ACCCountA report of the Australian Competition and Consumer Commission’s and Australian Energy Regulator’s activities

Report

1 January to 31 March 2013

Australian Competition and Consumer Commission

23 Marcus Clarke Street, Canberra, Australian Capital Territory 2601

© Commonwealth of Australia 2013

ISBN 978-1-921973-70-3

This work is copyright. Apart from any use permitted by the Copyright Act 1968, no part may be reproduced without prior written permission from the Commonwealth, available through the Australian Competition and Consumer Commission. Requests and inquiries concerning reproduction and rights should be addressed to the Director Publishing, Australian Competition and Consumer Commission, GPO Box 3131, Canberra ACT 2601 or by email to publishing.unit@accc.gov.au.

www.accc.gov.au

CONTENTSOverview.......................................................................................................................... 5

1. Maintaining competition..........................................................................................7Maintain and promote competition and remedy market failure 7

Enforcing the Act for businesses and consumers 7Competition enforcement................................................................................7

Maintaining competition in concentrated sectors 9Mergers...........................................................................................................9

Remedy market failure 15Authorisations and notifications....................................................................15

Government engagement 19Private Health Insurance...............................................................................19

2. Protecting consumers and Fair trading................................................................20Protect the interests and safety of consumers and support fair trading in markets 20

Consumer protection outcomes 20Action to protect consumers..........................................................................20Other significant activities.............................................................................24Product safety...............................................................................................26

3. Effective Regulation...............................................................................................29Promote the economically efficient operation of, use of and investment in monopoly infrastructure 29

Energy 29Better Regulation Program............................................................................29Decisions and determinations.......................................................................31

Telecommunications 35Decisions and determinations.......................................................................35Other significant events.................................................................................35Reports Released.........................................................................................36

Fuel price monitoring 36

Rail access 39Decisions and determinations.......................................................................39

Bulk wheat export – access to port terminal services 39

Water 41State Water price approval/determination pre-application consultation.........41

4. Increasing engagement..........................................................................................42Increase our engagement with the broad range of groups affected by what we do 42

Outcomes from International forUMS and conferences 42International partnerships and collaboration.................................................42International cooperation...............................................................................43

Consumer engagement 43Ruby Hutchison Memorial Address...............................................................432013 National Consumer Congress..............................................................43

Consumer Consultative Committee..............................................................44

Business engagement 44Franchising Consultative Committee.............................................................44Small Business in Focus report.....................................................................44Utility Regulators’ Forum...............................................................................44

Major speeches 45

5. Appendices.............................................................................................................46Complaints and inquiries 46

Enforcement outcomes & matters in court 49Litigation commenced...................................................................................49Litigation ongoing..........................................................................................49Litigation concluded......................................................................................52Undertakings accepted, Infringement Notices Paid, Audit Notices Issued....5387B Undertakings.........................................................................................53Infringement Notices.....................................................................................54Audit Notices.................................................................................................54

OVERVIEW1. In his first major public address for 2013 ACCC Chairman Rod Sims, set out the priorities for the

year ahead and also released the updated Compliance and Enforcement Policy. The policy outlines the ACCC's areas of focus and sets out the factors to be taken into account when deciding whether to pursue matters.

2. The ACCC has maintained its priority on competition and consumer issues arising in highly concentrated sectors and in particular the supermarket and fuel sectors. The ACCC is also now focusing more on online competition. This includes conduct which may impede emerging competition between online traders or limit the ability of small businesses to effectively compete online.

3. Some forms of conduct are so detrimental to consumer welfare and the competitive process that the ACCC will always assess them as a priority, These include cartel conduct and anti-competitive agreements, and the misuse of market power. The ACCC will also always prioritise the assessment of product safety issues which have the potential to cause serious harm to consumers.

4. In respect of consumer protection matters the 2013 priorities are:

online consumer issues

the telecommunications and energy sectors

consumer guarantees

consumer protection issues impacting on Indigenous consumers

credence claims particularly in the food industry and carbon price claims.

