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The Australian Competition and Consumer Commission
(ACCC) has hit the ground running in 2023, setting
its sights on the pricing of essential services in a bid to
crackdown on the rising cost of living.
The regulator will be targeting the gas, childcare and
telecommunications industries and warned the business community
that it has new and existing enforcement powers and is not afraid
to use them. Importantly, these matters are in addition to the 2022-23 Compliance and Enforcement Policy and
Priorities and reinforce the ACCC’s focus on existing and
emerging issues and their potential impact on consumer welfare and
the competitive process in Australia.
Businesses and stakeholders are therefore encouraged to take
note and refresh themselves of the types of conduct and the
industries which the ACCC is concentrating their resources on in
the new year.
Gas
In its July 2022 Gas inquiry 2017-2025 Interim report, the ACCC
forecasted gas price increases and warned the east coast gas market
was facing a gas shortfall in 2023 which could impact the stable
operation of Australia’s electricity network.
In response, the ACCC’s role as infrastructure regulator was
enhanced in December when the Australian Government handed the ACCC
wide-reaching powers under the Competition and Consumer (Gas Market Emergency
Price) Order 2022.
Under the Order, wholesale gas prices are temporarily capped at
$12 per gigajoule for gas sold by East Coast and Northern Territory
gas producers and their affiliates to wholesale customers in
Australia. The ACCC has since published interim Compliance and enforcement guidelines
explaining how the ACCC intends to exercise its enforcement
role.
While the guidelines are intended to support the gas industry
with their obligations to comply with the new laws, the ACCC said
it is ready to exercise its enforcement powers in response to any
alleged contraventions, particularly any conduct that may be
intended to circumvent the price cap. This is particularly relevant
as the ACCC has been granted maximum pecuniary powers under the
Competition and Consumer Act 2010 (Cth) to enforce the price cap
against corporations including fines the greater of; $50 million,
three times the value of the benefit obtained, or 30% of annual
Australian turnover of the corporation in the preceding 12 months
if the value of the benefit cannot be determined.
As part of the order, the ACCC will also be preparing a
mandatory industry code of conduct to ensure Australians in the
east coast gas market have access to Australian gas at reasonable
prices and on reasonable terms. Preparation of this code is already
underway and the provisions are expected to be released for
industry consultation in tranches as they progressed.
Childcare
The ACCC has resolved to crack down on the cost of childcare and
associated out of pocket costs in 2023, which have continued to
rise despite government intervention. This will support the inquiry the regulator was tasked with by the
Australian Government which will review the market for the supply
of childcare services.
The ACCC has begun examining and considering the costs of
operating childcare, including employees’ wages and property
costs; the level of competition in the childcare market; the level
of demand and supply; and prices charged to consumers, including
any impacts of government policy. It is also considering the
quality, accessibility and affordability of childcare across
different geographies, age groups and children’s needs, as well
as different forms of childcare including centre-based care,
outside school hours care and family day care.
The ACCC is already well progressed on this inquiry which will
determine whether the current government mechanisms and subsidies
are achieving their price limiting intention. The regulator is
expected to provide an interim report by 30 June 2023 and wrap up
the inquiry by the end of the year.
In the meantime, the ACCC will continue to track any changes in
childcare standards and pricing after
new childcare subsidies kick in mid-year.
Telecommunications
Telecommunications providers and retailers are also on notice in
2023 for any attempts to mislead customers on pricing, following
significant and successful enforcement activity last year.
The regulator initiated proceedings against Telstra for
allegedly making false or misleading representations about upload
speed to residential broadband customers of its cheaper brand,
Belong. It also secured admissions from Australia’s three
largest internet service providers for making false or
misleading representations to consumers when promoting certain NBN
internet plans. And the ACCC decided not to authorise proposed regional mobile network
arrangements between Telstra and TPG after taking the view the
arrangement would likely lead to less competition in the longer
term and leave mobile users worse off over time, in terms of price
and regional coverage.
