07/03/2023
ACCC Chair Gina Cass-Gottlieb: Speech to CEDA on the 2023-24 Compliance and Enforcement Priorities
I am pleased to be joining you today, nearly one year into my tenure as ACCC Chair, as I unveil the ACCC’s annual compliance and enforcement priorities. This yearly event is an important opportunity for our agency, and I very much appreciate CEDA again facilitating this address. I also note my appreciation for CEDA’s continued commitment to sophisticated economic debate in this country.
Our priorities must and do reflect the issues impacting the Australian economy, consumers and businesses in Australia. They are our own work, but they are informed by extensive feedback and engagement with many people and organisations, as well as complaints data, public discourse and international developments, among other information sources.
The present key issues of cost of living pressures, the price of essential services including energy and telecommunications, the integrity of environmental and sustainability claims, ever increasing losses to scams, consumer and fair trading harms from manipulative marketing practices in the digital economy and the always high risk to markets, business rivals and consumers from anti-competitive conduct, strongly feature in our priorities.
Today I confirm that we are building on much of the work we commenced with last year’s compliance and enforcement priorities, which my predecessor Rod Sims announced here a year ago. I very much endorsed the priorities set out by Rod, so am pleased that we can demonstrate continuity in the ACCC’s work program.
The ACCC has in recent times identified a set of enduring priorities involving conduct considered to be so detrimental to consumer welfare and the competitive process that we will always regard them as a priority. In a further demonstration of continuity, I am pleased to confirm that we will maintain these enduring priorities, including conduct impacting First Nations consumers, cartel conduct and anti-competitive conduct more broadly.
The ACCC continues to maintain a very active enforcement program recognising the importance of enforcement outcomes to achieve specific and general deterrence of the conduct prohibited by competition and consumer protection law. We had success in court last year against large businesses, including rideshare providers, food manufacturers, retail telecommunications providers, motor vehicle manufacturers, waste services companies, dairy processors and digital platforms.
These and other cases led to penalties of more than $200 million last calendar year, including $60 million in penalties for misleading representations by Google, $21 million dollar in penalties for false or misleading representations by Uber; an important outcome in the franchising sector that saw payments to franchisees and waivers of debt totalling approximately $10 million to impacted Retail Food Group franchisees as well as more than $12 million in penalties against Mercedes Benz for non-compliance with its Takata airbag recall communication plan. These outcomes all reflected our compliance and enforcement priorities for the previous year.
But it’s important to note that while enforcement is a critical part of the ACCC’s work, we also pursue our priorities through a combination of education, compliance work, advice to inform Government policy and law reform activities. The early announcement of our annual priorities serves to raise awareness across the business community and thereby foster and inform corporate compliance efforts.
I will now outline our key 2023-24 priorities, including a couple of our enduring priorities.
Competition and consumer issues arising from the pricing and selling of essential services, with a focus on energy and telecommunications
We have again highlighted competition and consumer issues connected to the pricing and supply of essential services such as telecommunications and energy as a compliance and enforcement priority.
In the current circumstances of rising cost of living, Australian consumers are even more vulnerable to the effects of anti-competitive conduct that reduce competition in the supply of essential services, restricting entry or expansion of competitors, reducing choice and contributing to price escalation pressures.
We are very conscious that misleading sales representations in relation to the price, features or benefits of essential services prevent consumers making informed purchasing decisions. It’s particularly important that consumers and businesses can make informed decisions about what services are right for them in relation to price and the quality of the service that is provided when they are struggling with shrinking household budgets.
You may recall we listed this as a priority last year, so I am pleased to note that we have had a number of successful public enforcement outcomes addressing competition and consumer concerns during the past 12 months.
In August the ACCC accepted a court-enforceable undertaking in relation to Telstra’s registration of radiocommunications sites in low band spectrum that the ACCC was concerned would hinder Optus’ plans to roll out its 5G network nationally. The undertaking, given after an intensive investigation by the ACCC, will promote competition and consumer choice for 5G services, including in metropolitan and regional Australia.
In November, the Federal Court ordered Telstra, Optus and TPG – Australia’s three largest internet service providers - to pay a total of $33.5 million after admitting to making false or misleading representations to customers about the NBN maximum speeds of their internet plans.
