Overview of developments in competition, antitrust and consumer law in Australia expected over the next 12 months. The presentation covers developments at the ACCC, status of the Harper Competition Reforms, substantive competition litigation, developments under the Australian Consumer Law, and other developments to note

1. Competition and Consumer Law Update
Every cloud has a silver lining…
Dr Martyn Taylor
Partner
March 2016

2. Overview
• Developments at the ACCC
• Status of the Harper Competition Reforms
• Substantive competition litigation under Part IV
• Developments under the Australian Consumer Law
• Other developments to note… and expect !
Whether the ACCC wins or loses… we get greater legal clarity & certainty
2

3. Developments at the Australian Competition and
Consumer Commission
3

4. 4
How the ACCC works in practice…
• The ACCC comprises an independent statutory Commission of
eight Members and four Associate Members.
• The Commission is supported by around 700 staff structured into a
number of Divisions and Groups.
• Possible breaches of competition law come to the ACCC’s
attention through complaints and information from members of the
public, the media, staff and other agencies.
• The staff of the ACCC are responsible for investigating anti-
competitive conduct and making recommendations to the
Commission via a ‘staff paper’.
• ACCC decisions are made through formal Commission meetings.
Only the Commission may decide to commence legal proceedings.
• The relevant sub-committee of the Commission considers the staff
paper and makes decisions, escalating to the full Commission if
necessary for matters of high importance or complexity.
Enforcement
Committee
Enforcement
& Compliance
Group
Full
Commission
Commission
Staff

5. Staffing changes at the ACCC
• Budgetary pressures have impacted the ACCC
– Pressures on ACCC’s $175m budget have lead to reductions in staff
– Restructuring of the organisation and streamlining of various teams
• Rod Sims is in the final year of his current 5 year tenure
– ACCC has taken a tough and strategic approach to enforcement.
Prepared to litigate more frequently, even when success is not assured
– Emphasis on high quality and principled decision-making, but also a
focus on ensuring that decisions are pragmatic and more commercially
nuanced (a legacy of the Metcash decision)
• Appointment of ACCC’s first chief economist in late 2015
– Sound economics will continue to underpin ACCC decisions; promoting
transparency and predictability
• Appointment of new ‘Agricultural Commissioner’ in 2016
5
Chairman
Rod Sims
Deputy Chair
Delia Rickard
Deputy Chair
Michael Schaper
Commissioner
Christina Cifuentes
Commissioner
Sarah Court
Commissioner
Roger Featherston
Commissioner
Jill Walker
Commissioner
Mick Keogh
and Four Associate Members

6. Streamlined ACCC structure (as at Dec 2015)
6

7. ACCC’s enforcement priorities for 2016-17
Enduring priorities
• Cartel conduct
• Misuse of market power
• Anti-competitive agreements and
practices
• Product safety issues
• Consumer issues affecting indigenous
consumers
Strategic priorities
• Agricultural sector
• Health and medical sector
• Government procurement
• Small business
• Consumer products
• Vulnerable consumers
7
Each year, the ACCC prioritises its enforcement activity within its budgetary constraint based
on those sectors and behaviours it considers are most deserving of regulatory attention.

8. Status of the Harper Competition Reforms
8

9. What was the Harper Review ?
• First comprehensive competition review in 20 years
– Policy concern regarding declining Australian productivity
– Hilmer Reforms in 2006 delivered strongest growth rates in OECD
– Previous reviews had limited terms of reference (eg Dawson Review 2003)
– Extensive consultation occurred under very broad Terms of Reference
• Ambitious 12 month timeline
– Liberal party 2013 election campaign pledged ‘root and branch’ review
– Sweeping Terms of Reference released in March 2014, followed by
appointment of panel members
– Issues paper released April 2014, leading to around 350 submissions
– Draft report released September 2014
– Final report released March 2015
– Government response released November 2015
9
Chairman
Ian Harper
Panel member
Peter Anderson
Panel member
Su McCluskey
Panel member
Michael O’Bryan

