ACCC signals tougher penalties in presentation of new priorities

Cartel conduct in government procurement, truth in advertising, competition and consumer issues in the health sector and industry codes are some of the Australian Competition and Consumer Commission’s new compliance and enforcement priorities for 2015.

Launching the 2015 edition of the ACCC’s Compliance and Enforcement Policy at the Committee for Economic Development of Australia today in Sydney, Chairman Rod Sims said the ACCC will be seeking to emphasise that the size of penalties in particular cases must be sufficient to provide appropriate deterrence.

This follows commentary that the recent $11m penalty against Flight Centre was “immaterial” and statements by Justice Gordon that the penalties available against Coles for unconscionable conduct were “arguably inadequate”.

“Some companies think they have a lot to gain from breaching our competition and consumer law; they should have much to lose as well,” Mr Sims said.

As part of his first speech for the year, Mr Sims announced a mix of established and new priorities and outlined the ACCC’s approach to achieving compliance with the Competition and Consumer Act (2010).

He said cartel conduct, anti-competitive agreements and practices, and misuse of market power are three of the ACCC’s enduring priorities alongside product safety.

“The detriment caused to both consumers and competition means these forms of conduct will always be in our sights,” Mr Sims said.

“As well as our general focus on detecting and deterring cartels, this year we will focus on cartel activity in government procurement.”

Mr Sims said competition and consumer issues in highly concentrated sectors will remain a priority and that the Coles unconscionable conduct outcome sets a benchmark which can be applied to other sectors.

“This outcome has very important economic consequences. This is about smaller businesses being able to have faith in their contracts with larger businesses so they can plan and invest.”

Mr Sims said naming truth in advertising as a priority, particularly when engaged in by large businesses with broad impact, is important as it is also required for a successful market economy.

“Our action in this area serves a dual purpose. When advertising is untruthful consumers are misled, and honest traders are put at a competitive disadvantage.”

Mr Sims said both competition and consumer issues in the medical and health sector need increased attention.

“Our work in this priority area will increase awareness within the medical profession and the broader health industry about both rights and obligations under the law.”

He said the ACCC will concentrate on emerging consumer issues in the online marketplace to ensure the rights and obligations that exist in the bricks and mortar world are not ignored online.

“One problem is significant delays by online businesses in addressing consumer complaints about either the product itself or delivery. We and other ACL regulators will be working with industry to improve responsiveness to consumer concerns.”

Previous penalties against Coles have been called “arguably inadequate”

In the area of improving product safety, Mr Sims confirmed the ACCC will seek to minimise the supply of unsafe goods by focusing on good practice in the manufacture, importing and quality assurance of consumer products.

As well as bedding down changes to the Franchising Code of Conduct, the introduction of a code of conduct to address unfair practices in the grocery sector will be a major focus in 2015.

In discussing consumer protection activities, Mr Sims said the ACCC will concentrate on issues affecting Indigenous consumers, older consumers, and consumers who are newly arrived in Australia.

With reported losses continuing to be significant, Mr Sims said, with the assistance of other agencies, the ACCC’s commitment to disrupting relationships scams continues.

He said also confirmed that ensuring that carbon tax cost savings are being passed through to consumers is a continuing focus.

In discussing the ACCC’s strategy, the Chairman said market analysis continues to play a role in supporting our compliance and enforcement approach.

“This year we will begin a new program of reviews of selected industry sectors. The sectors we are currently reviewing include debt collection and private health insurance.”

“These reviews will assist us to identify risks to consumers and the competitive process that may require intervention, and possibly identify and encourage good industry practice,” Mr Sims said.

In the third part of his speech, Mr Sims previewed other key activities and developments for the year ahead.

He outlined the ACCC’s role in ensuring privatisation delivers for consumers, improving the functioning of the financial system given the competition focus of the Murray report, ensuring a smooth transition for consumers to NBN services and reviewing water rules to improve outcomes in the Murray-Darling Basin.

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