There are number of matters still under investigation in essential services sectors, so I am hopeful that when I return next year I will have more successful outcomes to report.
Competition and pricing issues in gas markets, including compliance with the price cap order and other legal obligations for wholesale gas markets
Domestically and globally, the impacts of the war in Ukraine, sanctions and what Europeans describe as President Putin’s weaponising of energy, have caused record high energy prices. The resulting disruption to global gas markets is sustained and appears likely to continue into the mid-term.
In response, given the importance of gas to Australian industry, gas powered generation and households, the Federal government introduced an emergency price cap on the sale of wholesale gas by producers.
The government tasked the ACCC to enforce the cap, and directed the ACCC to continue our monitoring and reporting on the conduct of gas market participants.
We published interim compliance and enforcement guidelines for the price cap in January and began consultation with industry to clarify areas of uncertainty. We are also working with government in the development of a mandatory code of conduct for gas producers.
In the coming year we will prioritise compliance with the price cap and, once developed, the code. We expect this important work to account for a substantial share of our compliance and enforcement effort in the energy sector.
Promoting competition and investigating allegations of anti-competitive conduct in the financial services sector, with a focus on payment services
Ensuring that consumers and businesses get the benefit of competition in the financial services sector, and that any anti-competitive conduct is addressed, is particularly important in the context of current cost of living pressures and a rising interest rate environment. The ACCC maintains a focus on supporting competition in financial services through a range of market study, enforcement, compliance and engagement activity.
We have commenced our inquiry into retail deposit markets, looking at how banks set interest rates for deposit products, like savings accounts and term deposits, including in comparison to how rates are set for credit products and the role of deposits in banks’ funding. Our inquiry will also consider how consumers interact with these markets and what factors affect their decisions to search and switch between products and what impediments may stand in their way. These are critically important issues, particularly for those Australians who rely on interest paid on deposit and savings accounts to supplement their income from employment, superannuation and the pension. We are also contributing to the development of the government’s strategic plan for the payments system.
Our work in financial services also includes the proceedings we have commenced against Mastercard alleging misuse of market power. This matter is before the Federal Court, with a hearing set down for 2024. We allege that Mastercard has engaged in anti-competitive conduct in response to the RBA’s least cost routing initiative, with the purpose of deterring merchants from processing significant debit card volumes through the eftpos network, even though eftpos was often the lowest cost provider. We are concerned that Mastercard’s alleged conduct meant that businesses did not receive the full benefit of the increased competition that was intended to flow from the least cost routing initiative.
Exclusive arrangements that impact competition
At this point I will note that exclusive arrangements by firms with market power that impact competition remain a compliance and enforcement priority for the ACCC for 2023-24.
We remain concerned about the competitive harm that can be caused by the use of exclusive arrangements by traders who are in a position of market power, which can increase barriers to entry or lead to the anti-competitive foreclosure of rivals.
In this regard a case, that was resolved in my first month as Chair shortly after our last CEDA speech, emphasises the importance of this prohibition in our competition law and of placing it as a priority in compliance and enforcement.
In March 2022, the Federal Court ordered that Australasian Food Group, trading as Peters Ice Cream, pay a $12 million penalty for anti-competitive conduct in relation to the distribution of ice creams sold in petrol stations and convenience stores. Peters Ice Cream admitted that, from November 2014 to December 2019, it acquired distribution services from PFD Food Services on condition that PFD would not sell or distribute competitors’ single serve ice cream products in various geographic areas throughout Australia without the prior written consent of Peters Ice Cream. They admitted, that if PFD had not been restricted from distributing other manufacturers’ ice cream products, it was likely that one or more potential competitors would have entered or expanded in this market.
The conduct both impeded entry of new competitors and businesses selling the products and consumers lost the benefit this competition would have brought. This is a key priority for us in competition law enforcement across the economy.
Consumer, product safety, fair trading and competition concerns in relation to environmental claims and sustainability
In 2022 we identified consumer and fair trading issues in relation to environmental claims and sustainability as an enforcement and compliance priority. We have again prioritised our work in this area, but we have broadened this to take in our work in competition and product safety, reflecting the economy-wide transition process to be more sustainable.