5. Upholding the objectives of making markets work for everyone, strong enforcement action resulted in proceedings commenced in 5 matters and Federal Court outcomes in another 3 matters. Highlights include:

proceedings instituted against Energy Australia Pty Ltd and four of its marketing agents in relation to their door to door selling practices 

proceedings commenced against Visa Inc and a number of related Visa entities alleging misuse of market power in relation to dynamic currency conversion services

$750 000 penalties awarded against Adepto Publications and its sole owner after they admitted to making false and misleading representations to small businesses about advertising services that were never requested

$50 000 penalty awarded against King Island Meatworks and Cellars Pty Ltd after complaints were made that their meat was not sourced from King Island

a five year disqualification order against the former Director of Crimeguard International Security Systems, Mr Leslie Forsyth Stott, who was found by the Federal Court to have engaged in misleading conduct.

6. The ACCC granted conditional authorisation for Qantas Airways and Emirates to coordinate their air passenger and cargo transport operations and related services. This authorisation applies for 5 years.

7. We also announced that we would not oppose the proposed acquisition of Skywest Airlines by Virgin Australia Holdings. The main factor informing this view was that the merger parties supplied, and were likely to continue to supply, largely complementary services, rather than services that are in direct competition.

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8. The airline sector also featured in our review of consumer contracts along with telecommunications, fitness and vehicle rental industries, as well as some contracts commonly used by online traders and travel agents. Following the industry specific review and engagement, some unfair contract terms used in standard form consumer contracts have been changed or removed. When problems occur in contracts, the ACCC will now consider enforcement action.

9. A new safety standard for portable swimming pools received ministerial approval in January. The standard comes into effect on 30 March 2014. The revised safety standard for baby walkers came into effect on 15 February 2013 and work continues on safety standards for disposable lighters, folding cots, motorcycle helmets, baby bath aids, sunglasses, projectile toys, bean bags, balloon blowing kits and elastic luggage straps.

10. The ACCC hosted the 2013 National Consumer Congress in Sydney which coindided with World Consumer Rights day. This year’s Ruby Hutchison Address guest speaker, Carolyn Bond AO, Co-Chief Executive Officer of the Consumer Action Law Centre, focused on the role of advocacy in empowering, protecting and advancing the interests of consumers.

11. During the March 2013 quarter the ACCC received 49 304 complaints and inquiries from businesses and consumers.

12. We launched our new look website.

13. The Australian Energy Regulator’s published the first two Better Regulation Program newsletters and a program calendar to keep stakeholders informed on the progress of the reform program.

14. Expressions of interest were sought for the AER’s Consumer Challenge Panel (CCP). The CCP forms part of the AER’s Better Regulation reform program and is a key component of the Council of Australian Governments’ energy reform agenda agreed on 7 December 2012.

15. In the telecommunications sector, the ACCC released a draft report on making a final access determination (FAD) for the declared wholesale ADSL service. The service is used by retail telecommunications service providers to provide broadband internet products to consumers and businesses over Telstra’s copper network. The ACCC also directed Telstra to improve four processes that will support the migration of customers onto the National Broadband Network (NBN). The ACCC issued this direction as it considers that Telstra’s proposed processes would not provide appropriate protections to consumers and competition during migration. The direction requires Telstra to resubmit the amended processes to the ACCC within 40 business days.

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1. MAINTAINING COMPETITION Maintain and promote competition and remedy market failure

ENFORCING THE ACT FOR BUSINESSES AND CONSUMERS

Competition enforcement

1.1 In the March 2013 quarter the ACCC was involved in 9 proceedings relating to competition enforcement.

8 cases were carried over from the previous quarter

1 new case was commenced in the quarter alleging misuse of market power

these cases remain ongoing at the end of the quarter.

1.2 These proceedings relate to competition matters in industries including travel, construction and financial services. A complete list is included in the appendix.

1.3 In this period the ACCC also progressed its investigations in the fuel and supermarket industries.

1.4 These actions and outcomes demonstrate the ACCC’s continued focus on maintaining and promoting competition and remedying market failures.

Misuse of market power

VISA INC

Proceedings were instituted in the Federal Court Sydney against Visa Inc and a number of related Visa entities alleging misuse of market power in relation to dynamic currency conversion services (DCC). The ACCC alleges that Visa, the operator of the world’s largest retail electronic payments processing network, misused its market power for the purposes of preventing the expansion of DCC to new merchant outlets in Australia and preventing businesses in Australia from supplying DCC services on ATMs in competition with Visa’s own currency conversion service. The ACCC alleges that Visa earned less revenue when a cardholder selected DCC than when a cardholder used Visa’s own currency conversion service. The ACCC is seeking penalties, declarations and costs.

