The likes of Google, Facebook and Amazon could find themselves in the crosshairs of a newly empowered Australian competition regulator, and Rod Sims wants to move fast, the chairman told Lawyerly.
With major reforms to the law on their way, the Australian Competition and Consumer Commission could see its competition caseload double in the new year, Sims warned.
“We’re going to be moving pretty quickly,” he said.
The regulator will have a dedicated 10-person unit to investigate and enforce the new laws, which among other things prohibit concerted practices and lower the bar for proving monopoly cases under section 46 of the Competition and Consumer Act.
The Substantial Lessening of Competition team is headed by Cameron McKean, the current director of the ACCC’s merger investigations branch.
Having lost cases it would likely win under the new laws, the ACCC pushed hard for their passage. The reforms, which were proposed as part of the sweeping Harper review, bring the Australian competition regime closer to the antitrust regimes of other jurisdictions.
“We now have an effective section 46 and concerted practices law. We were significantly behind overseas to our detriment. Now we are more or less in line with laws overseas. We have the laws as we now want them,” Sims said.
The regulator is eager to bring a misuse case under the new powers, and companies with substantial market power should take heed.
“The behaviour that some are concerned about with Google, Facebook or Amazon, that behaviour is the sort of thing we can now take a look at, whereas before we couldn’t,” he said.
Google was fined a record 2.4 billion euros in June by the European Union’s antitrust regulator for favouring its own comparison shopping service over rivals.
Under the new ‘effects’ test of the competition law’s misuse of market power provision, Google’s conduct – which the European Commission said amounted to abuse of its market dominance – would make it a target of the Australian regulator too.
“The stuff they have been taken to court for in Europe, we can now pursue that,” Sims said.
Sims noted that the ACCC was not afraid to go after big companies. It has taken on Heinz, Medibank and Kimberly Clark. It has even brought a case against Google, albeit a consumer one and it lost that at the High Court.
The ACCC brought out guidance last week on how it will interpret the new laws once they come into effect. Under the amendments to section 46, companies with a dominant share of the market, as such, won’t get on the regulator’s radar. Once that market power has the effect of stifling competition, it’s a different story.
Under the new ban on concerted practices, cooperation on prices or other business decisions need not come about through some demonstrable agreement or contract. The bar is much lower, just as it is in the EU.
The enforcer’s recent unsuccessful action against a group of egg producers alleging an illegal agreement to cull hens and correct an oversupply of eggs was a “classic case” that could well stick if pursued again, Sims said, adding however that old cases are “done and dusted.”
The Federal Court in February last year ruled against the ACCC in the egg case, saying that although the regulator had established that the Australian Egg Corp. Ltd had intended that egg producers take concerted action to reduce egg supply, it had not established that there had been an agreement between them.
“The egg cartel case that we lost is exactly why the law is needed,” Sims said. “We didn’t show they actually made a commitment to cull eggs. That is exactly what the law is meant to get at.”
The ACCC has a separate unit devoted to cartel cases that investigates per se illegal price fixing cases, distinct from substantial lessening of competition cases.
Sims told Lawyerly the cartel unit had cases of its own coming down the pipeline, and action in some cases could be announced as early as the end of this year.
The top competition cop named the misuse of market power case brought against hospital giant Ramsay Health in May as another one to keep an eye on, in the wake of the ACCC’s big dollar criminal cartel win against Japanese shipping company Nippon Yusen Kabushiki Kaika.
The Federal Court handed down a $25 million penalty in that case — the first successful criminal cartel prosecution under the law — based on NYK’s turnover, applying a 2007 amendment that enhanced penalties.
The 10-year-old amendment allowed penalties to be as high as $10 million or three times annual profit or, if profit cannot be determined, 10% of turnover.
The fine against NYK “shows courts are willing to apply the law,” Sims said.
“We have to see now what we can get with a bigger company.”
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