The past 12 months have been both extraordinary and dreadful for many people and businesses in Australia. Many parts of the country experienced severe drought in 2019. This was followed by catastrophic bushfires over the summer and then the global COVID-19 pandemic from early 2020.

The public health crisis caused by the pandemic has been awful for so many in a range of different, unpredictable ways. But it has impacted everyone.

We have all had to make changes and, like many businesses and organisations, the Australian Competition and Consumer Commission (ACCC) has shifted the focus of our work and resources. Over 97 per cent of our employees moved to work from home over a two-week period in March, utilising and building on our pre-existing flexible work practices. It is a source of pride to us all that we have been able to maintain a high-quality level of work and productivity despite the challenges that working from home can bring.

The ACCC’s immediate response to the crisis was to refocus our resources on two broad areas: the authorisation of collaboration between competitors under the existing authorisation process; and the establishment of the ACCC’s COVID-19 Taskforce to tackle consumer problems arising from the crisis, particularly relating to travel and event and membership cancellations caused by the COVID-19 pandemic or resulting government restrictions. This included responding to over 20 000 COVID-19-related phone calls, emails and webforms, plus many more social media reports, from consumers and businesses.

The work of the COVID-19 Taskforce has benefited many consumers, including through Flight Centre’s decision to stop charging $300 cancellation fees and Qantas’ clarification that consumers whose flights were cancelled are entitled to refunds. While we have had some excellent public outcomes, the vast majority of work has been occurring behind the scenes through discussions and negotiations with industry associations, businesses and consumer advocacy bodies.

The ACCC has published COVID-19 information and guidance for consumers and businesses in a number of industry areas, including travel, events, sporting and gym memberships, telecommunication services and supply chain issues. We are reviewing and updating these as the environment changes to ensure they remain current and respond to emerging issues.

The interim authorisations we issued allowed competing businesses to collaborate in activities that might ordinarily be anti-competitive but that, during a crisis like the pandemic, can result in a net public benefit. These authorisations, for example, allowed banks to jointly provide debt relief to borrowers, supermarkets to coordinate to ensure our supermarkets were safe, and medical equipment manufacturers to coordinate the supply and manufacture of equipment.

Additionally, the ACCC provided warnings about the inevitable scams and misinformation that appeared online. Further, even where we are not able to take action against some particular conduct, we have on occasion called out poor behaviour, including in relation to excessive pricing. The COVID-19 Taskforce also engaged with major platforms such as Amazon, Gumtree, eBay and Facebook Marketplace to ensure they were taking appropriate measures to disrupt individuals seeking to sell certain essential items at excessive prices, such as hand sanitiser and toilet rolls.

While the pandemic has necessitated a shift in our priorities, it has not stopped our day-to-day work. In 2019–20 the ACCC recorded some significant wins in the courts, which has led to record total penalties of $232.7 million being imposed in proceedings brought by the ACCC, providing significant deterrence. Penalties are returned to the Australian Government.

Cartel Conduct

The ACCC continued to build on its criminal and civil cartel expertise and there were some significant outcomes during the 2019–20 year.

In August 2019 Kawasaki Kisen Kaisha Ltd (K-Line) incurred a $34.5 million fine, the largest ever criminal sanction imposed under the Competition and Consumer Act 2010 (Cth).

Also in August 2019 civil proceedings were instituted against BlueScope Steel Limited and its former sales and marketing general manager Mr Jason Ellis for alleged cartel conduct in relation to the supply of flat steel products. The Commonwealth Director of Public Prosecutions (CDPP) also charged Mr Ellis with two counts of inciting the obstruction of a Commonwealth official in the performance of their functions. These matters remain before the courts.

In August 2019 the CDPP also laid criminal cartel charges against Wallenius Wilhelmsen Ocean AS, a Norwegian-based global shipping company, concerning the international shipping of vehicles to Australia. Its recent guilty plea is an indication of the focused and forensic work of our cartel investigation teams, and marked an end to matters relating to this shipping cartel that date back to 2012.

