Merger control policy and enforcement a focus for the ACCC
Australia's competition regulator remains focused on merger control enforcement and advocating for a more effective merger control regime in Australia.
In an October 2021 speech, ACCC Chair Rod Sims reiterated the ACCC's concerns about Australia's merger control regime (see our previous newsletter). Mr. Sims cited difficulties extracting information from merger parties, highlighted inappropriate time pressures placed on the ACCC by merger parties, and threats made by merger parties to complete without ACCC approval. Mr. Sims described the approach of companies to Australia's merger processes as "sometimes contemptuous".
The ACCC had a busy final quarter to 2021, processing a number of applications for informal merger clearance for a number of major transactions and approving its first and only merger authorisation for 2021 (the proposed amalgamation of local payments entities BPAY, eftpos and NPPA).
The ACCC obtained an injunction from the Federal Court to prevent two healthcare companies completing a merger before the ACCC had completed its review of the proposed transaction. The merger parties subsequently announced that they would not proceed with the proposed acquisition.
In addition, the ACCC also announced an investigation of a completed transaction involving a bulk grain terminal at the Port of Newcastle. The ACCC was notified on 8 September 2021 and the transaction completed on 30 September, despite the ACCC's requests to delay, citing competition concerns raised by market participants.
ACCC active in cartel enforcement
The authority continues to pursue civil and criminal cartel cases and warns about cartel conduct risk in public sector tenders.
On 16 November 2021, Alkaloids of Australia Pty Ltd ("Alkaloids"), a pharmaceutical ingredient company, pleaded guilty to criminal cartel conduct, spanning almost 10 years, involving price-fixing, bid-rigging and market allocation of cartel arrangements with other overseas pharmaceutical ingredient suppliers.
On 26 October 2021, Alkaloids' former export manager pleaded guilty (in his individual capacity) to criminal cartel conduct charges relating to the same conduct. This is the first guilty plea entered by an individual to criminal cartel conduct under Australia's criminal cartel laws. Alkaloids and its former export manager have been committed to the Federal Court for sentencing.
The ACCC also recently instituted civil proceedings against two Sydney roof tiling businesses, First Class Slate Roofing ("First Class") and RAD Roofing Specialists (trading as "Mr. Shingles"), and their sole directors for alleged cartel conduct. The ACCC is seeking penalties, declarations, injunctions, and disqualification orders against the sole directors.
On 1 November 2021, the ACCC issued a warning to public sector agencies in respect of potential for collusion between bidders during procurement processes, following the ACCC's findings in an investigation of departmental processes.
The ACCC's recent cartel conduct enforcement action serves as a reminder that the ACCC is committed to pursuing both individuals and corporations over allegations of cartel conduct and may refer matters for criminal prosecution.
ACCC institutes proceedings for alleged resale price maintenance
The proceedings show the ACCC remains focused on pursuing resale price maintenance conduct. The ACCC has instituted proceedings for resale price maintenance (RPM) against Techtronic Industries Australia Pty Limited ("Techtronic") in connection with its wholesale supply of Milwaukee brand power tools, hand tools and accessories.
The ACCC is alleging that Techtronic engaged in the following contraventions of Australian competition law:
- Techtronic engaged in RPM conduct between 2015 and 2021, including by entering into 96 agreements with independent dealers that restricted the sale of Milwaukee power tools below a specified minimum price;
- Techtronic enforced these agreements by issuing reminders, warnings and breach notices to purchasers who advertised or sold Milwaukee products below the minimum prices prescribed by Techtronic; and
- Techtronic withheld supply from two dealers who had discounted prices below the specified minimum price.
The ACCC is seeking penalties, declarations, injunctions, a compliance order program, an order for corrective advertising and costs.
This case follows the ACCC accepting an undertaking by Nero Bathrooms' which admitted engaging in RPM in September 2021, as well as the ACCC's court proceedings against FFE Sports, in which it successfully obtained penalties in March 2021 for RPM.
The Concise Statement filed by the ACCC in connection with the proceedings is available here.
Federal Court imposes large penalties for Australian Consumer Law breaches
The recent Federal Court decisions include a record-breaking AUD 153 million penalty, demonstrating the importance of compliance with the Australian Consumer Law.
In Australia, the ACCC regulates compliance with both competition and consumer law.
In the last quarter of 2021, a number of significant penalty decisions under the Australian Consumer Law (ACL), which were pursued by the ACCC, were handed down by the Federal Court.
In early December 2021, the Federal Court ordered an AUD 153 million penalty against the Australian Institute of Professional Education Pty Ltd (in liquidation) (AIPE) for engaging in a system of unconscionable conduct and making false or misleading representations (among other things). To date, this is the highest penalty ever imposed under the ACL.
In late November 2021, the Federal Court also imposed a penalty of AUD 1 million on workplace relations adviser Employsure for making false and misleading representations in its Google Ads. On 17 January 2022, the ACCC filed an appeal in respect of the penalty imposed on Employsure (with the outcome yet to be decided). This came shortly after the ACCC obtained a penalty of AUD 220 thousand against agricultural machinery supplier AA Machinery Pty Ltd (trading as Agrison) after it admitted to making false and misleading representations to customers about its warranties and aftersales services.
The ACCC's ongoing enforcement activity in respect of breaches of the ACL is a timely reminder for businesses to ensure their marketing tactics and materials, contracts, and warranty protocols are compliant.
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