Competition Law News 2007

 

• 10 December - Criminal penalties on the way
  Criminal penalties for certain cartels (including 5 year jail terms) will be introduced in the first half of next year according to the Minister for Competition Policy and Consumer Affairs (Chris Bowen); it appears they may, however, be limited to certain industries (petrol, grocery etc ... details are hazy).

• 5 December - Amcor Immunity unconditional
  Amcor's 'conditional' immunity (from ACCC-initiated action) for whistleblowing on the cardboard box cartel with Visy became 'unconditional' today.  Of course, they are still defending a $300 civil class action from customers.

• 4 December - Samuel calls for quick action on cartels & Chris Bowen
  See Herald Sun article, ACCC tells government to get tough quickly on cartels, discussing speech by Samuel at the Chartered Secretaries Australia conference on 3 December urging quick action to criminalise cartels and noting that the Rudd Government has indicated in would introduce legislation within 12 months.

• Another interesting news items on this topic appeared in the Sydney Morning Herald etc (Labor eyes time for cartel crime) discussing moves by Chris Bowen to introduce criminal penalties shortly

• Another cartel news item by Paul Kerin calls on reform of the AFL's anti-competitive rules, with a focu on their draft rules - Busting the AFL cartel a worthy goal

• 28 November - Qantas fined for price fixing
  Qantas has agreed to pay a criminal fine of $70million (US$61m) for price fixing in relation to cargo-carriage between January 2000 and February 2006. The charges were filed in the US District Court in the District of Columbia in Washington DC today. Qantas pleaded guilty and co-operated and got off more lightly than two of its co-conspirators, British Airways and Korean Airlines, who were each fined US$300m. Qantas now face a class action from its customers. See the USDOJ Press Release.

• 28 November - Penalties of $190,000 on TEAC and Sales Manager for RPM
  The Federal Court imposed $190k penalties against TEAC ($175k) and it's National Sales Manager ($15k) for RPM today. TEAC had endeavoured to stop an independent retailer advertising prices below those specified by TEAC. TEAC agreed to the penalty and cooperated with the ACCC at an early stage, for which they received a discount in penalties.

• 28 November - Statement of Issues on proposed acquisition of Borders by A&R
  ACCC has released statement of issues which is available here.

• 26 November - Victorian Abalone fishermen fined for price fixing
  Penalties of almost $1m were imposed on companies and individuals involved in this cartel regarding pricing of abalone harvested in Victoria. Click here for ACCC media release. Click here for case at AustLII.

• 23 November - New Zealand goes after Pratt
  The NZ Commerce Commission have commenced proceedings against Visy/Pratt for price fixing. See Commerce Commission Media release here

• 2 November – Visy fined $36 million
  No big surprises in the Federal Court this morning; Justice Heerey handed down his judgment in the Visy cartel case and accepted the penalties agreed by the parties ($36m).  He did, however, made clear that he considered the case the worst cartel case ever brought before the Court.  The judgment is available here: http://www.austlii.edu.au/au/cases/cth/federal_ct/2007/1617.html

• 31 October – ACCC will oppose Pact Group acquisition of Brickwood Holdings
  Pact Group has been denied informal clearance following a market review by the ACCC which resulted in them forming the view that the proposed acquisition will SLC competition ‘for the manufacture and supply of PET bottles’ in Qld, NSW and Vic.  Visy and Brickwood are the biggest suppliers of PET bottles (used predominantly by large beverage suppliers) and the ACCC was concerned about the ‘commercial and family relationships between Pact Group and Visy’ and the potential impact this would have on competition between Visy and Pact Group post-acquisition.  While there are other ‘smaller’ PET bottle suppliers, they are unable to supply large scale orders and would not impose effective competitive restraint on the merged entity and Visy.  ACCC also noted significant barriers to entry for the supply of ‘large scale manufacture and supply of PET bottles’.

• 30 October – ACCC not to intervene in Google acquisition of DoubleClick
  The ACCC considered the proposed merger unlikely to SLC in an Australian market, noting in particular that the corporations were not in close competition in the provision of ad services and that there were other competitors likely to constrained the merged entity.

• 29 October – Cycling company guilty of RPM
  Bike importer, Netti Atom, and its general manager, were fined a total of $121,250 for RPM in relation to the distribution of its bicycle products.

• 26 October – Visy CEO quits
  Visy CEO, Harry Debney, resigned yesterday following the recent price fixing admissions and accepted responsibility for his breaches (for which he is expected to face a fine of $1.5m – which is also expected to be paid for by Visy)

• 18 October – Family First Price Fixing Plan
  Family First releases plan to make price fixing a criminal offence with jail terms of up to 10 years by introducing legislation when Parliament next sits (http://www.stevefielding.com.au/html/media/SF210_Oct182007.pdf).

