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A farewell to Sims: ACCC releases 2022-23 priorities

The Australian Competition and Consumer Commission (ACCC) has released its annual Compliance and Enforcement Priorities for 2022-23. The report was announced by Chair Rod Sims on the eve of his retirement as Australia’s longest serving head of the ACCC. A full copy of Mr Sims’ speech can be found on the ACCC website.

Mr Sims will leave the ACCC with a legacy of having been the driving force behind calls for reform to Australia’s competition and consumer laws and for taking on cases that test the boundaries of these laws, including for the purposes of showing that, in those cases where the ACCC is defeated, there is (in his opinion) a gap or weakness in the current laws.

On 21 March, Mr Sims will be succeeded by Gina Cass-Gottlieb. Time will tell whether Ms Cass-Gottlieb, having significant experience as a commercial lawyer, will continue Mr Sims’ enthusiasm for test cases. It has been reported that Ms Cass-Gottlieb vetted Mr Sims’ speech and the enforcement priorities that will be hers to inherit. Nonetheless, it is not clear the extent to which the report reflects her true policy priorities.

The announced priorities indicate that, over the coming year, the ACCC intends to:

  • crackdown on greenwashing and manipulative advertising in the digital economy;

  • continue to be a strong enforcement regulator with new priorities being anti-competitive exclusive dealing by large companies and collusive conduct in global supply chains

  • focus on how best to address competition issues in the financial services industry and relating to digital platforms; and

  • continue to push for reform of Australian merger laws and review processes.

With the 21 March at our door, we welcome Ms Cass-Gottlieb into her new role and farewell Mr Sims who, no doubt, will continue to play a role in influencing Australia’s competition and consumer policy going forward.

Consumer law priorities

The big priorities for this year are corporate greenwashing and manipulative advertising and marketing in the digital economy.

Greenwashing on the blacklist

Increasing consumer awareness and concern for the environmental impact of goods and services has resulted in businesses competing on climate-conscious credentials. The ACCC is concerned that this is leading to false claims about businesses’ green credentials. 

Colloquially referred to as ‘greenwashing’, the ACCC has vowed to work closely with other regulators (especially ASIC and the Clean Energy Regulator) to ensure that not only consumer-facing goods and services, but claims made in the manufacturing and energy sectors do not make misleading claims. The ACCC’s concern for greenwashing returns to the spotlight after a long lineage of proceedings in this space – including the ACCC’s action against GM Holden over Saab’s ‘green’ claims and the ACCC’s action against Volkswagen about whether the company’s diesel vehicles complied with environmental standards. 

It is, therefore, crucial for businesses to carefully review any statements they make in relation to their green and sustainability credentials, including to ensure they have a reasonable basis for making carbon neutrality predictions. More extensive commentary on corporate greenwashing is available here

Hard-line stance against manipulative advertising in the digital economy 

The 2022-23 priorities send a strong warning to companies operating in the digital economy against the use of ‘dark patterns’ that can arise from use of consumers’ data. The ACCC suggests that these ‘dark patterns’ include false scarcity reminders (for example, low-stock warnings), social media influencers that are not transparent about whether they are paid to promote advertised products and manipulation of online reviews. The ACCC has had some recent litigation successes in this area, but continues to push for a new prohibition against unfair trading practices (that extend beyond Australia’s existing unfair contract terms and unconscionable conduct laws). 

Competition enforcement priorities

As always, cartel conduct will remain an enduring priority for the ACCC, with two new issues added to its priorities for 2022-23 – exclusive dealing by large companies and collusion in supply chains under the veil of the pandemic. The ACCC has also put businesses operating in the financial services and digital platform sectors on notice that it is focused on anti-competitive conduct in these sectors.

Exclusive dealing by firms with market power 

The ACCC is concerned with a growing number of instances of large and powerful companies engaging in exclusionary behaviour – such as the unrestrained use of exclusive supply or acquisition arrangements that result in bottlenecking end goods and services. In particular, Mr Sims expressed concerns about the use of MFN clauses that prevent competitors from offering a better deal to consumers. The ACCC already has several investigations underway to address this concern, and Mr Sims warns that it intends to leverage this current work and undertake proactive enquiries to identify and address conduct of concern across several sectors this year.

No tolerance for using the pandemic as a veil for illegal collusion

The ACCC is concerned that the pandemic (with associated staff shortages, port congestion and transport interruptions) has resulted in significant supply chains issues in the retail sector, leading to increases in freight charges and, in turn, downstream price increases for end consumers. A priority for the ACCC this year will be to coordinate with overseas enforcement agencies via the Five Eyes Working Group[1] to detect any attempts by businesses to use the pandemic conditions as a veil for illegal conduct, such as collusion, in global supply chains.

Payment services under scrutiny

The ACCC will continue to focus on competition issues in the financial services sector with a particular focus on payments services. Companies that operate in the payment and digital wallet space should, therefore, expect to be subject to close scrutiny over the coming year. 

One of the ACCC’s main concerns about competition in the payments markets is least cost routing which enables businesses to choose which network will process their debit card transactions. In March 2021, it accepted undertaking from Visa to address its concerns that Visa may have limited competition in relation to debit card acceptance through its dealings with large merchants. The ACCC has put the financial services sector on notice that it will continue to investigate similar allegations of anti-competitive conduct designed to limit the take-up of least cost routing.

No rest for digital platforms

Digital platforms continue to be marked as a special area of concern by the ACCC with the most recent round of the ACCC’s five year inquiry into digital platforms considering various options for ex ante laws applying in the digital platform space. Mr Sims considers the need to investigate such options necessary because the current enforcement and investigative approach to alleged anti-competitive conduct involves lengthy and retrospective processes which ultimately amount to a ‘whack a mole’ strategy – attempting to remedy one manifestation of anti-competitive conduct while even more problematic conduct surfaces elsewhere. While Mr Sims is by no means unique among global regulators in holding concerns about the effectiveness of traditional enforcement approaches to regulate digital platforms, the claim does seem premature from an agency that is yet to run a competition law case against a major tech platform. 

Merger reform a priority

The ACCC’s proposed reform of Australia’s merger laws and review processes is set to remain a high priority for the ACCC (our previous article on these proposals is available here).

In his speech announcing the 2022-23 priorities, Mr Sims pointed to the recent Virtus/Adora merger as illustrative of the practical challenges that the ACCC faces with the non-mandatory informal merger review system in Australia. In that matter, the merger parties decided to proceed with the transaction before the ACCC completed its review. The ACCC successfully obtained an interlocutory injunction restraining the acquisition until the conclusion of court proceedings. However, Mr Sims expressed concern that the need to obtain an injunction in Court to prevent the transaction closing prior to the end of the ACCC’s review added unnecessary complexity and costs for all parties involved.

Other priorities

In addition to the above, the ACCC has highlighted compliance and enforcement priorities for essential services with a focus on: 

  • energy and telecommunications;

  • consumer guarantees for high value goods, including motor vehicles and caravans;

  • promoting small business protection, particularly in agriculture and franchising

  • compliance with button battery safety standards; and

  • consumer product safety issues for young children. 

[1] The ACCC recently announced that it has joined with competition authorities in the US, the UK, Canada and New Zealand to form a Five Eyes Working Group.  


Authors

MCCOWAN-mark-highres_SMALL
Mark McCowan

Head of Competition

GRAY Jodi SMALL
Jodi Gray

Partner


Tags

Competition/Antitrust

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