COURT-ENFORCEABLE UNDERTAKINGS

1.5 In the March 2013 quarter, the ACCC secured one s.87B undertakings for an alleged breach of the Competition and Consumer Act (2010).

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Alleged anti-competitive behaviour

ALL HOMES PTY LTD

On 26 February 2013 the ACCC received a court-enforceable undertaking from All Homes Pty Ltd following concerns that All Homes may have attempted to induce real estate agents to arrive at an understanding about real estate agents’ fees. ACCC concerns arose following an email sent by All Homes to over 1,000 real estate agents in the ACT and Queanbeyan region. All Homes undertook for a period of three years not send or request information to registered real estate agents about a suggested fee or range of fees for real estate agent services in an area, send a letter to each real estate agents who originally received the email advising that they are free to set the prices at which they provide their services, and implement an internal compliance program

NEW COMPLIANCE AND ENFORCEMENT POLICY

1.6 On 21 February 2013 the ACCC released its revised Compliance and Enforcement Policy. The policy outlines the ACCC's priority areas for the year and sets out the factors to be taken into account when deciding whether to pursue matters. A strategic review confirmed many previously identified priorities and added some new areas. Some forms of conduct are so detrimental to consumer welfare and the competitive process that the ACCC will always assess them as a priority, irrespective of which sector of the economy the activity occurs. These are in the areas of cartel conduct, anti-competitive agreements and misuse of market power.

1.7 As a specific area of focus, the ACCC has maintained reference to placing priority on competition and consumer issues arising in highly concentrated sectors and in particular the supermarket and fuel sectors. The ACCC also places emphasis on online competition and consumer issues. This includes conduct which may impede emerging competition between online traders or limit the ability of small businesses to effectively compete online.

1.8 The ACCC's consumer protection priorities are online consumer issues, telecommunications and energy, consumer guarantees, consumer protection issues impacting on Indigenous communities, credence claims particularly in the food industry and carbon price claims. The ACCC will always prioritise the assessment of product safety issues which have the potential to cause serious harm to consumers; and continue to focus on anti-competitive and unconscionable conduct that seeks to exploit or unfairly constrains small businesses in the marketplace.

1.9 In accordance with the new Compliance and Enforcement Policy, the ACCC continues to progress a number of matters in the fuel and supermarket sectors, including those noted below.

Continuing investigations1.10 During the March quarter, the ACCC also undertook significant activity in projects involving fuel,

supermarkets and competition issues in the online retail sector.

INFORMATION SHARING – FUEL COMPANIES

1.11 On 3 May 2012 the ACCC announced it had commenced an investigation into price information sharing arrangements in relation to the retail petrol sector because of concerns that such arrangements may be in breach of the Act.

1.12 The petrol price sharing arrangements allow for the private and very frequent exchange of comprehensive retail price information between the major petrol companies. The ACCC is concerned that this allows petrol retailers to signal price movements, monitor competitors’ responses, and react to them. The ACCC is concerned that these arrangements may lessen price competition in petrol retailing to the detriment of consumers.

SHOPPER DOCKETS

1.13 The ACCC is considering the competition implications of the trend of larger and longer fuel shopper docket offers.

SUPERMARKETS

1.14 In early 2012 following concerns voiced publicly about the conduct of major supermarket chains, the ACCC sought information from supermarket suppliers regarding the way in which they were treated by supermarkets. A range of concerns were voiced and the ACCC sought information

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from the supermarkets regarding some of that conduct. Broadly speaking, a number of suppliers have complained that they are being treated unconscionably by major supermarket chains as well as allegations that the supermarkets are misusing their market power. The ACCC will look closely at these allegations, and expects that considerable work will be required before deciding whether any action ought to be taken.

ONLINE COMPETITION

1.15 The ACCC is continuing to monitor online trading activities and is considering matters that affect competitive behaviour and consumer protection in the online trading environment. Activities by online traders that may be considered as anti-competitive include the misuse of market power, exclusive dealing distribution arrangements and controlling prices through resale price maintenance. The ACCC is examining in further detail, fake online reviews and testimonials which mislead or deceive consumers or provide a business with a competitive advantage.