• 17 October – Labor calls for criminal penalties for price fixing
  Rudd re-iterated Labor’s policy in relation to price fixing, stating that Labor has ‘long advocated criminalisation’.

• 17 October – ACCC opposes Kmart/Woolworths Merger
  The ACCC has indicated it would oppose any attempt by Woolworths to acquire Kmart and Officeworks.  While they would not oppose an acquisition of Officeworks by itself (because of limited competitive overlap), the proposal to also acquire Kmart would, in the opinion of the ACCC, substantially lessen competition.

• 16 October – Federal Court for Visy - $36m fine proposed
  The Visy settlement came before the Federal Court today.  The parties (ACCC/Visy) have agreed to penalties of $36m for Visy.  Pratt will escape a personal penalty (based in part on the fact that he will be bankrolling the corporate fine but the CEO and former general manager are expected to face fines of $1.5m and $500,000 respectively.  Justice Heerey can accept or reject the agreed penalties and has reserved his decision in this respect.

• 12 October – No collective bargaining for Dr’s
  The ACCC has lodged a draft objection to the collective bargaining notification lodged by AMA Victoria to negotiate on behalf of certain Visiting Medical Officers at LaTrobe Regional hospital.  Negotiation would include fees.  The ACCC has expressed concern that, as the notification covered 39 doctors and they represented a significant proportion of the specialists providing Visiting services the hospital, this could have an impact on competition and that there was only a marginal public interest justification for the arrangement.

• 8 October – Pratt/Visy admit price fixing
  Richard Pratt has admitted illegal cartel activity with Amcor in relation to the market for cardboard boxes.  It is expected penalties (not to mention private damages claims) in the order of $30 will follow for Visy; Amcor has previously received ACCC immunity for its cooperation but is being sued in a class action for damages – the same can be expected for Visy.

• 27 September – ACCC allows collective licencing for rights in sound recordings
  The ACCC has re-authorised the Phonographic Performance Company of Australia’s (PPCA) collective licencing arrangements for public performance or broadcast of sound recordings and music videos.  Licensors include Sony BMG, EMI, Universal and Warner.  This authorisation is subject to some conditions which the ACCC considers necessary to ensure a ‘net public benefit’ – as required for authorisation.  The public benefit is said to include cost savings in administration, monitoring and negotiation – both for copyright holders and users – and that it would facilitate compliance with copyright laws.  On the flip-side, it removes the competition that would otherwise exist if copyright owners competed to licence music rights and may give PPCA market power because of limited alternatives open to copyright holders.  The conditions imposed by the ACCC include requiring PPCA to make public a list of sound recordings distributed and the fees attached, and recordings it did not distribute licence fees for, which could assist users in determining whether to deal with individual copyright holders or the PPCA and provide greater transparency about the blanket licences.  Other conditions include requiring PPCA to include alternative dispute resolution procedures in its complaints handling policy, requiring record companies to develop guidelines setting out the circumstances in which they (individually) would consider entering into direct licences and providing written notice to licencees of proposed fee increases and other material changes to the licences.

• 24 September – Bill receives assent
  The Trade Practices Legislation Amendment Bill (No 1) 2007 received assent today – it enters into force the day after assent (25 Sept) so the modified s 46 plus the new predatory pricing provisions will now be law.

• 19 September – Bill passes House
  Just before 6pm today the Trade Practices Legislation Amendment Bill (No 1) 2007, with the Senate predatory pricing amendments, passed through the House.  It will now become law one day after receiving Royal Assent.  This represents the most radical change to s 46 since 1974; and has some potentially serious flaws.

• 18 September – Bill passes Senate
  The Trade Practices Legislation Amendment Bill (No 1) 2007 passed through the Senate today with the predatory pricing amendments.

• 18 September – Microsoft v the EU
  Microsoft has lost its EU appeal against a decision that it has abused its monopoly power (the EU's equivalent to our s 46 ... just a tad more effective) and fined nearly half a billion Euro's - plus costs (largest some ever in EU history). The conduct involved a bundling of its media software player with its Windows product said to be designed to lock out competition in the market for media players. It also involved the use of Windows to lock out competition in the market for workgroup servers. Microsoft has previously faced similar adverse judgments in the US. I will try to provide more details shortly

• 17 September – Predatory Pricing in the Senate
  The amendment to the amendment bill was formally introduced into the Senate today.