Misleading claims about environmental or sustainability credentials have an impact right across the economy. Consumers, shareholders and governments are looking for legitimate change not ‘smoke and mirrors’ when it comes to environmental initiatives implemented by businesses. The ACCC can play a role by ensuring businesses tell the truth about the environmental impacts of the goods and services they supply.
Just last week we announced the results of our internet sweep of potential ‘greenwashing’ claims that highlighted key problems in the way some businesses are marketing their environmental credentials.
The report reveals that 57% of the businesses reviewed in the sweep made concerning claims about their environmental credentials. The cosmetic, clothing and footwear and food and drink sectors were found to have the highest proportion of concerning claims among the industries targeted in the operation. Other sectors examined also had a significant proportion of concerning claims.
This is concerning because consumers and businesses are more focused on sustainability to inform their purchasing decisions and are often prepared to pay more for sustainable practices. The findings of the sweep are that some businesses make vague environmental claims that consumers are unable to verify, that some businesses don’t provide sufficient evidence of their claims, set goals without clear plans to achieve them or use third-party certifications they either don’t have or use them in a confusing or unjustified way. Environmental or sustainability claims will only help consumers make informed purchasing decisions if the claims are clear, are not misleading and do not omit relevant information.
Businesses using broad claims like ‘environmentally friendly’, ‘green’, or ‘sustainable’ are obliged to back up these claims through reliable scientific reports, transparent supply chain information, reputable third-party certification or other forms of evidence. Businesses must be able to provide robust evidence for their claims and if unable to do so, then these claims should not be made.
We are also seeing an increasing number of businesses seeking certification for their products or business operations. It is important that businesses clearly explain the relevance of the certification program, and don’t overstate its benefits or implications.
For example, we saw broad claims that a business is “certified” by a scheme when only its products were certified, and not the entire business. We also saw the word “certified” used in relation to an entire product, when only certain components of the product are certified.
This report is just the start of our work. The sweep will help inform the ACCC updating of economy-wide guidance material and education activities. We already have investigations underway for alleged misleading environmental claims and these may grow as we conduct more targeted assessments into the claims identified in the sweep.
We’ve established a new internal taskforce focused on sustainability that will build our expertise, inform and coordinate our efforts across the agency. In particular, the taskforce will examine and seek to influence a range of issues where environmental and sustainability issues intersect with the application of competition and consumer law, including product safety. The ACCC has a wider role in this transition beyond consumer law issues. The transformation to a greener economy is changing industries and creating demand for new infrastructure. This creates potential for restrictive behaviour from incumbents, or disruption that may impact the provision of products and services. Coordination in support of new technology may require competition exemptions. The taskforce will be proactively examining ways in which the ACCC as competition regulator can contribute.
The sweep also identified businesses making clear, defined and substantiated claims. The most effective examples of this included information near the relevant claims, provided accessible click-through links, and presented the evidence in a way that was easy to understand. The objectives of regulators and businesses making legitimate environmental claims are the same – to ensure that there is consumer trust and confidence in the integrity of the claims, and the businesses making the claims. False or misleading sustainability claims undermine consumer trust in all green claims and reduce confidence in the market – something the ACCC is keen to guard against.
Consumer and fair trading issues relating to manipulative or deceptive advertising and marketing practices in the digital economy
Manipulative and deceptive practices in connection with digital services will continue to be a key priority for the ACCC. While many businesses and consumers benefit from digital services, we also see concerning instances of conduct impacting consumers, including “dark patterns” or manipulative sales techniques. They range from the all-too-common difficulty we have all experienced in trying to unsubscribe from a paid service, to the use of our own data to exploit our individual characteristics in making a sale. We are also concerned about the manipulation of online reviews and search results, and the use of algorithms to achieve this manipulation, as well as comparison websites and social media influencers who don’t disclose commercial relationships, including paid promotions.
Last month we conducted a sweep to identify misleading testimonials and endorsements by social media influencers. We are looking at a range of platforms – including Instagram, TikTok, Snapchat, YouTube, Facebook and Twitch – with a particular focus on sectors such as fashion, beauty, travel, health and fitness where influencer marketing is widespread.
