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

22.Authorisations

In assessing the likely public benefits and detriments of an authorisation application the ACCC undertakes a transparent public consultation process, placing submissions on a public register subject to any claims of confidentiality. After considering submissions the ACCC will issue a draft decision and provide an opportunity for interested parties to request a conference to discuss the proposal. The ACCC will then further consider the application in light of any additional submissions and release a final decision.

Significant authorisations

AUSTRALIAN RETAIL CREDIT ASSOCIATION LIMITED (ACRA) - AUTHORISATION - A91482 On 3 December 2015 the ACCC granted an authorisation to the ARCA as well as current and future signatories of the Principles of Reciprocity and Data Exchange (the Principles) for a period of five years. This was in relation to the reciprocity, consistency and enforceability provisions contained in the Principles. ARCA is the industry association for organisations involved in the provision, exchange and application of retail credit reporting data in Australia. For example, when a consumer applies to a credit provider for a loan, the credit provider will typically request a report about the individual’s credit worthiness from a credit reporting body. ARCA’s members include credit providers, such as banks and credit reporting bodies. ARCA developed the Principles as a system for exchanging comprehensive consumer credit information, following amendments to the Privacy Act 1988 which allows both positive and negative consumer credit information to be collected and exchanged. In its determination, the ACCC accepted that there are significant benefits arising from improving the information available to credit providers to assist them in making more informed credit decisions. This should lead to increased competition between credit providers together with greater access to credit for consumers and the avoidance of consumer over-indebtedness. The ACCC considered that the reciprocity, consistency and enforceability provisions in the Principles would assist with the realisation of benefits associated with comprehensive credit reporting. The ACCC accepted that credit providers need adequate assurance in a framework for sharing their commercially valuable consumer credit information in order to participate in comprehensive credit reporting to address the free rider concern. The reciprocity provisions combined with the enforceability provisions are likely to provide the requisite assurance and improve incentives for participation. The ACCC considered that the consistency provisions were likely to facilitate a more complete exchange of consumer credit information between credit providers and each credit reporting body. This is likely to promote competition between credit reporting bodies, between credit providers and lower the cost for credit providers to comply with their responsible lending obligations. A more standardised system for the exchange of Comprehensive Reporting should bring benefits in terms of lower cost for the industry. The ACCC also accepted that there are some potential public detriments arising from the costs imposed by the relevant provisions of the Principles, most notably as a result of the consistency provisions. However the ACCC considered that each credit provider would make a commercial decision whether or not to provide and consume data from multiple credit reporting bodies, based on their estimates of the associated costs and benefits. The ACCC also noted the concerns raised in relation to the recording of financial hardship arrangements and settlement of defaults, but concluded this should be co-ordinated by industry and relevant regulators outside of the authorisation process. Overall the ACCC was satisfied that in all the circumstances the proposed conduct was likely to result in public benefits that would outweigh the likely public detriments.

AUSTRALIAN COTTON SHIPPERS ASSOCIATION INCORPORATED (Cotton Shippers) - AUTHORISATION - A91505 On 9 July 2015 Cotton Shippers sought authorisation for coordination between its merchant members to only purchase cotton from growers using pricing grades based on machine classing of the colour and leaf of cotton. They also refused to purchase cotton on the basis of visual classing. The applicants sought authorisation indefinitely or for a minimum of 10 years. All of the five main quality attributes of cotton can be classed by machine. In Australia, only three of these attributes are classed by machine colour and leaf as they are typically classed visually. On 23 October 2015 the ACCC issued a draft determination proposing to deny authorisation in respect of the proposed conduct. The ACCC considered that Cotton Shippers had not provided information demonstrating any significant market failure which would prevent competition driving the market towards an efficient outcome. The ACCC was concerned that a coordinated shift to machine classing was not an appropriate market intervention and would result in an elimination of competition between merchants in respect of the move to full machine classing. The ACCC was not satisfied that the proposed conduct was likely to result in a public benefit that would outweigh the likely public detriment; including the detriment constituted by any lessening of competition that would be likely to result. On 1 November 2015 the applicants withdrew the application.

23.Notifications

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