The Australian Competition and Consumer Commission (ACCC) has released its Compliance and Enforcement Policy for 2012. This is the first time the ACCC has given such clear guidance on its enforcement priorities for a particular year. The Policy is a welcome development and is consistent with the seven principles Rod Sims, the Chairman of the ACCC, outlined when he joined the ACCC last year.
The Policy indicates that the ACCC intends to give priority to enforcement initiatives:
in the highly concentrated supermarket and fuel sectors;
where indigenous consumers and consumers who purchase telecommunications and energy products need to be protected;
against conduct that impedes competition for online traders;
against representations about carbon pricing; and
in relation to the new consumer guarantee regime.
Protecting the interests of vulnerable consumers vs short run gains
In launching the Policy Rod Sims stated that the enduring goal of the ACCC is to serve the long term interests of consumers through enforcing compliance with the Competition and Consumer Act 2010 (Cth). Mr Sims made it clear, however, that this does not mean that the ACCC will seek unsustainable prices or rates of return in any sector for short run gain, only to see investment levels decrease.
The Commission’s three crucial roles
Mr Sims identified the three crucial roles of the ACCC as being:
to maintain and enhance competition in Australia by, for example, preventing mergers or arrangements that substantially lessen competition, or by addressing misuse of market power or anti-competitive agreements and cartels;
to protect consumers; and
to regulate monopolies effectively.
The principles that guide the Commission when it carries out its three crucial roles
Mr Sims also identified five elements which aid the ACCC in carrying out these roles:
to be proactive and strategic rather than reactive;
not to be too conservative, and to be professional, responsive and work within the legal framework. This may mean taking on more cases with less certain outcomes;
to be more communicative about what the ACCC are and are not doing and the reasons why;
to publicly state the opinion of the ACCC in regards to the need for law or policy changes; and
to keep attracting the best people to the ACCC.
The fuel and supermarket sectors
Under the Policy, the ACCC intends to determine whether there are breaches in the fuel and supermarket sectors, which are relatively concentrated in Australia.
In the case of the fuel industry, the ACCC has noted concerns about co-ordinated price movements. In the case of supermarkets, the ACCC has noted concerns about the way supermarkets may deal with their suppliers (including the increased sales of home brand products).
It is possible that the ACCC will seek to test the cartel regime in the fuel industry and amendments to the prohibition on misuse of market power in the supermarket industry.
Business to business conduct
Other business to business conduct identified by the ACCC as worthy of enforcement priority are:
the impact of the online world (and the reactions of established companies to new online players); and
anticompetitive mergers, where the ACCC intends to rely on commercial assessments rather than abstract theories.
Regulating monopolies
Mr Sims has also indicated the ACCC's desire to debate the role of third party access regimes for infrastructure, particularly how relevant they are to greenfield investment (such as new railways in new coal fields such as the Galilee Basin in Central Queensland) and new inter-modal transport facilities in Australia’s capital cities.
The key question is whether some new investment facilities, that are intended to be common user facilities, should be declared by governments as open access facilities to provide investor and potential user certainty. For example, this key question might be asked of intermodal facilities used to service ports.
Protecting consumers
Under the Policy, the ACCC intends to give priority to protecting consumers in:
the telecommunications sector, due to the increased complexity of products;
the energy industry, where rapidly rising prices are causing new activity that can mislead customers; and
indigenous communities, who may be vulnerable to unconscionable and others forms of egregious conduct.
Carbon pricing
The ACCC also intends to give priority to carbon pricing, to ensure firms do not mislead customers by attributing a price increase to carbon when it is not the case.
Increase the ACCC’s engagement internationally
The ACCC intends to engage with its international counterparts more broadly, particularly in the Asia-Pacific region.
Factors the ACCC intends to take into account when it decides to take enforcement action
The Policy also outlines the factors the ACCC will give priority to when deciding whether to undertake enforcement activity, including whether the matter involves conduct of significant public interest; anti-competitive conduct involving cartel behaviour or misuse of market power; unconscionable conduct, particularly involving large national companies or traders, or conduct which involves a significant new or emerging market issue.
The Policy also confirms that, where appropriate, the ACCC will take action to clarify or rest the law.
These factors are consistent with our experience in dealing with the ACCC and its enforcement team.