In response to an ACCC social media post requesting consumer responses we received more than150 tip-offs from consumers who believed certain influencers had failed to disclose their affiliation with the product or company they were promoting. These tip offs were one source of the influencers that were selected for the sweep.
There is potential for consumer harm if social media influencers do not clearly disclose if there are any commercial motivations behind their posts. The findings from the sweep will inform ACCC compliance and education initiatives and enforcement investigations where we see consumers are at risk of being misled or deceived.
Competition and consumer issues relating to digital platforms
Australian consumers and businesses are increasingly reliant on the products and services offered by digital platforms. Last year in November, the ACCC released the fifth interim report for the Digital Platform Services inquiry.
The report recommends a range of new measures to address harms from digital platforms to Australian consumers, businesses and competition. In addition to consumer and competition specific recommendations for digital platforms, the report also reinforces the ACCC’s support for an economy-wide ban on unfair trading practices to address certain business practices that occur online and offline, including those that involve digital platforms.
Changes such as rapid advances in technology and e-commerce, the significant role of digital platforms in providing information to consumers, collecting their data, influencing their purchasing decisions, increased market consolidation, and increased reliance on intermediaries when making purchasing decisions increase the risk and magnitude of harms to consumers from unfair practices and postdate many existing consumer protection and fair-trading laws.
These harms include, for example, online interface design choices or ‘dark patterns’ that exploit behavioural biases and distort consumer choice, subscription traps, and practices designed to get consumers to agree to unfair or unfavourable contract terms. These practices harm consumers and reduce trust, and multiple international jurisdictions have general or specific protections against such practices.
The report also identified a range of other consumer issues with digital platforms. For example, we have observed a significant increase in scams, as well as harms from fraudulent apps and fake reviews. To better protect Australian consumers and businesses, the report proposes that platforms be subject to new notice-and-action requirements; stronger verification rules for business users and reviews; and new minimum standards for dispute resolution processes.
Like many other competition agencies worldwide, the ACCC has identified that the largest digital platforms have the ability and incentive to engage in conduct that entrenches and extends their market power, undermining competition on the merits with outcomes harming both consumers and business users. This conduct can include platforms impeding customer switching, preferencing their own services, or imposing ‘tying’ and exclusive device pre-installation agreements.
The report recommends new service-specific mandatory codes of conduct for certain designated digital platforms that would regulate such conduct. These measures would complement continued enforcement of Australia’s existing competition laws and ensure that Australian law keeps pace with both fast-moving digital markets and regulatory developments overseas, where many jurisdictions are already acting on these issues having also concluded that ex post enforcement of existing competition law is not sufficient.
Treasury has concluded its consultation on the recommendations from the report and we await policy decisions by Government in this area.
Scam detection and disruption, including supporting the implementation of the National Anti-Scams Centre
The ACCC is committed to support the community in the fight against scams. The ACCC Scamwatch service identifies, reports, and disseminates information about scams amongst government agencies and industry participants to improve the disruption of scams and work to address, the personal and financial damage wreaked by scams on consumers.
We continue to advocate a three-pronged approach to tackling scams. First, we need to stop scammers reaching consumers by disrupting phone calls, SMS, email, social media messaging or the other ways in which scammers contact would-be victims. Second, we need to make sure consumers are supported with up to date information so they can spot a scammer when contacted. Finally, we need measures in place so that if a consumer is convinced to attempt to transfer funds to a scammer they are prevented from doing so.
We will continue to lend our expertise and support to prepare for the establishment of the Government’s National Anti-Scams Centre.
Empowering consumers and improving industry compliance with consumer guarantees, with a focus on high value goods including motor vehicles and caravans
The number one consumer complaint to the ACCC is how people can enforce their rights when a product or service is faulty. The Australian Consumer Law (ACL) clearly sets out certain protections and remedies for consumers and businesses, but many continue to face challenges in enforcing their rights.
This is why we have again prioritised empowering consumers and improving industry compliance with consumer guarantees, with a focus on high value goods including motor vehicles and caravans.
