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05 Mar 2020

ACCC's 2020 priorities: Digital economy, construction, electricity and food suppliers all under the microscope

By Kirsten Webb, Mihkel Wilding, Anchal Kapur and Damiano Fritz

Australian businesses should endeavour to take a proactive approach to engaging with the ACCC’s concerns, ensure that they have robust compliance programs and obtain legal advice where necessary.

While last year the ACCC shone a spotlight on the financial services, energy and telecommunications industries, the focus in 2020 will shift to digital platforms, essential services (telcos and electricity), the commercial construction industry and funeral services. In his annual address announcing the ACCC's enforcement priorities for the year ahead, ACCC Chair, Rod Sims, stressed the need for more competition law cases in particular to be brought before the courts to set "boundaries of acceptable conduct" and made it clear that the ACCC will continue to intervene where it "sees a clear" problem and considers it "necessary".

Moreover, following the introduction of the tougher consumer law penalties regime in September 2018, Australian business should expect the ACCC to continue to seek higher penalties for both consumer and competition law breaches.

Mr Sims also flagged two key areas of potential reform to the Competition and Consumer Act 2010 (CCA) and Australian Consumer Law (ACL):

  • Unfair contract terms: reforms to the unfair contract terms provisions of the ACL are "advanced" and "well underway", which will broaden the scope of provisions and introduce a prohibition on the use of unfair contract terms in standard form consumer contracts (currently, only a court is able to find unfair contract terms void and unenforceable).
  • Unfair trading practices: The ACCC has already recommended the introduction of an unfair trading practices law in its final reports on the Digital Platforms Inquiry and Customer Loyalty Schemes. Mr Sims re-stated the ACCC's preference for the introduction of a general "unfair trading practices" prohibition following similar laws in other jurisdictions such as the US, UK and EU.

Snapshot of the ACCC’s enforcement focus for 2020 

Competition enforcement

  • Cartel investigations: Cartel investigations remain an enduring enforcement priority, with five criminal cartel cases already before the courts – and at least two new cartel cases expected before the end of the year.
  • Misuse of market power: Following its first enforcement action under the new misuse of market power provisions, the ACCC is keen to ensure its investigations in this space are more efficient and speedy. The ACCC foreshadowed the use of injunctions to target misuse of market power in the future.
  • Public procurement: The ACCC is concerned about collusive behaviour in this area and is working to enhance its detection capabilities.
  • Mergers: The ACCC has foreshadowed ongoing scrutiny of mergers, and not only improving how it assesses competition effects but also streamlining its investigations. 

Consumer enforcement

  • Consumer guarantees: Enforcement of consumer guarantees was described as the “number one” focus, with a particularly emphasis on complaints involving motor vehicles and white goods.
  • Funeral services industry: The ACCC considers that this is a concentrated sector with some firms having significant market power through vertical integration. The ACCC is concerned about anti-competitive conduct such as misuse of market power and exclusive dealing – as well as consumer law issues in relation to pricing, unfair contract terms, bundling and unconscionable conduct.
  • Misleading food labelling: The ACCC will take a more active role in 2020 in relation to the sale and promotion of food products, including regulating health and nutritional claims, credence claims and country of origin.
  • Prices and selling practices of essential services: The pricing and selling practices of essential services continues to concern the ACCC. This is particularly the case for telcos and electricity providers where the ACCC is still looking for "true change". 

Key areas of focus

Digital economy

Following the ACCC's landmark Digital Platforms Inquiry, as well as significant fines handed down to Facebook in the US and the UK for mishandling users’ personal information, the ACCC will continue to engage with its overseas counterparts to develop theories of harm relevant to digital platforms and "digital issues" more generally. The ACCC remains concerned about consumers being misled over the collection and use of their personal data, as well as a range of other competition issues relevant to the use and monetisation of data, and have set up a separate digital platforms branch to investigate these issues. Mr Sims remarked that proactive action in this sector was warranted given the dominance of these platforms and their relationships with consumers and advertisers, citing two new market inquiries into the digital advertising and digital platform services markets recently commenced by the ACCC.

Commercial construction

The ACCC will continue to keep a close eye on the commercial construction sector in 2020, with its dedicated Commercial Construction Unit scrutinising conduct affecting competition and poor trading practices. Mr Sims noted that there are investigations underway into secondary boycotts, activity aimed at damaging individual small businesses, and unfair contract terms.

Consumer guarantees

Consumer guarantees remain the “number one” priority for the ACCC. Over the last year, the ACCC says it has received approximately 25,000 reports from consumers seeking a remedy in relation to motor vehicles or white goods. The ACCC is particularly concerned about these sectors due to the high value of purchases and scope for consumer harm.

The ACCC considers that the high number of complaints in these sectors indicates that consumers continue to face significant hurdles in enforcing their right to a consumer guarantee for these products. The ACCC hopes that further enforcement and compliance initiatives will result in “long anticipated” change in industry behaviour and drive increased compliance with consumer guarantee and other consumer obligations.

Product safety

The Takata airbag recall is now the largest product safety project undertaken by the ACCC to date. Progress is ongoing with 2.6 million of the 3 million affected vehicles now repaired. The ACCC has joined forces with the Department of Infrastructure, Transport and Regional Development to transition full responsibility for motor vehicle safety from 1 July 2021 to the Department, when the Department will gain compulsory recall powers for motor vehicles.

The other major product safety focus for the year relates to button batteries which can cause significant injury if swallowed by children. The ACCC established the Button Batteries Taskforce in 2019 to review whether industry actions to mitigate these risks were sufficient and to consider what regulatory options might be available. The ACCC will soon release a Draft Recommendation outlining proposed regulatory options available under the Australian Consumer Law to address the hazard of these batteries for public comment.

Small businesses and franchising

The ACCC will continue its focus on the small business sector, with a particular focus on enforcement of the Franchising Code of Conduct. Mr Sims highlighted that the recent Parliamentary inquiry into the franchising sector highlighted a number of concerning practices affecting franchisees. Mr Sims remarked that “enforcement cases alone will not address the many issues which have been identified in the franchising sector” as there is a concern that some franchise systems do not focus on running a viable system, to the benefit of both franchisees and franchisors. The ACCC will continue to work with the Government’s Franchising Taskforce to address some of the concerns.

Enduring priorities

Some priorities remain unchanged going into the 2020, with the ACCC continuing to focus on:

  • cartel conduct;
  • anti-competitive conduct (anti-competitive agreements and practices, as well as misuse of market power);
  • conduct which affects vulnerable and disadvantaged consumers;
  • serious product safety issues; and
  • conduct which affects Indigenous Australians.

The ACCC has stated that these priorities are reflected in its investigations pipeline, with a promise to bring a number of cases in these areas over the course of 2020.

Looking forward and preparing for what’s next

Businesses, especially those which operate in the ACCC's priority areas, should familiarise themselves with the ACCC's agenda and prepare for scrutiny. In particular, given the extent to which the ACCC is consulting with its international counterparts in developing theories of harm and various areas of enforcement, it is prudent for Australian businesses to keep abreast of how similar issues are being assessed and enforced on an international level. Finally, given the ACCC has promised to continue pushing for higher penalties in both consumer and competition law matters, Australian businesses should endeavour to take a proactive approach to engaging with the ACCC’s concerns, ensure that they have robust compliance programs and obtain legal advice where necessary.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.