10. Reforms to competition policy
10
Competition principles
New overarching competition principles will be adopted by the Australian commonwealth,
state and territory governments within the existing National Competition Policy (NCP)
under COAG.
Now
Role of government
The new NCP will include updated competitive neutrality principles, including a
requirement for each COAG government to have an independent complaint body.
Soon
Regulatory reviews and
restrictions
Federal competition payments may encourage states and territories to reduce regulation
in priority areas.
Reforms will target excessive planning regulation, retail trading hour restrictions, and
pharmacy ownership and location rules.
Later
Parallel importing
The government will remove restrictions on the parallel importing of books.
Announced reforms will allow greater importing of used motor vehicles from 2018.
Now
Human services
The Productivity Commission will consider competition principles in the delivery of health,
education and community services.
Reforms will promote choice and innovation.
Later
Transport services
Long-term reforms to road transport will promote more cost reflective road pricing.
Reforms to shipping have been deferred for further consideration.
Later
Utility services
Federal competition payments may encourage states and territories to implement the
National Water Initiative.
COAG will continue to finalise the Energy Market Reform Agenda.
Soon
Intellectual property
The Productivity Commission will finalise its review of intellectual property laws by August
2016.
Subsequent reform will complement the government’s innovation agenda.
Soon

11. Reforms to competition laws
11
Legislation
An exposure Bill is being drafted to simplify various provisions of the Competition and
Consumer Act 2010 (Cth).
Now
Cartel conduct
Simplification of the cartel and exclusive dealing provisions will occur, including repeal of
the exclusionary provision restrictions.
Soon
Vertical conduct
Third line forcing will have a competition test.
Resale price maintenance will be notifiable.
Soon
Price signalling The price-signalling provisions will be repealed. Soon
Unilateral conduct
The government has announced it intends to make a significant reform to section 46, but
the level of controversy suggests that this issue will be the most fiercely contested.
Later
National access regime
The government will implement the Productivity Commission report on the National
Access Regime of February 2014.
Now
Mergers
The government is preparing an exposure draft Bill to address concerns with the formal
merger review and authorisation processes.
Now
Authorised conduct
The authorisation, notification and collective bargaining procedures will be streamlined,
including a new block exemption power.
Soon
Private rights
Private litigants will be able to rely on admissions of fact in other proceedings, thereby
assisting class action proceedings.
Soon

12. Reforms to competition institutions
12
National competition
policy body
The National Competition Council may be replaced by a new Australian Council for
Competition Policy to oversee policy reform.
Soon
Access and pricing
regulator
COAG may consider the transfer of certain ACCC functions into a single national ‘Access
and Pricing Regulator’.
Later
ACCC procedures
The ACCC will follow a media code of conduct.
The ACCC will also improve its communications with small businesses.
Now

13. Controversy over misuse of market power reforms
What happened?
• Harper Review recommended major
reforms to section 46 – see below
• Minister Bruce Billson took a proposal to
Cabinet in August 2015 and was blocked by
Tony Abbott, following various lobbying
• The Government’s response in November
2015 recommended further consultation by
Commonwealth Treasury
• Treasury undertook further public
consultation over the period December
2015 to February 2016, receiving 86
submissions
• Government announced on March 16 that it
will adopt the Harper Review proposal.
What is the key concern?
• Historically, consideration was repeatedly
given to including an ‘effects test’ in s46,
but reviews recommended against this
• Small business was concerned that section
46 does not provide sufficient protection
and again repeated this submission
• ACCC was concerned that section 46 is
difficult to effectively enforce, so sought to
reform the concept of ‘taking advantage’
• Harper Review proposed substantial
reforms, largely adopting ACCC’s solution
• Business Council considered ACCC’s
reforms would create significant uncertainty
and impose material compliance costs
PP:1979806913
Harper Review: A corporation that has a substantial degree of power in a market must not engage in conduct
if the proposed conduct has the purpose, or would have or be likely to have the effect, of substantially
lessening competition in that or any other market. [NB. Main difficulty with this is legitimate fierce competition]

14. What happens next ?
14
• Implementation will be affected by the political
priorities of the Government in an election year
• The policy debate around section 46 has become
particularly politicised, but the Government
announced on March 16 that it will adopt the full
Harper Review proposal.
• Draft exposure Bill is currently being drafted and
should be released for consultation mid year.
• Seems unlikely that a Bill will be finalised and
enacted before the federal election later this year
(particularly if there is a double dissolution election in
the middle of the year, as has been suggested).
• What happens will turn on the result of the election,
although some changes may have bipartisan support.

