Insights into the Australian Competition & Consumer Commission conceptualisation of its function are provided in today's speech by ACCC chair Sims, which reiterated the enforcement priorities statement
noted recently and featured the following comments
Each year the ACCC receives roughly 160,000 complaints and inquiries. From this pool we have to make a judgment on which matters merit an investigation.
This process narrows our scope to about 500 initial investigations, around 140 of which are then conducted at an ‘in-depth’ level.
From this activity we take around 35 cases to court each year, accept around 30 court enforceable undertakings and issue infringement notices in around 30 matters.
Like any other agency, we need to make important choices about where to allocate our resources.
The ACCC conducts an annual strategic review of consumer and competition issues to identify areas we should focus on.
As part of this process, consumer groups, ombudsmen and other fair trading agencies provide an excellent sounding board in helping us shape our priorities.
At the start of each year we publish a revised Compliance and Enforcement Policy which sets out our areas of focus and explains the factors we take into account when deciding whether or not to pursue particular matters.
This year the review confirmed many previously identified priorities, some of which I have already covered, but also revealed some new areas we intend to pursue.
Competition
Deterring cartels, misuse of market power and anti-competitive agreements are enduring priorities for the ACCC.
Consumers stand to benefit from our work in this area. When there is anti-competitive conduct consumers often bear the cost by paying higher prices.
For example, late last year we instituted proceedings against a number of parties relating to an alleged cartel in the laundry detergent industry. We argue that an industry-wide shift to ultra-concentrated laundry detergent products resulted in denying Australian consumers the benefits of lower prices for these products.
It is alleged by the ACCC that in a meeting with a retailer, one of the manufacturers involved estimated that, without the conduct, the value of the laundry detergent market would be $146 million lower over 2009-13. In our view this is one measure of the potential detriment to consumers flowing from the conduct alleged by the ACCC.
In a separate case, last month, the ACCC took court action against Pfizer Australia Pty Ltd. We are alleging misuse of market power and exclusive dealing in relation to its supply of atorvastatin to pharmacies.
Atorvastatin is a tablet product used to lower cholesterol. Prior to the expiry of patent protection, Pfizer’s brand, Lipitor was one of the highest selling prescription medicines.
The ACCC alleges that Pfizer’s purpose was deterring or preventing competitors in the market for atorvastatin from engaging in competitive conduct, as well as to substantially lessening competition.
Product safety
Product safety is another perennial priority for the ACCC. This year our campaign activities will focus on quad bikes and button batteries.
We have also observed a trend of greater direct sourcing of less expensive products from overseas by retailers of “fast-moving consumer goods” which correlates with an increase in consumer injuries and a sharp increase in the number of recalls of those goods.
We are concerned by indications that some major retailers appear not to have satisfactory processes in place to properly meet their responsibility to ensure the safety of the goods they sell. Quality assurance processes may be slipping resulting in consumers being injured.
Let me be very clear: if major retailers are discovered to have taken short-cuts in applying basic quality assurance and control measures, at the expense of consumer safety, we will take action in any way we can.
Emerging consumer issues in the online marketplace
The priority area which best fits the theme of the congress is our interest in comparator websites and drip pricing. …
Drip pricing involves the incremental disclosure of fees and charges over an online booking process. It causes both competition and consumer detriment.
Consumers see a ‘headline’ price advertised at the beginning of the booking process but when they progress to the payment phase, additional fees and charges have been added.
Consumers purchasing airfares or event tickets are all too familiar with this practice.
Drip pricing involves a lack of transparency which may mislead consumers, and it can also make it difficult for businesses to compete on a level playing field.
There will be enforcement action in this area shortly.
Consumer protection in the telecommunications and energy sectors
Our scrutiny of the telecommunications industry’s advertising and sales practices continues.
In relation to this, as I have already mentioned, we were pleased with the High Court’s decision last year to reinstate a $2 million penalty against TPG. The ruling reinforced the importance of accurately stating the full cost to consumers in headline advertising.
In the energy sector our focus in 2013 was on addressing unlawful door-to-door sales conduct by energy retailers. AGL and APG were ordered to pay penalties more than $1 million, and our proceedings against Energy Australia and Origin Energy are still before the Federal Court.
Our next area of focus in the energy sector is misleading discount claims. The ACCC is increasingly concerned about possible misleading conduct by energy retailers in their promotion of energy plans. These concerns relate to the promotion of discounts and savings off energy use and/or supply charges under those plans. We refer to this new focus of our energy work as ‘discounts off what?’
This new focus will not come as a surprise to the sector. In August 2013, the ACCC wrote to energy retailers about our concerns. In December 2013, the ACCC commenced legal action against AGL South Australia for allegedly misleading residential consumers in South Australia about electricity discounts.
It is likely that there will soon be further court action.
Scam disruption
For the past couple of years, the ACCC’s Infocentre has received around 80,000 contacts about scams. In 2012, consumers reportedly lost over $93 million. These statistics are very concerning and yet represent just the tip of the iceberg when it comes to the financial impact of scams.
The ACCC, as the national consumer protection agency, has an important role in helping protect Australians from scams. In the past we have focused on empowering consumers to spot a scam and how to avoid being scammed.
This year we are prioritising some level of scam disruption. We will seek to identify and contact scam victims in order to stop money being sent to scammers. We will also be working with money remitters, for example Western Union, to stop fraudulent funds transfers.
Given the size of the problem, this is not something that we can tackle alone. We will be working collaboratively with state and territory consumer agencies, many of which are already doing excellent work in this area.
