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A Shifting Landscape
Competition Law in 2016
Simon Uthmeyer, Partner
Alec White, Senior Associate
Anna Parker, Senior Associate
Outline
New ACCC priorities in 2016
Legislative changes from Harper Review?
Unconscionable conduct – Application in B2B
Cartel Case Study – ACCC v Renegade Gas
March 2016 Melbourne In-house Counsel Day 2016 2
ACCC Priority areas 2016
March 2016 Melbourne In-house Counsel Day 2016
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Legislative provisions Industries / consumers / providers
• Unfair contract terms • Agriculture sector
• Cartels • Ensuring small business receives benefit from
Industry Codes of Conduct
• Misuse of market power • Vulnerable consumers including indigenous
consumers
• Anti-competitive agreements • New car retailing
• Product safety including recalls of unsafe
products
• Health/medical sector
• Consumer guarantees • Government procurement
• Scams
• Gas inquiry
• Petrol
Note:
Black is retained from 2015
Red is new in 2016
Changes from Harper Review?
Government released response in November 2015
Preparing exposure draft of legislation
Key changes proposed:
New concerted practices prohibition
Removal of per se third line forcing prohibition
Changes to misuse of market power prohibition?
March 2016 Melbourne In-house Counsel Day 2016
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Harper Review – concerted practices
Model legislative provisions in Harper Review Final Report
March 2016 Melbourne In-house Counsel Day 2016
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Harper Review – concerted practices
"The Panel considers that the word ‘concerted’ has a clear and
practical meaning and no further definition is required for the
purposes of a legal enactment"
Jointly arranged or carried out or co-ordinated
Regular and deliberate activity undertaken by two or more
firms, including regular disclosure or exchange of price
information
Not unilateral or mere parallel conduct
March 2016 Melbourne In-house Counsel Day 2016
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Harper Review – third line forcing
Supplying goods or services (or offering a discount / rebate) on
condition that the purchaser will acquire other goods or
services from a third party
Proposed substantial lessening of competition test
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Supplier A Supplier B
Customer C
A supplies to C on
condition that C also
acquires from B
Harper Review – market power
March 2016 Melbourne In-house Counsel Day 2016
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(Screenshots from Google News)
Harper Review – market power
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Treasury consultation - options
Status quo
Options in between
Harper proposal
Unconscionable conduct – Key issues
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Applies to B2B transactions
Flexible and expanding
Potential large penalties
Wide range of transactions
Evolution of Unconscionable Conduct
March 2016 Melbourne In-house Counsel Day 2016
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Equity:
Blomley v
Ryan
CBA v
Amadio
s51AC
Extends
statutory UC
to B2B
s51AA Codification
of unwritten
law on
equitable UC
Expanded
penalties
ACL: s21
Combined
statutory UC for
B2C and B2B
Ancient
times 2010 1986 1998 2014/15
ACCC v Lux (2013)
• $370k penalty
ACCC v Coles (2014)
• B2B
• $10m penalty
ACCC v WOW (2016)
• TBC
s52A Statutory UC
introduced.
Applies to
consumers
1992
Two kinds of unconscionable conduct
March 2016 Melbourne In-house Counsel Day 2016
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Equitable
Unconscionable
Conduct
Statutory
Unconscionable
Conduct
(s21 ACL)
B2C
B2B
Evolution of Unconscionable Conduct
March 2016 Melbourne In-house Counsel Day 2016
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Equity:
Blomley v
Ryan
CBA v
Amadio
s51AC
Extends
statutory UC
to B2B
s51AA Codification
of unwritten
law on
equitable UC
Expanded
penalties
ACL: s21
Combined
statutory UC for
B2C and B2B
Ancient
times 2010 1986 1998 2014/15
ACCC v Lux (2013)
• $370k penalty
ACCC v Coles (2014)
• B2B
• $10m penalty
ACCC v WOW (2016)
• TBC
s52A Statutory UC
introduced.
Applies to
consumers
1992
Equitable UC cases
March 2016 Competition Law in 2016 14
Evolution of Unconscionable Conduct
March 2016 Melbourne In-house Counsel Day 2016
15
Equity:
Blomley v
Ryan
CBA v
Amadio
s51AC
Extends
statutory UC
to B2B
s51AA Codification
of unwritten
law on
equitable UC
Expanded
penalties
ACL: s21
Combined
statutory UC for
B2C and B2B
Ancient
times 2010 1986 1998 2014/15
ACCC v Lux (2013)
• $370k penalty
ACCC v Coles (2014)
• B2B
• $10m penalty
ACCC v WOW (2016)
• TBC
s52A Statutory UC
introduced.
Applies to
consumers
1992
What is unconscionable?
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Taking advantage of
special disadvantage
or vulnerability
Moral obloquy Contrary to
societal norms
Inconsistent with
acceptable
business and
social standards
Unconscionable
Dishonest > Unfair
ACCC v Lux
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ACCC v Coles
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Tier 1 and 2
suppliers
Tier 3 suppliers
(heavily dependent
on Coles)
Coles
Products
$ Payments
$ Rebates
Efficient ordering
quantities rebate
$ Payments
Data sharing
rebate
Profit Gap
Waste and markdowns
Late / short deliveries
How does statutory unconscionable
conduct fit with other provisions?
March 2016 Melbourne In-house Counsel Day 2016
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Unfair
contract
terms Unconscionable
Conduct
Misuse of
Market Power
Cartels Case Study
ACCC v Renegade Gas and
Speed-E-Gas
March 2016 Melbourne In-house Counsel Day 2016
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Cartel Case Study
Mr Hobby,
Managing Director
Mr Wilson,
Sales Manager
Mr Berman,
Managing Director
Mr Smith, Sydney
Branch Manager
March 2016 Competition Law in 2016 21
Cartel Case Study
The communications led to an understanding:
Stay Away Provision
Replacement Provision
March 2016 Competition Law in 2016 22
Cartel Case Study
Once the understanding was reached, the two companies
implemented it internally:
Instructions to staff
Refusing to pay commissions
Warnings to staff
March 2016 Competition Law in 2016 23
Federal Court's finding
The conduct was in breach of the prohibitions against cartel
conduct
Melbourne In-house Counsel Day 2016
March 2016
More information?
March 2016 Melbourne In-house Counsel Day 2016
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Questions
March 2016 Melbourne In-house Counsel Day 2016
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