15. Substantive competition litigation under Part IV
15

16. Misuse of market power / exclusive dealing
ACCC v Visa [2015] FCA 1020
• Pleaded as a misuse of market power
and exclusive dealing. Visa admitted
exclusive dealing and paid a penalty of
AUD 18 million plus AUD 2 million costs.
• Visa Inc supplied to financial institutions
on the condition that they did not acquire
dynamic currency conversion services for
Visa transactions from Visa competitors.
• This conditionality is prohibited under
section 47(2) where it has the effect of
substantially lessening competition (SLC).
Visa admitted that it did SLC.
• The ACCC’s allegation under s46 was
that Visa had taken advantage of
substantial market power by blocking
certain transactions by Visa cardholders
with the purpose of harming competitors.
This allegation was dropped by the ACCC
in the settlement with Visa.
ACCC v Pfizer [2015] FCA 113 on appeal
• Pleaded as a misuse of market power
and exclusive dealing. The ACCC lost in
the Federal Court (FC) and appealed to
the Full Federal Court. Appeal was heard
in Nov 2015 with judgment reserved.
• Pfizer provided a rebate scheme for its
existing drug ‘Lipitor’ to incentivise
pharmacies to continue to acquire from
Pfizer once Pfizer’s patent expired.
Pfizer also engaged in direct supply and
adopted a bundling strategy.
• The FC held that Pfizer did not have an
anti-competitive purpose (under s46), or a
purpose of SLC (under s47), but rather
had a purpose of promoting its own
products for its own corporate survival.
• While documentary evidence suggested
blocking, the FC was persuaded by
alternative explanations in oral evidence.
16

17. Cartel conduct – ongoing civil prosecutions
ACCC v Cascade Coal (Listed: 4 April)
• ACCC is alleging bid rigging conduct
involving mining exploration licences in
NSW. ACCC has commenced action
against 11 respondents, including Paul
and Moses Obeid.
• ACCC alleges that Cascade entered into
a contract, arrangement or understanding
with other entities that they would
withdraw from the tender process. In
return, Cascade would acquire certain
land and grant an interest in a mining
venture to certain third parties.
• The ACCC investigation followed a high
profile report by the NSW Independent
Commission Against Corruption (ICAC).
• Much of the conduct occurred before the
criminal prohibition against cartel conduct
came into force in 2009, hence the ACCC
is favouring a civil prosecution.
ACCC v Colgate Palmolive (Listed: 7 June)
• ACCC is alleging Colgate-Palmolive,
Unilever Australia, and PZ Cussons
Australia entered into arrangements to
stop supplying standard concentrate
laundry detergents and to only supply
ultra concentrate from first quarter 2009.
• ACCC alleges that the groups agreed to
sell ultra concentrates for the same price
per wash as the equivalent standard
concentrates and not to pass on cost
savings to consumers.
• ACCC alleges that the arrangements
covered brands including Cold Power,
Radiant and Omo and had a significant
effect on competition in an industry
valued at almost $500m per annum.
• ACCC alleges Woolworths and Paul
Ansell (an ex-Colgate sales director) were
knowingly concerned.
17

18. Cartel conduct – interesting outcomes
ACCC v Aust. Egg Corp. [2016] FCA 69
• Pleaded as attempt to induce a
contravention of the cartel provisions.
ACCC lost in the Federal Court (SA) and
has appealed to the Full Federal Court.
• AECL alleged that AECL, Farm Price and
Twelve Oaks Poultry had attempted to
induce AECL egg producers to take
action to address and correct an
oversupply of eggs.
• The Federal Court held that the ACCC
had not established that the action was
intended to be pursuant to an agreement
or understanding involving mutual or
reciprocal obligations by competing
producers (i.e., insufficient ‘mutuality’).
• The judgement appears to be specific to
the evidence presented in court, but
raises an interesting issue on the level of
mutuality required for attempts.
ACCC v Informed Sources [settled 2015]
• Pleaded as an agreement with the effect
or likely effect of substantially lessening
competition in contravention of s45.
• ACCC successively discontinued
proceedings against various parties after
receiving court enforceable undertakings
• ACCC alleged that fuel retailers used the
Informed Sources to communicate retail
petrol pricing. ACCC alleged that the
near real time manner of communication
was likely to decrease competitive rivalry.
• In settlement, Informed Sources agreed
to make pricing information available to
consumers at the same time that retailers
receive it (eg mobile ‘apps’ could pick up
this information to inform consumers).
• Interesting issues are raised regarding
asymmetric market transparency.
18