In September 2019 we published our revised ACCC Immunity and Cooperation Policy for Cartel Conduct, which came into effect on 1 October 2019. The policy covers cartel conduct such as price-fixing, market sharing, bid rigging and customer allocation but does not extend to anti- competitive concerted practices. In July 2019 the ACCC established a separate anonymous reporting portal for reporting anti-competitive conduct in the construction industry.

Mergers

In September 2019 we announced that we would oppose the acquisition of B&J City Kitchen by Jewel Fine Foods on the basis that it would be likely to substantially lessen competition, because they were the two largest competitors in chilled ready meals and the proposed acquisition would concentrate most of the manufacturing capacity for chilled ready meals. Subsequently, B&J City Kitchen was acquired by a Coles Group company.

There were other examples of our merger control being effective, with several matters withdrawn after the ACCC issued statements of issues outlining concerns. These included Assa Abloy’s acquisition of E Plus building products, Bis Industries’ acquisition of Cougar Mining Group, and the proposed merger between Cengage Learning and McGraw-Hill Education.

There were also some high-profile setbacks.

The Federal Court found against us in the TPG–Vodafone merger case. And the Full Federal Court dismissed our appeal to stop Pacific National’s acquisition of Aurizon’s key Acacia Ridge Terminal in Brisbane. We are seeking leave to appeal to the High Court against the Full Federal Court’s ruling in the Pacific National case.

We stand by our decisions to oppose these mergers, and we will continue to oppose mergers that we consider will substantially lessen competition.

In this context, I cannot fail to mention the debate Australia needs to have about how concentrated we want our economy to be and therefore how we approach assessments of the competition effects of mergers.

Despite the ACCC’s lack of success in blocking mergers in the Federal Court and the Australian Competition Tribunal, we maintain the importance of taking action to preserve competitive market structures. Without a strong merger regime, there is a risk of higher market concentration as dominant firms acquire competitors to enhance their market power. Ultimately, this could lead to price increases and harm to innovation, productivity and inequality.

In 2020–21 we will pay particular attention to the potential for opportunistic purchases of distressed or failing firms caused by the worsening economic climate to ensure that acquisitions of assets or businesses do not substantially lessen competition. Competition must and will survive the current COVID-19 pandemic crisis, as it is fundamental for the recovery phase of the crisis. An open, well-functioning economy is essential to the prosperity of all Australians, and such an economy depends completely for its success on robust competition.

ACL and competition enforcement

The ACCC enforces the Australian Consumer Law (ACL) to deter contraveners and others from breaching the ACL in the future and to obtain redress for consumers and small businesses.

Over the past year the ACCC achieved a number of ‘firsts’.

Following ACCC action, in August 2019 the Federal Court imposed a $350 000 penalty against Europcar in the first proceedings under the excessive surcharging provisions.

The Federal Court also imposed the first pecuniary penalty for a breach of the 2017 Horticulture Code of Conduct, ordering Australia’s largest potato wholesaler, Mitolo Group Ltd, to pay a penalty of $240 000.

In September 2019 the Federal Court imposed $26.5 million in penalties—a record amount at that time—against Cornerstone Investments Aust Pty Ltd, trading as Empower Institute, after the Court found that the training college had engaged in a system of unconscionable conduct when it enrolled consumers in VET FEE-HELP funded courses. The Court also ordered Empower to repay more than $56 million to the Commonwealth for funding it had received to provide the courses.

However, the record set by the penalties against Empower was short-lived: in December 2019 the Federal Court imposed penalties of $125 million against Volkswagen AG as a result of admitted conduct related to the ‘Dieselgate’ emissions scandal. This is the highest ever total penalty amount imposed for breaches of the ACL. Volkswagen has appealed against this penalty, and the appeal is to be heard in August 2020.