MAINTAINING COMPETITION IN CONCENTRATED SECTORS

Mergers

1.16 As the ACCC Chairman stated in his speech to the Committee for Economic Development of Australia on 21 February 2013 the ACCC will continue to closely scrutinise acquisitions in concentrated markets. While there are a range of factors to take into account in assessing mergers under section 50 of the Act, market concentration is a key factor. Acquisitions in the supermarket, liquor and hardware sectors by the major supermarket chains will continue to be a focus.

1.17 The impact on competition of proposed and completed mergers and acquisitions is assessed by the ACCC under section 50 the Act, which prohibits mergers and acquisitions that would have the effect, or likely effect, of substantially lessening competition.

1.18 The ACCC does this by providing the merger parties with its view on whether a particular proposal is likely to breach section 50 of the Act. This process is generally known as the ‘informal clearance’ process. Businesses may also apply to the ACCC for formal clearance of mergers.

1.19 The ACCC monitors media daily for news of proposed or actual mergers to identify any transactions that may potentially raise competition issues. Where proposals are identified in the media that have not yet been notified to the ACCC, the ACCC may investigate further.

1.20 The ACCC deals with matters by pre-assessment when it determines they do not require review because the risk of competition concerns being raised is considered low.

1.21 This pre-assessment process enables the ACCC to respond quickly where there are no significant concerns.

1.22 In the March 2013 quarter there were 65 matters considered by the ACCC (51 matters were pre-assessed as not requiring review and 14 matters were reviewed on confidential or public basis).

1.23 Of the 12 matters reviewed publicly all were cleared unconditionally. The ACCC formed the view that it could not make a decision without conducting public inquiries for one confidential review of a merger proposal and cleared another on a confidential basis.

1.24 The ACCC assessed 24 requests from the Foreign Investment Review Board (FIRB) in the quarter. This is an increase of 33 per cent (up from 18) on the previous quarter.

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Table 1:   Matters assessed and reviews undertaken – 1 January to 31 March 2013

Confidential

Public Total

Pre-assessed 1 January – 31 March 2013 51 0 51

Total reviews undertaken 1 January – 31 March 2013 2 12 14

Total reviews can be broken down into the following categories:

Not opposed 1 12 13

Finished—no decision (including withdrawn) 1 1 1

Opposed outright

Confidential review—ACCC concerns expressed

Resolved through undertakings

Variation to undertaking accepted

Variation to undertaking rejected

Total matters assessed and reviews undertaken 53 12 65

Note: Only public matters can be resolved with undertakings

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SIGNIFICANT MERGER DECISIONS THIS QUARTER

Merger COMMONWEALTH BANK / AUSSIE HOME LOANS

Case study – Commonwealth Bank Australia’s proposed acquisition of remaining issued capital of Aussie Home Loans

On 11 January 2013 the ACCC commenced a review of the Commonwealth Bank’s proposal to acquire the remaining 67% of the issued capital in Aussie Home Loans. The Commonwealth Bank already owned 33% of the shares in Aussie Home Loans.

In addition to providing other banking services, Commonwealth Bank supplies home loans directly to consumers and also through indirect lending channels via intermediaries such as mortgage brokers.

Aussie Home Loans operates a franchise network of approximately 750 mortgage brokers, providing a distribution channel for bank and non-bank lenders for the supply of home loan products and other retail banking and insurance products. Its brokers have access to a range of lenders’ mortgage products, and receive the benefit of Aussie’s brand recognition as well as administrative and technical support services.

In addition, these mortgage brokers may supply ‘white label' products, financed by a third party lender such as Commonwealth Bank, but rebranded as own brand home loan products of Aussie Home Loans.

On 21 March 2013 the ACCC announced it would not oppose the proposed acquisition.

The ACCC assessed the effects of the proposed acquisition in the context of the national market for the supply of home loans and the national market for the supply of mortgage distribution services. The supply of mortgage distribution services refers to mortgage aggregators and broker head groups providing lending institutions access to their networks of aligned brokers. The ACCC did not consider it necessary to form a definitive view as to whether there was a separate market for the supply of mortgage referral services which provide services and advice to consumers seeking to obtain a mortgage product.

The ACCC considered that the proposed acquisition would be unlikely to substantially lessen competition in any relevant market.

In forming this view the ACCC took into account the competitive constraint arising from the presence of a number of alternative suppliers of home loans, including bank and non-bank lenders, and alternative suppliers of mortgage distribution services, including other broker head groups and mortgage aggregators.