19. Treatment of vertical resupply/agency arrangements
ACCC v ANZ Ltd [2015] FCAFC 103
• Pleaded as price fixing under the historic
s45A. The Federal Court dismissed the
claim. The ACCC appealed. The Full
Federal Court dismissed the appeal.
• ACCC alleged that ANZ had required
Mortgage Refunds to limit the amount of
refund it would provide to its customers
when arranging home loans for ANZ.
• ACCC alleged this was price fixing as
ANZ and MR were competitors in the
market for loan arrangement services.
• FC and FFC held that ANZ was supplying
loans and not loan arrangement services,
so ANZ and MR were not in competition
• The case raises the key issue whether a
supplier and its resupplier (or agent) can
be in competition with each other. The
case suggests this turns on the proper
characterisation of the resupply.
ACCC v Flight Centre on appeal to High Ct
• Pleaded as price fixing under the historic
s45A. The Federal Court upheld the
claim. Flight Centre appealed. The Full
Federal Court upheld the appeal.
• ACCC alleged, in effect, that Flight
Centre attempted to induce three airlines
to enter into arrangements not to sell
airfares at prices lower than Flight Centre
• ACCC alleged this was price fixing as
Flight Centre and the airlines competed in
distribution and booking services.
• FC agreed with ACCC. FFC disagreed,
finding no separate market for the supply
of distribution and booking services.
• The case raised the same issue as the
ANZ case, but was decided differently.
Whether agents compete with principals
turns on the proper characterisation of the
services supplied, so turns on the facts.
19

20. Developments under the Australian Consumer
Law
20

21. The Australian Consumer Law (ACL)
• Commenced in January 2011 as a co-operative reform between the
Commonwealth and the States and Territories.
• The ACL is administrated and jointly enforced by the ACCC and the various
State and Territory consumer protection agencies.
• Key elements of the ACL include:
• protections against misleading or deceptive conduct and false or misleading
representations, as well as other unfair practices such as bait advertising;
• protections against unconscionable conduct as well as a national unfair contract terms
law covering standard form consumer and small business contracts;
• a national law guaranteeing consumer rights when buying goods and services,
including consumer guarantees that products will meet certain standards;
• a national product safety law and enforcement system;
• a national law for unsolicited consumer agreements covering door-to-door sales and
telephone sales;
• simple national rules for lay-by agreements; and
• penalties, enforcement powers and consumer redress options.
21 PP:19798069

22. Recent litigation under the ACL
Unconscionable conduct
ACCC v Woolworths (Federal Court)
• ACCC alleges that in December 2014,
Woolworths developed a strategy,
approved by senior management, to
urgently reduce Woolworths’ expected
significant half year gross profit shortfall,
• ACCC alleges Woolworths sought to
obtain payments from a class of 821
suppliers to its supermarket business.
• ACCC alleges that these requests were
made in circumstances where
Woolworths was in a substantially
stronger bargaining position, did not have
a pre-existing contractual entitlement to
seek the payments, and either new or
was indifferent to whether it had a
legitimate basis for the requests.
• ACCC is seeing injunctions, refunds,
pecuniary penalties, declaration, costs.
Misleading representations
ACCC v Reckitt Benckiser (Federal Court)
• ACCC alleged that Reckitt Benckiser
(RB) made misleading representations on
the packaging of each Nurofen Specific
Pain product and on its website that each
product was formulated to treat a
particular type of pain and solely or
specifically treated that type of pain.
• RB admitted that it had engaged in the
contravening conduct and consents to
orders made by the Court.
• The Court ordered RB to remove the
Nurofen Specific Pain products from retail
shelves within 3 months. The Court also
ordered RB to publish website and
newspaper corrective advertising and to
implement a compliance program.
• ACCC agreed to an interim packaging
arrangement with disclosures thereafter.
22