• 10 September – ACCC alleges RPM against SKINS
  The ACCC has instituted proceedings in the Federal Court against Skins Compression Garments Pty Ltd alleging, amongst other things, that Skins engaged in RPM by inducing and attempting to induce a sporting retailer in Melbourne not to advertise a 20% discount off the RRP of the goods and that Skins withheld supply to the retailer because they did advertise the 20% discount.

• 30 August – ACCC authorises ‘Casual Mall Licensing Code of Practice’
  The Code places restrictions on when a ‘shopping centre proprietor can grant a casual mall license to a competitor of an existing tenant’.  The ACCC considered the restrictions minimal (relating only to competing premises opposite to or adjacent to an existing tenant) and then only in limited circumstances.  The ACCC also considered a public benefit would result from the code by ‘balancing the reasonable and consistent treatment of permanent retail tenants with the introduction of casual mall licences’ which was, amongst other things, better for business certainty.

• 30 August – ACCC High Court victory on government immunity
  The ACCC has won a High Court case, successfully arguing that private-sector companies are not immune from competition policy when dealing with government departments (note that government departments carrying on business are not immune from competition policy, but if not carrying on a business they are).  The case involved Baxter Healthcare and arose from a Full Federal Court decision that ‘if the State health purchasing authorities with which Baxter was dealing were entitled to Crown immunity, Baxter was entitled to “derivative” Crown immunity’ and was protected from ACCC proceedings (ACCC News Release 9 Feb).  Baxter was alleged to have engaged in misuse of market power and exclusive dealing and at first instance Justice Allsop indicated he would have found them guilty of this conduct absent the immunity.  The case now returns to the Federal Court … it will be an interesting one to watch …

• 24 August – ACCC brings price-fixing action against stevedores
  The ACCC has instituted proceedings against former Patricks companies and senior executives alleging contraventions of s 45, including price fixing.  The alleged agreements involved acquiring and sharing various stevedoring facilities.

• 24 August – ACCC allows citris growers to collectively bargain
  Last month three citrus growers lodged the first collective bargaining notification under new notification provisions which came into effect 1 January 2007. On Friday the ACCC indicated that it would not object to the notification and protection from prohibition begins tomorrow (28 August). On 20 August the Australian Newsagents Federation lodged the second collective bargaining notification, proposing to negotiate contracts on behalf of its members in WA with publisher, Western Australian Newspaper.  The ACCC subsequently indicated it would not object to the notification

• 21 August – ACCC brings price-fixing action against ANZ
  The ACCC has instituted proceedings in the Federal Court against ANZ alleging engaged in unlawful price fixing.  According to today’s ACCC Press Release: Mortgage Refunds was a mortgage broker which refunded its customers a part of the commission it received from lending institutions. The ACCC alleges that the ANZ Bank sought to reach an agreement with Mortgage Refunds to limit its refunds to customers as a condition of it continuing to deal with the bank. The ACCC seeks a declaration that ANZ engaged in price fixing in contravention of the TPA, an injunction restraining ANZ entering into similar arrangements and penalties for the alleged contravention.

• 21 August – Petrol Inquiry
   The public inquiry into petrol prices opened today.  Michael Delaney, CEO of Motor Traders Association, gave evidence that he believed Shell and Caltex were working with supermarket partners Coles and Woolworths to force BP and Mobil out of the market.  Note that these arrangements would (arguably – if the parties were not related) constituted third line forcing absent notification (we’ll discuss this soon).

• 15 August – Merger knocked back by ACCC
  It’s not often a merger is knocked back by the ACCC so it’s noteworthy when it is.  PMP and McPherson’s book printing businesses proposed a joint venture (involving share acquisitions between the companies which brought it within the merger provisions of the TPA) to operate a combined book printing business.  Using its informal merger clearance process the ACCC knocked back the merger (this does not prevent the parties merging (or trying to) – but if they choose to merge they can be pretty confident the ACCC will bring an action challenging it) out of concern it would substantially lessen competition ‘for the supply of mono (black and white) offset book printing.’

• 15 August – Trade Practices Amendment (Small Business Protection) Bill 2007
  The Trade Practices Amendment (Small Business Protection) Bill 2007 was introduced into the House by Peter Costello today.  If passed, the bill will permit the ACCC to take action on behalf of person who have suffered, or are likely to suffer, loss as a result of a secondary boycott (this is not the same as simply bringing an action against the offending party (which they can do) but bringing representative action to recover loss on behalf of those who have suffered). The ACCC can already do this in relation to the other forms of anti-competitive conduct we discuss in this unit.   We are not studying secondary boycotts as part of the unit, so you are not required to be familiar with this bill - but it's useful to have a general idea of what it's about (it’s politically divisive legislation given that secondary boycotts crop up primarily in relation to industrial disputes – some have argued the provisions should be moved out of Part IV of the TPA and into industrial legislation (the Treasurer rejects this approach in his second reading speech)).

