23 May 2018

State of Play: Competition law

Kirsten Webb sets out the key enforcement priorities for the ACCC in 2018 and Australia's penalty regime.

To learn more about the key market trends and latest legal developments in Australia, visit our Australian Market: the state of play page.

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The Competition Law Regulator in Australia is the Australian Competition and Consumer Commission.  I'm going to go through a couple of the aspects of the ACCC's enforcement priorities and announcements in recent times that are going to be of interest I think to international companies who carry on business in Australia or who are thinking of doing so.

So first moving to the ACCC enforcement and compliance priorities for 2018, and these are the ACCC's announced priorities for the next 6 to 12 months.  The ACCC's priorities apply to a couple of sectors and areas of conduct that are likely to be of interest to  you.  The sectors that the ACCC said it's going to focus on are consumer issues in broadband services and in energy, obviously 2 sectors that are significantly important to the Australian economy and more generally.  In terms of competition issues, the ACCC is going to focus on the financial services sector and also on the commercial construction sector.  In terms of conduct, the competition laws in Australia have gone through significant amendments in the last period of time and this will be the first year that the ACCC's had a full year to enforce a couple of our key new prohibitions – a prohibition against misuse of market power and a prohibition against concerted practices.  In terms of conduct as well, the ACCC of course will continue to investigate and take proceedings for cartel conduct which could be civil proceedings or criminal proceedings.  Of note recently, the ACCC has just announced in February of this year that criminal charges are being laid against an Australian corporation and its managing director and a former employee.  They're the first criminal charges that have been laid against an Australian corporation and also against individuals for breaches of our cartel prohibitions in the CCA. 

In terms of the new laws that I mentioned, 2 of the significant changes following the Harper Reforms include amending our misuse of market power prohibition and introducing a new concerted practices prohibition.  Both of those turn on ultimately whether or not the relevant conduct that's being investigated is, has the purpose or is likely to have the effect of substantially lessening competition.  The ACCC said that it lobbied hard for these new laws and it intends to use them and it's established a new Substantial Lessening of Competition Unit specifically focusing on investigating potential contraventions of those new prohibitions.

Now turning to the penalty regime.  In Australia currently we have different penalties for consumer law breaches than for competition law breaches.  The ACCC has long said that penalties should be higher in both categories.  On the consumer law front, legislation has been introduced which seeks to increase the current level maximum fine for consumer law penalties.  Those changes, if they're given effect to, will bring the consumer law penalties in line with the competition law penalties.  In terms of competition law penalties, in late March 2018 the OECD published a report which compares Australian penalties for competition law breaches against the penalties that have been imposed in OECD jurisdictions including Europe, the UK, Korea, Japan, Germany and the USA.  The OECD report concluded that Australian penalties, both the maximums and the averages, are significantly lower than the competition law penalties imposed in those other jurisdictions, and that applies both for large companies and also for anti‑competitive behaviour that has been going on for a long period of time.  Not surprisingly, the ACCC has said that it will take another look at its approach to competition law penalties in light of the OECD report.  So in the coming 6 to 12 months and in the future we can certainly expect to see the ACCC pushing for higher penalties particularly for larger corporations to act as specific and general deterrents.  In terms of 2018 priorities, pushing for higher penalties obviously is a big one for the ACCC and watch this space in 2018.