The ACCC concluded that while the Commonwealth Bank is likely to have the ability and incentive to increase the volume of, for example, ‘white label’ home loan products that it would supply through Aussie Home Loans, this would not give rise to a substantial lessening of competition. Aussie Home Loans brokers make up only around 6% of Australia's mortgage brokers, and there are many other distribution channels through which lenders can access brokers and borrowers.

The ACCC consulted widely with a range of interested parties, including bank and non-bank lenders, mortgage aggregators, broker head groups and industry bodies.

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Bertelsmann SE and Co KGaA and Pearson Plc - proposed combination of global book publishing businesses (Random House & Penguin)

- On 11 January 2013 the ACCC commenced a review of Bertelsmann SE and Co KGaA and Pearson Plc proposal to combine their global book publishing businesses (Random House & Penguin).

- The ACCC consulted market participants and overseas regulators also reviewing the proposed transaction and concluded that:

o in the market for the acquisition of authors rights remaining publishers would be likely to competitively constrain the merged firm post merger, and that authors face low barriers in switching to alternative publishers;

o in the market for the supply of books by publishers remaining publishers would be likely to competitively constrain the merged firm post merger, and

o in the market for supply of book sales and distribution services publishers can undertake distribution and/or marketing of their books in-house or outsource these functions to a third party and remaining publishers would be likely to competitively constrain the merged firm post merger.

o in the market for the retail supply of books that while the merged entity will be vertically integrated into online retailing it would not have the incentive to foreclose retailers from access to its catalogue.

- The ACCC did not consider it necessary to form a definitive view on whether there were separate product markets based on book format (printed or electronic) or the sales channel (online or bricks and mortar retailers).

- On 8 March 2013 the ACCC announced it would not oppose the proposal by Bertelsmann SE and Co KGaA and Pearson Plc to combine their global book publishing businesses (Random House & Penguin) having formed the view that it was not likely to substantially lessen competition in any market.

Virgin Australia Holdings Limited - proposed acquisition of Skywest Airlines (Australia) Pty Ltd

- On 2 November 2012 the ACCC commenced a review of Virgin Australia Holdings Limited’s proposal to acquire 100 per cent of the shares in Skywest Airlines Limited, the Singaporean holding company for Skywest Airlines.

- On 31 January 2013 the ACCC announced it would not oppose the proposed acquisition as it considered it was unlikely to substantially lessen competition in any relevant market.

- The main factor informing this view was that the merger parties supplied, and were likely to continue to supply, largely complementary services, rather than services that are in direct competition.

- The ACCC considered the effects of the proposed acquisition on the supply of domestic air passenger transport services, international air passenger transport services and domestic air charter services. In each case the ACCC focused on services provided to or from Western Australian (WA) destinations.

- At the time of the review, Virgin offered Australia-wide domestic regular passenger transport (RPT) services, while Skywest offered a localised RPT network limited to domestic routes to and from destinations within WA. The direct overlap between Virgin Australia and Skywest's services was limited to a single route between Perth and Broome, and Skywest provided fewer than five frequencies per week on this route. Skywest operated only one international service (between Port Hedland and Denpasar, Bali), and Virgin did not operate on that route. Finally, while domestic air charter services were a key part of Skywest’s business, outside of its pre-existing Corporate Alliance with Skywest, Virgin had a very limited charter offer.

- The ACCC also took into account the competitive constraint arising from the presence of other airlines operating in WA, including between Perth and Broome.

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Statement of Issues

1.25 If ACCC has come to a preliminary view that a proposed merger raises competition concerns that require further investigation it will publicly release a Statement of Issues.  A Statement of Issues published by the ACCC is not a final decision about a proposed acquisition, but provides the ACCC’s preliminary views, drawing attention to particular issues of varying degrees of competition concern, as well as identifying the lines of further inquiry that the ACCC wishes to undertake.  A Statement of Issues provides an opportunity for all interested parties (including customers, competitors, shareholders and other stakeholders) to ascertain and consider the primary issues identified by the ACCC. It is also intended to provide the merger parties and other interested parties with the basis for making further submissions should they consider it necessary.

1.26 In this quarter the ACCC publicly released a Statement of Issues on the following matters: H J Heinz Company Australia Limited proposed acquisition of Rafferty's Garden Pty

Ltd issued on 7   February 2013

- The Statement of Issues outlined the  ACCC’s preliminary view that the proposed acquisition would result in the combination of the two largest suppliers of wet and dry infant food in Australia and would remove Rafferty’s Garden as one of Heinz’s closest and most vigorous and effective competitors in the wet and dry infant food markets.