In December 2019 the ACCC instituted Federal Court proceedings against Tasmanian Ports Corporation Pty Ltd (TasPorts) in its first case taken under the amended misuse of market power provision. The case involves allegations that TasPorts sought to stop a new entrant from competing effectively with TasPorts’ marine pilotage and towage businesses, with the purpose, effect and likely effect of substantially lessening competition. This matter is still before the Court.

We continued our work in identifying potentially unfair contract terms, which has led to businesses removing them from their contracts.

In July 2019 Uber Eats agreed to change its contracts with restaurants in response to our concerns that some parts of their standard form contracts were likely to be considered unfair contract terms. We also achieved a number of other successful outcomes which saw unfair contract terms being removed from standard form contracts with small business, including contracts in the stevedoring, dairy and waste management industries.

In September 2019 the Federal Court declared that terms in three Ashley & Martin standard form contracts were unfair and therefore void. Under one of the terms found unfair by the Court, consumers who wished to terminate the contracts more than two days after they accepted the program and consulted with a doctor were required to pay 100 per cent of the total price payable.

In 2019–20, the ACCC was, as always, active in looking at the franchising sector.

In June 2020 the Federal Court imposed freezing orders against Megasave Couriers Australia Pty Ltd and its sole director, and in July 2020 we issued proceedings against Megasave and its director alleging that false or misleading representations were made to franchisees.

In January 2020 the Federal Court ordered $4.2 million in penalties against former carwash and detailing franchisor Geowash Pty Ltd and two executives for breaches of the ACL. The two executives have appealed.

There were several other notable enforcement outcomes:

• In March 2020 the Federal Court ordered debt collection agency Panthera Finance Pty Ltd to pay $500 000 in penalties for unduly harassing three consumers over debts they did not owe and for misleading one of the three consumers.
• In April 2020 the Federal Court ordered STA Travel to pay $14 million in penalties for making misleading representations in MultiFLEX Pass advertising that consumers who bought the airfare add-on could change their flights without paying fees or charges.
• In May 2020 the court ordered Novartis Consumer Health Australasia (Novartis) and GlaxoSmithKline Consumer Health Australia Pty Ltd (GSK) to pay penalties of $4.5 million for false or misleading representations in the marketing of Voltaren Osteo Gel and Voltaren Emulgel pain relief products.

The ACCC also accepted a court enforceable undertaking from TEG Live Pty Limited in which it committed to refunding over $5 million to about 5000 consumers who bought approximately 20 000 tickets to watch basketball games featuring the USA men’s national basketball team in August 2019.

Consumer Product Safety

Consumer safety is paramount, and we take our responsibilities in protecting Australians from unsafe goods very seriously.

Our Takata Taskforce continued to facilitate the replacement of well over three million faulty Takata airbags from Australian vehicles pursuant to a compulsory recall. While we made good progress with the largest ever recall in Australia, with over 2.6 million of the three million affected vehicles having had airbags replaced, we will continue working to ensure faulty airbags are replaced or the affected vehicles are no longer on the road.

We commissioned research from the Australian National University on the Takata recall, and it showed the recalls are significantly less likely to be responded to in locations where disadvantaged consumers are over-represented. We are doing a number of things to address this, including outreach work in Indigenous and culturally and linguistically diverse communities to find owners of vehicles with affected airbags.

We have also been working with the Department of Infrastructure, Transport, Regional Development and Communications to assist in transitioning full responsibility to them for motor vehicle safety from 1 July 2021. We are also assisting the department on other airbag recalls not covered by the compulsory recall notice. This work continues to be a high priority.

The ACCC inspected 12 480 product lines at 1624 retailers to assess compliance with 18 mandatory safety standards. As a result of this proactive surveillance program, many products have been recalled, including trolley jacks, nightwear for children and treadmills.

