In doing so the ACCC protects consumers from unfair business practices and unsafe products whilst regulating national infrastructure and other markets with limited competition or natural monopoly characteristics. This was achieved by engaging in a broad range of activities across the economy in the October to December 2015 quarter.

2.Strong enforcement outcomes were attained in the December quarter. The ACCC accepted undertakings from Informed Sources Australia Pty Ltd and 5 petrol retailers following alleged contraventions of the Competition and Consumer Act 2010 (Cth) (CCA) in the exchange of fuel pricing information. As part of this matter an undertaking was also accepted from Eureka Australia Petroleum Pty Ltd, trading as Coles Express.

3.The ACCC received payment for 18 infringement notices, including penalties totalling $32,400 paid by the manufacturer and distributor of Uncle Tobys Oats – Cereal Partners Australia Pty Ltd (Cereal Partners). The ACCC issued the notices having reasonable grounds that Cereal Partners made false or misleading representations about the protein content of certain oat products in contravention of the Australian Consumer Law (ACL) provisions.

4.The ACCC instituted proceedings in the Federal Court against Woolworths Ltd (Woolworths) alleging that Woolworths had acted unconscionably in dealings with a large number of suppliers as part of a scheme approved by senior management called ‘Mind the Gap’. The ACCC alleges that the scheme sought to reduce an expected significant half year gross profit shortfall by placing payment pressure on certain suppliers.

5.The ACCC announced that it would not oppose the proposed acquisition of BG Group PLC by Royal Dutch Shell PLC as it was not satisfied that these companies were likely to be meaningful competitors in the domestic market for gas. Also announced was the decision not to oppose the transaction between Foxtel Management Pty Ltd and Ten Network Holdings Ltd.

6.The ACCC granted an authorisation to the Australian Retail Credit Association and current and future signatories of the Principles of Reciprocity and Data Exchange for five years.

7.The ACCC is continuing to monitor the recall of faulty Samsung washing machines that have caused electrical fires, and also refreshed a communications campaign on the national Infinity electrical cable recall. Hoverboards have emerged as a safety hazard and the ACCC is working with state and territory electrical regulators to identify faulty and dangerous hoverboards and recall them from sale where appropriate.

8.The ACCC released a market study report on the Darwin petrol market, finding that the increase in retail petrol margins in Darwin has imposed a significant cost on motorists.

9.The ACCC released its 2013-14 report on the private health insurance industry with a focus on the transparency and accuracy of information provided to consumers by providers.

10.The Royal Commission into Trade Union Governance and Corruption issued its final report which contains recommendations that various amendments be made to the secondary boycott provisions of the CCA as well as establishing a building and construction industry regulator to work alongside the ACCC in relation to enforcement action.



11.Maintain and promote competition

Competitive markets lead to lower prices, better quality products and services, greater efficiency and more choice - all of which benefit consumers. As Australia’s only competition regulator, the ACCC works to enhance the welfare of Australians by maintaining and promoting competition.

The ACCC does so by enforcing Part IV of the CCA in relation to anti-competitive conduct.

The ACCC also considers mergers and acquisitions to assess whether they would substantially lessen competition.

The CCA allows the ACCC to consider applications for authorisation and notifications which enables some anti-competitive conduct to proceed; where the public benefit outweighs the public harm, including harm from reduced competition.

12.Outcomes to address harm to consumers and businesses resulting from anti-competitive conduct

The ACCC’s Compliance and Enforcement Policy sets out priorities for the year and the factors the ACCC takes into account when deciding whether to pursue matters. In February 2015 a revised policy was released which continues to prioritise cartel conduct, anti-competitive agreements and practices, and the misuse of market power.

13.Proceedings

In the December 2015 quarter the ACCC was involved in 14 proceedings relating to competition enforcement.

These proceedings relate to competition matters in a range of industries including pharmaceuticals, travel, fuel and financial services. A complete list of these proceedings is included in the Appendix.

Of the 14 competition enforcement proceedings:


14 cases were carried over from the previous quarter

Nil new cases commenced in the quarter

1 case was finalised, and

13 cases remained ongoing at the end of the quarter.

Proceedings appealed


Nil

Proceedings concluded


One proceeding in competition enforcement was completed during the December 2015 quarter. In two competition cases judgment is anticipated in the first quarter of 2016.


INFORMED SOURCES AUSTRALIA PTY LTD (Informed Sources) and petrol retailers

In August 2014 the ACCC instituted proceedings in the Federal Court Registry in Victoria against Informed Sources Australia and 5 petrol retailers which are subscribers to its retail petrol price information system. The petrol retailers are, BP Australia Pty Ltd (BP), Caltex Australia Petroleum Pty Ltd (Caltex), Eureka Operations Pty Ltd trading as Coles Express (Eureka), Woolworths Ltd (Woolworths), and 7-Eleven Stores Pty Ltd (7-Eleven).