But we believe there is a clear case for law reform to make non-compliance with businesses’ consumer guarantees obligations illegal. Businesses failing to provide an appropriate remedy of repair, replacement, refund or having the service performed again when they are legally obliged to, should be conduct prohibited under the ACL.
This would dramatically change business incentives to comply with their consumer guarantee obligations and more effectively support consumers to secure their statutory consumer guarantee rights.
Given the number of complaints we receive about non-compliance with the consumer guarantees, we believe these is a strong case for law reform on this issue.
Unfair contract terms in consumer and small business contracts
The commencement of laws prohibiting unfair contract terms later this year will be an important change for consumers and small business. It will mean businesses may face contraventions of the law and penalties if they use unfair contract terms in standard form contracts or rely on them in their dealings with customers or small businesses. Prior to this change courts could declare specific terms unfair and therefore void, but they were not prohibited and no penalties could be imposed.
The ACCC has long advocated for this change, so it is no surprise that we will be prioritizing compliance with these requirements. For too long, in our view, many businesses have failed to take the unfair contract provisions seriously. Now that unfair contract terms attract penalties, we expect to see businesses complying with their obligations, and will consider enforcement where appropriate. Businesses have until November this year to review and update their standard form contracts before these penalties apply. These changes will improve small business and consumer confidence that they will not be taken advantage of when entering into or renewing standard form contracts in the future.
The changes also expand coverage to contracts with more small businesses – that is those employing fewer than 100 people or those that have a turnover of less than $10 million per annum. We will work to ensure that consumers and small businesses, including franchisees, enjoy the full benefit of these strengthened laws.
The changes will build upon some successes the ACCC has had under existing law, most significantly last year when the Federal Court declared that 38 contract terms used in contracts entered into by Fujifilm Business Innovation Australia or Fujifilm Leasing Australia with many thousands of small businesses were unfair.
The Court declared the unfair contract terms void and unenforceable, with the companies ordered to stop enforcing these terms in current small business contracts and to cease using these terms in 11 types of standard form contracts with small businesses for the next 5 years.
In anticipation of the new provisions, we are undertaking a review of business terms and conditions across a number of different sectors. This proactive review will be used as the basis for future enforcement cases.
Ensuring that small businesses receive the protections of the competition and consumer laws and small business industry codes of conduct, including in agriculture and franchising is an ongoing priority for the ACCC.
We will continue to prioritise our work in ensuring that small businesses receive the protections of the competition and consumer laws and small business industry codes of conduct, including in agriculture and franchising.
The introduction of industry codes of conduct in the franchising, dairy and horticulture sectors have played a role in providing protection for small businesses with limited bargaining power in their dealings with larger businesses.
We continue to monitor the codes and enforce them when necessary. Already we have had some success. In 2022 the court found that Lactalis Australia Pty Ltd had breached the Dairy Code. Significantly, this was our first dairy code related court outcome.
As well, in February this year, the full Federal Court upheld the ACCC’s penalty appeal in a case against workplace relations advisor Employsure Pty Ltd for making false and misleading representations to small business customers in its online ads that it was, or was affiliated with, a government agency. As a reminder that it is a serious breach of trust to misrepresent a business as being part of the government, and that such breaches of the law will have serious consequences, the court increased the penalty, ordering Employsure to pay $3 million.
We welcome this increased penalty. Penalties must be sufficiently high to deter repeat conduct and deter other business conduct, so they cannot be seen as just an acceptable ‘cost of doing business’.
Conduct impacting First Nations consumers
As I have noted, our work in addressing conduct that impacts First Nations people remains an enduring compliance and enforcement priority for the ACCC. While our work in the past has primarily focused on education and outreach activities for First Nation consumers in northern Australia, we are looking to broaden our engagement work beyond regional areas to metropolitan and peri-urban areas.
Our focus on First Nation issues has now become integral to the larger remit of much of the ACCC’s work as we identify the disproportionate impact of conduct such as scams and misleading advertising and sales practices on First Nation communities and our inquiries into the insurance sector, childcare and mobile regional infrastructure allow us to look at the challenges faced by First Nations people in accessing and acquiring key services.