Following a two-year ACCC investigation, in October 2019 the federal government accepted the ACCC’s recommendation to introduce a new mandatory safety standard for quad bikes. The standard requires that, within 12 months, all new (and second-hand) bikes will need to have information affixed to them about the angle at which they might start to overturn. Within 24 months all new general use quad bikes will need to meet minimum standards for stability and be fitted with an operator protection device to reduce the risk of serious crush injuries and deaths in the event of a rollover.

Telecommunications

During 2019–20 we focussed on issues arising from poor consumer experience with the National Broadband Network (NBN). We progressed two key inquiries, one in relation to NBN Co’s wholesale service standards to address gaps in service standards and the second into NBN wholesale pricing to restore competitive pricing of entry-level plans on the NBN.

This work is supported by our Measuring Broadband Australia (MBA) reports, which provide Australian consumers with accurate and independent information about broadband speeds. During the surge in demand on the NBN as a result of workers and students relying on online methods of communication due to the COVID-19 pandemic, information on NBN performance has been of particular importance. In May 2020 we enhanced our broadband performance monitoring by releasing our first MBA monthly key indicators report to provide further insights into NBN performance.

We were also active in taking enforcement action in the telecommunications sector.

On 8 October 2019 the ACCC issued a formal warning to NBN Co under s. 103(4) of the Telecommunications Act 1997 (Cth) relating to NBN Co’s supply of NBN business services. To address the ACCC’s concerns, NBN Co gave an undertaking to offer consistent contract terms to anyone seeking upgraded NBN infrastructure and to give the same information to them at the same time.

NBN Co subsequently provided a further court enforceable undertaking in which it admitted that it misled Canberra consumers that their telephone and internet services supplied over the TransACT Network would be disconnected if they did not move to the NBN. As part of the undertaking, NBN Co made a commitment to reimburse consumers and businesses for the early termination costs they paid where they moved to NBN Co and then chose to return to the TransACT Network.

The Federal Court imposed penalties of $6.4 million against Optus in relation to misleading claims made about NBN internet disconnections to consumers, which followed earlier penalties of $10 million against Optus in relation to its third-party billing service.

Telecommunication provider BVivid Pty Ltd provided the ACCC with a court enforceable undertaking in which it admitted that NBN telemarketing calls likely breached the ACL and paid $25 200 in penalties following the issue of two infringement notices.

In June 2020 we instituted Federal Court proceedings against Dodo Services Pty Ltd (Dodo) and Primus Telecommunications Services Pty Ltd (iPrimus), both owned by Vocus Group (Vocus), alleging they made false or misleading claims about the NBN broadband speeds their customers could achieve during busy evening hours. This matter is still before the Court.

Energy and fuel

The Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Act 2019 (Cth) came into effect on 10 June 2020. The new provisions prohibit a range of conduct in the electricity retail and wholesale markets and provide for a series of graduated remedies which can be imposed against companies that breach the provisions. This will be a continuing area of focus for the ACCC in 2020. The ACCC’s role is to enforce compliance with these laws, and competition and consumer issues in electricity are key compliance and enforcement priorities for the ACCC. In May 2020 we issued guidelines to assist electricity retailers and generators to comply with laws aimed at protecting consumers and businesses from excessive electricity prices.

The ACCC will continue to closely monitor the behaviour of companies in the electricity markets. We have a range of enforcement tools available, including public warning notices, infringement notices and commencing legal proceedings in the Federal Court alleging that companies have breached these laws.

The past year also saw the release of the new Electricity Retail Code, with the ACCC responsible for monitoring and enforcing compliance with the code for retailer price setting and marketing activities.

We also achieved a number of enforcement outcomes in relation to energy. For example:

• Amaysim Energy Pty Ltd, trading as Click Energy, was ordered to pay penalties of $900 000 for making false or misleading marketing claims about potential discounts and savings
• M2 Energy Pty Ltd, trading as Dodo Energy, and CovaU Pty Ltd paid penalties totalling $37 800 and $12 600 after the ACCC issued infringement notices for alleged misleading claims about discounts available on their energy plans.