- The ACCC is investigating whether the removal of Rafferty’s Garden as a competitor would be likely to substantially lessen competition, paying particular attention to the height of barriers to entry or expansion and the degree of supermarket countervailing power.

- The ACCC will announce a new final decision date following consideration of additional information provided by the merger parties.

Virgin Australia Holdings Limited and Tiger Airways Holdings Limited proposed joint venture to operate Tiger Airways Australia issued on 7 February 2013

- The Statement of Issues outlined the ACCC’s concerns relating to the risk of muted competition following the reduction in the number of airline groups within Australia from three to two (excluding regional airlines), and the loss of Tiger Australia as an independently owned discount competitor. It also outlined other factors that may affect the ACCC’s final decision, including Tiger Australia’s expected future if it is not acquired by Virgin Australia, and the likely size and strength of Tiger Australia post-acquisition.

- The current indicative date for the ACCC’s final decision is 24 April 2013.

Gallagher Group proposed acquisition of Country Electronics issued on 31 January 2013

- Gallagher and Thunderbird are two of the three main suppliers of electric fencing energisers and accessories, animal weigh scales and other animal management products used by farmers in Australia.

- The Statement of Issues outlined the ACCC’s inquiries as to whether the increase in market concentration resulting from the proposed acquisition would be likely to substantially lessen competition, paying particular attention to the height of barriers to new potential market entrants and Gallagher’s current shareholding in Tru-Test, another major supplier of these products.

- The timing of the decision has been suspended at Gallagher’s request to allow it to make further submissions. The ACCC will announce the new final decision date upon receipt of further submissions from Gallagher.

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REMEDY MARKET FAILURE

Authorisations and notifications

1.27 In circumstances where competitive markets do not work to deliver the most efficient outcomes it may be in the public interest to allow certain restrictions on competition. This is particularly where there are features in a market that may lead to market failure – where the market left to itself does not achieve the most optimal outcomes. In many ways the authorisation and notification provisions of the Act allow the ACCC to consider the benefits from allowing conduct that addresses a market failure but which nonetheless restricts competition.

Authorisations1.28 Broadly, the ACCC may ‘authorise’ businesses to engage in conduct that might otherwise

amount to a breach of the Act where it is satisfied that the public benefit outweighs any public detriment, including from a lessening of competition.

1.29 In assessing the likely public benefits and detriments of an authorisation application, the ACCC undertakes a transparent public consultation process, placing submissions on a public register, subject to any claims of confidentiality. After considering submissions, the ACCC will issue a draft decision and provide an opportunity for interested parties to request a conference to discuss the draft decision. The ACCC will then reconsider the application in light of any further submissions and release its final decision.

Table 2:  Authorisations received and decisions issued–January to March 2013

Total authorisations received 1 January – 31 March 2013

New 6 (7)

Revocation and substitution 2 (5)

Minor variations 0 (0)

Decisions issued 1 January – 31 March 2013

Draft determinations 8 (13)

Final determinations 12 (18)

Interim decisions 6 (12)

* no. proposals (no. applications)

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SIGNIFICANT AUTHORISATIONS

1.30 The March quarter 2013 has been a busy time for assessing aviation related applications:

QANTAS AIRWAYS LIMITED & EMIRATES - AUTHORISATIONS - A91332 & A91333

On 7 September 2012 Qantas and Emirates applied for authorisation to coordinate their operations pursuant to a Master Coordination Agreement. The alliance between Qantas and Emirates involves coordination of their air passenger and cargo transport operations and related services (including line maintenance engineering services and flight training for air crew and cabin crew) as well as joint procurement of goods and services (such as aviation fuel).

On 27 March 2013 the ACCC issued a determination granting conditional authorisation for a period of five years.

The ACCC considered that the proposed conduct would or would be likely to result in public benefits through enhanced product and service offerings and improved operating efficiency.

The ACCC also recognised that the alliance is likely to result in public benefits by providing the opportunity for the applicants to reduce wingtip flying (i.e. multiple airlines flying on the same route at the same time of day) and avoid some duplicated fixed costs (e.g. through consolidation of office space, airport lounges and back office functions), but the magnitude of these benefits is likely to be small.