23. Extension of unfair contract terms to small business
• From November 2016, amendments to the ACL will protect small
business from unfair terms in standard form contracts.
• Standard form contracts are contracts that are offered on a non-
negotiated ‘take it or leave it’ basis.
• The law will apply to such contracts enter into or renewed after 12
November 2015 where at least one of the parties to the contract is a
small business (employs less than 20 people) and the upfront price is
less than $300.000 (or $1 million if the contract exceeds12 months).
• Unfair terms include, for example:
• terms that enable one party (but not another) to avoid or limit their
contractual obligations
• terms that enable one party (but not another) to terminate the contract
• terms that penalise one party (but not another) for breaching or terminating
• terms that enable one party (but not another) to vary the terms of the
contract.
23 PP:19798069

24. Review of the ACL, including issues with e-Commerce
• In June 2015, Terms of Reference (TOR) were agreed for an
implementation review of the ACL.
• Consumer Affairs Australia New Zealand (CAANZ) is tasked to
conduct the review with a final report due in March 2017.
CAANZ should publish an issues paper within the next month.
• CAANZ must assess the effectiveness of the ACL provisions
and the extent to which the national consumer framework has
met COAG’s policy objectives.
• The ACCC supports the ACL. The most likely outcome of the
review will be the further strengthening of the ACL in certain
key areas.
• The TOR specifically requires CAANZ to assess the flexibility
of the ACL to respond to new and emerging issues. Issues
with consumer protection on the Internet are likely to be
considered, noting the ACCC has been focussed on this issue.
24

25. Other developments to note… and expect
25

26. The first criminal cartel prosecution in Australia?
• Rod Sims publicly commented in February: “We have around
20 cartel investigations under way at any one time and we
expect one or two criminal prosecutions this year”.
• Criminalisation of cartel conduct occurred in July 2009
– Historic ACCC policy that every cartel is criminal until decided otherwise
– Various reasons why no criminal enforcement has yet occurred, including the
complexity of the legislative provisions and timing of the relevant conduct
• ACCC structure includes a ‘Serious Cartels Group’
– Greater use of search warrants and ‘dawn raid’ powers
– Desire to have a ratio of leniency to prosecutions for deterrent reasons
• Simplification of the cartel provisions is underway
– Harper Competition Review recommendations accepted by Government
– Draft exposure Bill is being prepared for release later this year
26

27. The greater use of merger authorisations?
Current merger procedures Proposed new merger procedures
PP:1979806927
Formal
clearance
Informal
clearance
Formal
authorisation
Applicant Applicant Applicant
ACCC
outside
legislation
ACCC
pursuant to
legislation
Tribunal
pursuant to
legislation
Letter of
Comfort
Statutory
Immunity
Statutory
Immunity
Appeal
Informal
clearance
Formal
authorisation
Applicant Applicant
ACCC
outside
legislation
ACCC
pursuant to
legislation
Tribunal
pursuant to
legislation
Letter of
Comfort
Statutory
Immunity
Appeal
• The greater practicality of merger authorisations may create merger opportunities in more
concentrated sectors of the economy that can demonstrate a high public benefit component.

28. New powers to regulate credit card surcharges
• In February 2016, a new legislative and regulatory framework
was established to ban card ‘surcharge payments’ that are
‘excessive’. The ACCC is the enforcement agency.
• Excessive surcharging by merchants involving an additional cost
passed to the consumer that is above the merchant’s cost of
acceptance of the payment method – may be banned.
• The prohibition will only apply in respect of surcharges that
exceed a level for surcharging permitted under either a Reserve
Bank standard or else set out in regulations.
• The ACCC has been given powers to compel the production of
information by issuing a ‘surcharge information notice’, issue
infringement notices, seek pecuniary penalties and otherwise
seek remedial orders from the court.
28

29. Our global footprint
29

30. 0
Contact us
Dr Martyn Taylor
Partner
Norton Rose Fulbright Australia
+61 2 9330 8056
martyn.taylor@nortonrosefulbright.com
nortonrosefulbright.com
2185357230
Norton Rose Fulbright Australia is a law firm as defined in the Legal Profession Acts of the Australian states and territory in which it practises.
Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity,
are members (‘the Norton Rose Fulbright members’) of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal
services to clients.
The purpose of this communication is to provide general information of a legal nature. It does not contain a full analysis of the law nor does it constitute an opinion of any Norton Rose Fulbright entity on the points of law discussed. You must
take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose Fulbright.