In addition, the ACCC will continue its work cracking down on
scams, which often target vulnerable and disadvantaged people,
after combined losses of over $2 billion reported to
Scamwatch, the government and the financial sector in 2021. The
regulator has warned that part of this onus would fall to digital
platform providers, particularly after the significant Optus and
Medibank data breaches, and recommended new measures to address harms from
digital platforms including mandatory dispute resolution
processes and stronger requirements for combating scams, harmful
apps and fake reviews in the fifth report of the ACCC’s
five-year Digital Platform Services Inquiry.
Other priorities
In addition to the above priorities, recent legislative change
around unfair contract terms and compliance action against
greenwashing will mean these issues face heavy scrutiny in
2023.
After long advocating for the introduction of penalties for
unfair contract terms, the ACCC welcomed the passing of the Treasury Laws Amendment (More Competition, Better
Prices) Bill 2022 (Cth) in the federal parliament last
year.
Under the legislation, new penalties for businesses that include
unfair contract terms in their standard form contracts with
consumers and small businesses were introduced. Businesses have
until 9 November this year to review and update their standard form
contracts before these penalties apply.
Importantly, the Bill also increased the maximum pecuniary
penalties for corporations to $50 million and to 30 per cent of a
corporation’s annual turnover over the period the breach
occurred (whichever is greater) for certain competition law and
consumer law breaches. Maximum fines for individuals who engage in
anti-competitive conduct and breaches of the consumer law
protections also increased from $500,000 to $2.5 million. These new
penalties apply in respect of conduct engaged in from 10 November
2022, and as noted above, would include gas pricing behaviour with
the imposition of the price cap.
Businesses will also need to be ready to substantiate any
environmental or sustainability claims when marketing their goods
and services after the ACCC launched two internet sweeps late last
year to identify misleading environmental and sustainability
marketing claims and fake or misleading online business reviews.
The sweeps were conducted with the broad aim of identifying
deceptive advertising and marketing practices by businesses or
industries.
So, it is important that businesses can back up the claims they
are making, whether through reliable scientific reports,
transparent supply chain information, reputable third-party
certification, or other forms of evidence as the ACCC won’t
hesitate to take enforcement action by issuing substantiation
notices where consumers are being misled or deceived by green
claims.
Notably, the ACCC isn’t the only regulator eyeing off this
issue with the Australian Securities and Investments Commission
recently issuing infringement notices to listed companies Vanguard Investments Australia Ltd, Black Mountain Energy Limited, Diversa Trustees Limited and Tlou Energy Limited over concerns about
sustainability-related statements that the companies did not have a
reasonable basis to make.
Stay off the ACCC’s radar
The ACCC’s priorities are relevant for public sector
entities, private businesses and consumers to understand their
legal rights and obligations, particularly given the current
economic circumstances.
ACCC Chairwoman Gina Cass-Gottlieb recently told the Australian
Financial Review:
“It has become more and more
significant as we face the rising CPI, monetary responses in terms
of interest rates, and the significant increases in energy pricing
that everyone is facing, both to households, small businesses and
other users.”
With the regulator emphasising its readiness to step into an
enforcement role if required, it is important for the business
community to be familiar with these priorities, and know where to
seek help.
How can we help?
Our team can assist you in understanding your legal rights and
obligations, staying up to date with any impending changes to the
law, or providing advice that may address emerging issues by:
- undertaking an annual internal review of your entities’
competition and consumer compliance policies. This would include
reviewing existing and anticipated arrangements to identify any
risks arising from the competition and consumer sectors that have
been highlighted by the ACCC above (and more generally) - ongoing investigations, inquiries and market studies that the
ACCC is conducting and how to effectively engage with the ACCC on
such matters - conducting regular compliance training sessions on how to
properly manage and identify anti-competitive behaviour and
consumer law compliance risks.
This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader’s
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
individuals listed.
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