Taking all of these together, the ACCC was satisfied that the proposed conduct would or would be likely to result in material, but not substantial, public benefits.

The ACCC considered that the alliance is likely to result in detriments through its effect on competition in regions where Qantas and Emirates currently offer overlapping air passenger and cargo transport services. However, in most of these regions, the ACCC identified competitive constraints which mean that these detriments are likely to be minimal.

The ACCC was concerned that, with the proposed conduct, Qantas and Emirates will have the ability and incentive to unilaterally reduce or limit growth in capacity (in order to raise airfares) on the four routes between Australia and New Zealand where they both operate air passenger and cargo transport services. These are Sydney-Auckland, Melbourne-Auckland, Brisbane-Auckland and Sydney-Christchurch.

In this case, the ACCC decided to impose conditions to address the competition concerns identified on the routes between Australia and New Zealand. The conditions require the applicants to maintain at least their pre-alliance aggregated capacity on the four trans-Tasman routes of concern, subject to a review to consider whether increases in the minimum required capacity are warranted.

Qantas Airways Limited & Jetstar Airways Pty Ltd - Authorisation - A91314 & A91315

- On 28 June 2012 Qantas and Jetstar applied for authorisation for coordination involving four Jetstar branded low cost carrier joint ventures based in Asia (Jetstar Asia, Jetstar Pacific, Jetstar Japan and Jetstar Hong Kong), and their respective full service airline shareholders.

- The creation or continuation of these Jetstar joint venture airlines was not the subject of the authorisation application.  Rather, the authorisation application concerned the way in which the Asian Jetstar joint venture airlines will coordinate with each other, how their owners will support and expand each joint venture business, and how each full service airline shareholder relates their Jetstar joint venture to their own business.

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- The ACCC considered that the proposed conduct was likely to result in public benefits by enhancing the parties’ product and service offering to consumers, particularly leisure travellers, travelling between Australia and Asia. It also has the potential to confer public benefits by triggering a competitive response from rival airlines and stimulating tourism.

- The ACCC considered that the proposed conduct was likely to result in little, if any, public detriments because it is not likely to have a significant impact on competition. While the parties engaging in the proposed conduct potentially overlap on 227 routes, on all or nearly all of these routes they are either not likely to compete to any significant extent in the future without the conduct for which authorisation is sought or they face significant competition from other airlines.

- On balance, the ACCC considered that the benefits of the proposed conduct are likely to outweigh the detriments, at least for the next five years. 

Queensland Chicken Growers Association Incorporated - Authorisation - A91347

- On 24 January 2013 the ACCC granted authorisation to the Queensland Chicken Growers Association Incorporated to collectively negotiate supply contract terms and conditions, including growing fees, with Inghams Enterprises Pty Ltd, Baiada Poultry Pty Ltd and Golden Cockerel (the Targets) on behalf of its current and future members who provide chicken growing services to the Targets. The ACCC granted authorisation until 15 February 2023.

eRx Script Exchange Pty Ltd - Authorisation - A91348

- On 7 March 2013 the ACCC granted authorisation to eRx to enter into and give effect to a contract which has the purpose of enabling it to make its electronic pharmaceutical prescription exchange system (PES) interoperable with MediSecure's (MDS) PES and vice versa. Clause 14 of the proposed contract provides that following the introduction of interoperability, eRx and MDS will share equally in the fee which is charged to a pharmacy user and the Commonwealth by the PES to which the pharmacy is connected in respect of each prescription that has originated on the PES of the other party. Authorisation was granted until 30 June 2017.

DRAFT DETERMINATIONS

1.31 Significant authorisations for which a draft determination was issued during the March 2013 quarter (and no final determination) included: Narta International Pty Ltd - Authorisation - A91335

- On 17 September 2012 Narta International Pty Ltd (Narta) applied for authorisation for 10 years for its members to enter into and give effect to an amended version of clause 5.8 of Narta's Code of Conduct under which members would agree to abide by any minimum advertising price as set by Narta from time to time. The proposed conduct would enable Narta to impose a minimum advertising price (MAP) on a range of goods collectively acquired by its members, namely Beko branded electrical goods, new release electrical products or exclusive models of electrical goods. The level of the MAP would be set by Narta senior management and notified to members. Narta would not impose limitations or restrictions on a member's actual selling prices.