The extension of our Gas Inquiry until December 2025 enabled us to continue our work providing greater transparency in the east coast gas market. In 2019–20 we published two interim reports around the supply and pricing of gas, particularly for commercial and industrial users. We also conducted a detailed review of the effectiveness of Part 23 of the National Gas Rules, and continued to publish our liquefied natural gas netback price series to improve transparency of gas prices.

Our role in fuel price monitoring took on even more significance with the advent of the COVID-19 pandemic. Around half of the fuel-related enquiries and complaints we received in 2019–20 were received between March and April 2020, aligning with the initial period of the pandemic. In response to the pandemic we enhanced our petrol price monitoring in March 2020 to determine whether recent falls in international crude oil and refined petrol prices were flowing through to consumers.

Digital platforms

In July 2019 the Treasurer released the ACCC’s final report on the current and future impact of the digital platforms—in particular, on the media and advertising sectors. A particular focus of our Digital Platforms Inquiry (DPI) was the disruption of journalism and media businesses by Google and Facebook and their unprecedented market power.

The DPI report made 23 recommendations spanning competition law, consumer protection, media regulation and privacy law, reflecting the intersection of issues arising from the growth of digital platforms.

In December 2019 the federal government adopted the key recommendations the ACCC made, including the establishment of a specialist digital platforms branch within the ACCC to proactively monitor and investigate potentially anti-competitive conduct by digital platforms and any conduct that may breach consumer laws.

In October 2019 the ACCC instituted proceedings against Google LLC and Google Australia Pty Ltd alleging they engaged in misleading conduct and made false or misleading representations to consumers about the personal location data Google collects, keeps and uses.

We also commenced two major merger reviews of acquisitions by Facebook and Google of Giphy Inc and Fitbit respectively. Both acquisitions have the potential to further entrench buyers’ dominant position and adversely affect competition in digital advertising markets.

Transparency and inadequate disclosure issues involving digital platforms and consumer data were a major focus of the DPI and remain one of the ACCC’s top priorities.

In April 2020 the federal government directed the ACCC to develop a mandatory code of conduct to address bargaining power imbalances between Australian news media businesses and digital platforms. The government asked for the draft code to be released for public consultation before the end of July 2020, with a final code to be settled soon thereafter.

Consumer Data Right

We made significant progress implementing the Consumer Data Right (CDR) in banking over the past year. Under the Consumer Data Right, individual customers can request their bank to share their data for deposit and transaction accounts and credit and debit cards. Crucially, on 25 May 2020 we launched the CDR Register and Accreditation Application Portal, the IT backbone of the Consumer Data Right, ahead of live consumer data sharing which commenced on 1 July 2020. From 1 November 2020 consumers will be able to share their data relating to home loans, investment loans, personal loans and joint accounts.

This is a key milestone for competition in Australia in banking. The Consumer Data Right will be extended to other sectors in the future.

Now the critical infrastructure is in place, we are looking forward to seeing a greater number of eligible participants entering the CDR ecosystem. This will provide consumers with more control over their financial data and give them greater choice and access to more personalised financial products and services.

Market studies and inquiries

Because of our experience and expertise as the competition and consumer regulator, the ACCC plays a key role in a number of important government-initiated inquiries and market studies.

In September 2019 we completed our inquiry into the supply of foreign currency conversion services in Australia. The inquiry highlighted issues with transparency and impediments to effective price competition in the sector.

In October 2019 the federal government directed the ACCC to commence an inquiry into home loan pricing. In April 2020 we issued a Home Loan Price Inquiry interim report, which looked into the pricing of home loans by the big four banks between January and October 2019. The interim report shows that the big four banks considered various factors as they decided whether to pass on the Reserve Bank of Australia’s June, July and October 2019 rate cuts. But recovering profits was central to their decisions to not always fully pass through the lower rates to mortgage customers.