• 13 August – Funeral price fixing!
  Penalties have been awarded against the ‘International College of Celebrancy’ and its director for attempting (unsuccessfully) to fix prices of funeral ceremonies by funeral celebrants in the Melbourne metropolitan area!  The action was brought under the Competition Code of Victoria

• 10 August - Criminal Cartels ... just around the corner?
  In the ‘proposed legislation’ for the Spring Sitting (which run until 6 December) on the Prime Minister’s website, we see legislation introducing criminal penalties for serious cartel conduct. The key legislation includes:

  • Trade Practices Amendment (Cartel Conduct and Other Measures) Bill
    This will ‘implement recommendations from the Dawson Review to introduce criminal penalties for serious cartel conduct’ [we still don’t know how]
  • Federal Court Amendment (Criminal Jurisdiction) Bill
    This will ‘facilitate the effective exercise by the Federal Court of new indictable criminal jurisdiction in relation to serious cartel conduct which will be granted by proposed amendments to the Trade Practices Act 1974’

  The introduction of these bills was also flagged by Fran Bailey (Minister for Small Business and Tourism) in Parliament on Wednesday when she said that the ‘government will shortly be moving to introduce legislation imposing criminal penalties for serious cartel conduct’ (p 80 Hansard).

• 9 August 2007 - Amendment Bill in the Senate
  The Trade Practices Legislation Amendment (No 1) Bill 2007 was introduced into the Senate and Senator Coonan delivered the second reading speech – debate was adjourned

• 8 August 2007 - Amendment Bill in the House
  The Trade Practices Legislation Amendment (No 1) Bill 2007 had its second and third readings in the House on Wednesday 8 August - proposed amendments by Labor were defeated and they otherwise supported the bill while labelling it 'cosmetic'. For details see the main discussion or this site: http://parlinfoweb.aph.gov.au/piweb/browse.aspx?NodeID=217
  

  3 August 2007 - Alcohol Price Fixing
  ACCC accepts court-enforceable undertakings from hotelier in Ayr'
  The ACCC accepted court-enforceable undertakings (we'll learn more about these later) from a hotelier in Ayr who attempted to fix the price of alcoholic beverages with other hoteliers. Some of you - Geelong-based students in particular - will remember similar proposals among Geelong night-clubs a couple of years ago (although this might have been motivated by a sense of community benefit rather than profit - in an attempt to reduce public drunkenness and its negative side-effects it is price-fixing nonetheless and (absent authorisation) prohibited by the Act). For the press release see: http://www.accc.gov.au/content/index.phtml/itemId/794254/fromItemId/2332

• 27 July 2007 - C7 loses
  C7 lost its case against News Ltd, PBL, Telstra and others regarding its claim that anti-competitive conduct by those parties had led to the failure of the C7 business (which produced and distributed sports channels for Australian pay television). Justice Sackville in the Federal Court dismissed claims that there was an anti-competitive agreement in contravention of s 45 or that there was a misuse of market power in contravention of s 46.

  
  5 July 2007 - Anti-competitive conduct by surgeons
  The Federal Court imposed penalties of $110,000 on two Adelaide surgeons as a result of anti-competitive conduct designed to prevent a newly qualified surgeon supplying services in the market (action was taken under the SA competition code equivalent to s 45 which permits action against individuals and not just corporations)

• 29 June 2007 - Resale Price Maintenance alleged
  The ACCC has instituted legal proceedings against TEAC, alleging RPM in relation to a number of its goods, including televisions. We will be discussing RPM in detail in topic 11.

• 27 June 2007 - Collective Bargaining Authorisation for Potatoes!
  The ACCC granted a final authorisation allowing Victorian Potato Grower Council members to collectively bargain the terms of their contracts with potato buyers (inc processors and wholesalers) on the basis it would produce public benefits such as more efficient outcomes and would have only a minor (if any) effect on competition. This decision was made pursuant to the new streamlined collective bargaining authorisation system - we will discuss this later in the unit.

• 15 June 2007 - ACCC to Inquire into Petrol Prices
  The ACCC announced it would commence and inquiry into petrol pricing - this will consider, amongst other things, the extent of competition in the industry.