I am pleased to note that the ACCC is also prioritising increasing opportunities and development support for our First Nations employees. We finalised and published our latest Reconciliation Action Plan in November last year, and we are proud to support our First Nations’ Employee Network, Mipla Tunapri, comprising two words from Aboriginal and Torres Strait Islander languages, meaning we or us and to give knowledge and understanding.
Just as we benefit from listening to and being influenced by our colleagues in Mipla Tunapri, I noted in my foreword to our plan an ambition to elevate this influence by enhancing Aboriginal and Torres Strait Islander voices within the agency and our work.
Cartel conduct
Cartel conduct is intrinsically harmful to our economy, restricting competition, choice and increasing price and we place great importance on detecting and deterring such conduct. This is why our work in cartels remains an enduring priority.
Our cartel program is both proactive and reactive. Proactively we are conducting screening of data relating to markets to identify sectors with likely cartels and analysing markets to identify those with high risk factors which may result in anti-competitive conduct. We also are engaging with industry and public sector organisations about the risks and indicators of cartel conduct in procurement. In addition we receive information about potential cartel behaviour through immunity applications, whistleblower contacts, referral from other agencies and our Infocentre contacts.
The ACCC continues to pursue both criminal prosecutions and civil actions to stop and punish cartels when we find them.
Last year for the first time individuals were sentenced for criminal cartel offences in Australia. Four individuals were sentenced to suspended prison terms in September 2022 after pleading guilty to fixing the Australian dollar / Vietnamese Dong exchange rate and related transaction fees. The money remittance business Vina Money was fined one million dollars in relation to the conduct.
In November 2022, Alkaloids of Australia and its former export manager, Christopher Kenneth Joyce, were sentenced after pleading guilty to several criminal cartel offences relating to anti-spasmodic medications. Mr Joyce was sentenced to two years and eight months’ imprisonment to be served as an intensive corrections order, including 400 hours of community service. He was also disqualified from managing corporations for five years and fined $50,000.
In the waste industry, Bingo Industries and its former managing director and chief executive are awaiting sentencing after pleading guilty to criminal cartel offences relating to price fixing for demolition waste services in Sydney. In December 2022 a competitor, Aussie Skips, was charged with offences relating to the same cartel.
And in November 2022, the Federal Court ordered NQ Cranes to pay a $1 million penalty after it admitted that it had entered into an illegal market-sharing agreement with a competitor.
We observe that our recent litigation successes and education outreach is working as a deterrent to illegal cartel conduct. I can report that we are seeing a significant increase in approaches under our cartel immunity program.
Consumer product safety issues for young children, with a focus on compliance, enforcement and education initiatives
This year, the ACCC will continue the important work of tackling product safety issues for young children. This focus recognises that children are particularly vulnerable to harm from unsafe products.
Continuing this priority will build on our work this year which, to date, has seen 43 recalls of unsafe children’s products, affecting a total of 177,000 items. In June 2022, we also welcomed the introduction of the world first mandatory standards for button batteries.
The successful implementation of the button battery standards—which aim to reduce the risk of severe injury and death, especially in young children—has seen a move to safer products across a range of product categories.
In 2023-24, we will focus on high-risk safety issues for young children, including products containing button batteries, products designed for and used when young children are sleeping, children’s toys and household hazards including toppling furniture. We will support our compliance, monitoring and enforcement work by continuing to provide education and engagement, including through our dedicated baby product safety website, babyproductsafety.gov.au.
As I’ve mentioned, we are also focused on the role product safety can play in sustainability and having markets operate where consumers can have confidence in both the safety and sustainability of products.
I will have more to say about this in June, when we announce the ACCC’s full suite of product safety priorities for 2023-24 at the National Consumer Congress.
Conclusion
The ACCC is charged with enhancing the welfare of Australians through promotion of competition and fair trading and the protection of consumers. These objectives are intertwined – effective competition benefits consumers in better products and services at more competitive pricing and consumer protection and fair trading enhances the conditions for competitive markets. Our compliance and enforcement priorities focus our work to promote these objectives.
Thank you for your time today, for the opportunity to introduce our 2023 – 2024 priorities and for your participation in compliance efforts that address these priorities.