The ACCC alleged that Informed Sources and the petrol retailers contravened s45(2) of the CCA by giving effect to price information sharing arrangements which had the effect or likely effect of substantially lessening competition in the retail petrol markets in metropolitan Melbourne. The ACCC alleged that the information sharing arrangements between Informed Sources and the petrol retailers:

allowed these retailers to communicate with each other about their prices, and

were likely to increase retail petrol price coordination and cooperation, and decrease competitive rivalry.

On 22 December 2015 the ACCC accepted s87B undertakings and Justice Murphy made orders by consent which discontinued the proceedings against each of the parties; noting that the Eureka undertaking had been given earlier in December. Details of the s87B undertakings are provided on page [9].

YAZAKI CORPORATION (Yazaki) and AUSTRALIAN ARROW PTY LTD (Australian Arrow)



In December 2012 the ACCC instituted proceedings against Yazaki and its wholly owned subsidiary Australian Arrow.

The ACCC alleged that the respondents engaged in cartel conduct in relation to the supply of wire harnesses to Toyota Motor Corporation Australia Limited (Toyota) and its related entities in Australia. Wire harnesses are electrical systems that facilitate the distribution of power and the sending of electrical signals to various components of a motor vehicle.

The ACCC alleged that Sumitomo Electric Industries Ltd (Sumitomo) and Yazaki had engaged in a long standing practice of coordinating their responses to requests for quotations issued by automotive manufacturers in Japan, as part of an international cartel.

The Australian aspect of this international cartel relates to the supply of wire harnesses to Toyota. Subsequent to an alleged overarching cartel agreement that was arrived at since at least the mid-1990s, it was further alleged that specific coordination between Sumitomo and Yazaki occurred in 2003 and 2008 in Japan; and relates to both the 2006 and 2011 Camry model vehicles respectively. The earliest alleged conduct that relates to Australia commenced in 2003, along with the 2006 and 2011 Camry model vehicles which also involves the 2002 model Camry.

The ACCC alleged that the conduct was in contravention of the market sharing and pricing fixing provisions of the Trade Practices Act 1974 (TPA) and CCA, that Yazaki gave effect to the overarching cartel agreement by making the 2006 and 2011 Camry agreements, and by discussing, agreeing, submitting and directing Australian Arrow to submit prices, Yazaki and Australian Arrow (as to submitting prices only) gave effect to the 2006 Camry and 2011 Camry agreements. The ACCC also alleged that by continuing to:

supply, not informing Toyota or any regulatory authority of the agreements, and

not attempting to compete with their competitors

that Yazaki and AAPL gave effect to the 2006 and 2011 Camry agreements.

The ACCC’s action followed similar enforcement action against Yazaki and other cartel participants by competition regulators in the US, Canada and Japan. The investigation arose from an immunity application which reported the conduct.

In November 2015 the Federal Court found Yazaki engaged in collusive conduct with its competitor in the supply of wire harnesses to Toyota in Australia.

The Court found that:

in 2003 and 2008 Yazaki made and gave effect to arrangements with a competitor, which included the coordination of quotes to Toyota for the supply of wire harnesses used in the manufacture of the Toyota Camry. The Court held this was in breach of the exclusionary arrangement provisions of the CCA and the Competition Code of Victoria (the Code),

Yazaki’s conduct was subject to the CCA and the Code because Yazaki was carrying on business in Australia, notwithstanding that much of the conduct occurred in Japan. However the Court held that because the price fixing conduct by Yazaki did not occur in a market in Australia, as required by the CCA, it did not contravene the price fixing provisions, and

Yazaki’s Australian subsidiary, Australian Arrow, engaged in market sharing and price fixing conduct in 2003 in relation to wire harnesses used in the manufacture of the 2002 model Toyota Camry. However, the Court did not accept the ACCC’s argument that Australian Arrow gave effect to the 2003 and 2008 agreements made by Yazaki.

A hearing on relief will now take place on a date to be fixed by the Court in 2016.

LITTLE COMPANY OF MARY HEALTH CARE LTD (LCMHC) and CALVARY HEALTH CARE RIVERINA LTD (Calvary Riverina)



In October 2015 the Federal Court declared that LCMHC and Calvary Riverina (jointly known as Calvary) engaged in exclusive dealing conduct that was likely to have an anti-competitive effect in the supply of day surgery services in Wagga Wagga. Calvary’s conduct related to the adoption of bylaws concerning the accreditation of medical practitioners to use Calvary medical facilities.

During the period March 2011 to 12 October 2015 Calvary maintained bylaws that meant medical practitioners who wanted to establish a competing day surgery facility risked losing their accreditation to operate at Calvary facilities. This had the likely effect of deterring new entrants into the day surgery market in Wagga Wagga.

The Court declared that by engaging in this conduct LCMHC and Calvary Riverina contravened s47 of the CCA as the conduct had the likely effect of substantially lessening competition in the day surgery market in Wagga Wagga and its surrounding areas.

LCMHC has given an undertaking to the Court to delete the clauses of the bylaws of concern to the ACCC. LCMHC and Calvary Riverina agreed to joint submissions and a statement of agreed facts that are to be filed with the Court, and consented to the orders made by the Court. Judgment is expected in early 2016.

14.Undertakings accepted and administrative resolutions



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