The rural sector and regional Australia have become an increasing focus of our work.

In September 2019 we released our final report from the agricultural Wine Grape Market Study. We made 10 recommendations to improve the efficiency and fairness of wine grape markets in Australia’s warm climate grape growing regions, where most of Australia’s wine is produced.

In July 2019 we released an update report of the Northern Australia Insurance Inquiry finalising a further 13 recommendations aimed at boosting price transparency and consumer choice in northern Australia, whose residents pay considerably higher premiums for home, contents and strata insurance. In December 2019 we released our second interim report, which assessed a range of possible government interventions to improve insurance affordability and availability. The inquiry’s main focus in 2019–20 was on how to achieve real and meaningful change for northern Australian communities.

In August 2019 the government directed the ACCC to commence an inquiry into markets for tradeable water rights in the Murray–Darling Basin. The final report of the Murray–Darling Basin Water Markets Inquiry is due to be handed to government by November 2020. The interim report, which was handed to the government on 30 June and published on 30 July 2020, will do much to frame the issues in this complex but vital area of activity.

On 19 June 2020 the federal government gave the ACCC a new role to actively monitor and regularly report on the domestic air travel market. The COVID-19 pandemic has severely impacted the domestic aviation industry and the ACCC will be looking for any early signs of damage to competition that could harm the long-term interests of consumers.

In parallel, the ACCC is also continuing to investigate whether Qantas’ acquisition of a 19.9 per cent ownership stake in Alliance Airlines was in breach of the merger law.

Competition and consumer advocacy

There is much going on in the area of competition and consumer advocacy. For example, at the most basic level, we remind consumers they can save a lot of money by regularly shopping around for new home loans and electricity supply, as new customers clearly pay less than loyal customers.

As Australia’s general infrastructure regulator, we are also drawing attention to the lack of an effective general regulatory regime for infrastructure monopolies that are not vertically integrated. We have Part IIIA for vertically integrated infrastructure but no ‘Part IIIB’ where the monopoly owners are not vertically integrated.

There are also government reforms underway to consider laws dealing with unfair contract terms and a national safety provision, which we are contributing to. And the debate has just started on whether Australia should follow the United States, the United Kingdom, Europe and other jurisdictions by introducing a law against unfair practices by large businesses against consumers and small businesses.

Farewells

In 2020 we said farewell to two of the ACCC’s valued leaders.

In late April the ACCC’s Chief Operating Officer Rayne de Gruchy retired after almost 10 years at the ACCC. I thank her for her outstanding public service career and the pivotal role she played during her tenure. We owe much of our governance structures, culture and flexible working practices to Rayne. Her work in these areas provided us with a solid foundation that allowed us to continue our work during the COVID-19 pandemic.

I also want to particularly thank Commissioner Cristina Cifuentes, who departed the ACCC on 3 July 2020 after more than seven years in the role, which she held concurrently with nine years as a Board member of the Australian Energy Regulator (AER). Cristina has for a long time been one of Australia’s leading infrastructure regulators and her extraordinary breadth of experience and knowledge, particularly in the energy, transport, telecommunications and finance sectors, has been invaluable in shaping many key decisions of both the ACCC and AER.

We also saw some departures from the AER in the past year.

First, Paula Conboy departed in September 2019. In her four years as Chair of the AER, Paula’s calm and sage leadership steered the AER to a position of strength.

In May 2020 we saw the departure of Michelle Groves as the AER’s Chief Executive Officer. For 15 years Michelle provided the leadership and vision that has seen the AER develop into the highly professional, trusted agency it is today.

While the effects of the COVID-19 pandemic continue to ripple through and damage the economy, we will maintain our focus on enhancing the welfare of Australians by promoting competition, and assisting in mitigating the damage to businesses, consumers and the economy, to ensure the recovery is as swift as possible.

Rod Sims
Chair, ACCC