- On 17 January 2013 the ACCC issued a draft determination proposing to deny authorisation for these arrangements. A pre-decision conference was held on 15 February 2013.

Notifications1.32 Notification is an alternate process to authorisation as a means for businesses to obtain

protection from legal action for certain conduct including exclusive dealing and collective bargaining.

EXCLUSIVE DEALING NOTIFICATIONS

1.33 Exclusive dealing (where a business trading with another imposes restrictions on the other businesses freedom to choose with whom, in what or where it deals) is prohibited under the Act in certain circumstances. Third line forcing is a type of exclusive dealing conduct which involves the supply of goods or services subject to a condition that the buyer must also acquire certain

ACCCount 1 January to 31 March 2013 16

goods or services from a third party. Third line forcing conduct is prohibited outright while other forms of exclusive dealing are only a breach of the Act if they substantially lessen competition.

1.34 The exclusive dealing notification process provides protection from legal action for potential breaches of the exclusive dealing provisions of the Act where the ACCC assesses there is sufficient public benefit. Lodging a notification with the ACCC provides protection from legal action automatically from the lodgement date (or soon after in the case of third line forcing conduct), which remains in force unless revoked by the ACCC. Notifications can be reviewed by the ACCC at any time.

1.35 The ACCC may revoke the protection provided by a notification for third line forcing conduct if it is satisfied that the likely public benefit from the conduct will not outweigh the likely detriment. To revoke a notification for other exclusive dealing conduct the ACCC must be satisfied that the conduct is likely to result in a substantial lessening of competition and the likely benefit to the public will not outweigh the detriment.

Table 3:   Exclusive dealing notification projects

Exclusive Dealing Notifications January to March 2013no. proposals (no. notifications)

Matters lodged in the quarter 96 (164)

Matters requiring a draft notice 0 (0)

Matters allowed to stand 78 (98)

Matters revoked 0 (0)

Matters withdrawn 1 (1)

1.36 Significant notifications that have required consultation in the period (including both new notifications as well as notifications allowed to stand during the period) were:

Port Hedland Port Authority - Notification - N96171

- The Port Hedland Port Authority proposes that all vessels entering and leaving the port (other than very small and manoeuvrable craft) must engage the harbour towage services of BHP Billiton Minerals Pty Ltd.

Tabcorp - Notifications - N96146 - N96148

- Tabcorp Wagering (Vic) Pty Ltd, Tabcorp Wagering Manager (Vic) Pty Ltd and TAB Limited propose to offer 'Tabcorp Venue Goods and Services' at a particular price (or offer to give a discount, allowance, rebate or credit) on condition that the person has acquired member services from a Nominate Membership organisation. Current nominated member organisations are the Australian Hotels Association NSW, Clubs NSW, Australian Hotels Association Victoria and Community Clubs Association of Victoria Inc.

- Allowed to stand 27 March 2013

Jireh International Pty Ltd - Notification - N96013

- Jireh International Pty Ltd will require Gloria Jeans Coffees franchisees to acquire Cafe Goods and Services from a supplier or suppliers approved in writing by Jireh.

- Allowed to stand 25 February 2013

Subway Systems Australia Pty Ltd - Notification - N96512

- Subway Systems Australia Pty Ltd will offer Subway franchises and franchise services to franchisees on condition they acquire goods and services from approved suppliers. Approved suppliers and the goods and services that franchisees are required to obtain from approved suppliers may change from time to time.

ACCCount 1 January to 31 March 2013 17

- The ACCC sought submissions from interested parties regarding the notification and is currently assessing the conduct.

Jasmin Solar Pty Ltd - Notification - N96232 and N96653

- Jasmin Solar proposes to offer to supply domestic solar systems to low income households and seniors and pensioners in South East Queensland for $1 on condition that customers use Diamond Energy as their energy retailer.

- The ACCC sought submissions on the notification from Jasmin Solar and interested parties. The ACCC is currently assessing the notified conduct.

- Jasmin Solar also proposes to offer to supply domestic solar systems to SE Queensland households approved for the Queensland government's 44c/kwh rebate scheme for $999 on condition that customers use Diamond Energy as their energy retailer.

- The ACCC is currently assessing the notified conduct.

Qube Logistics (Aust) Pty Limited - Notification - N96205

- Qube Logistics (Aust) Pty Ltd (Qube) manages the storage, maintenance and handling of container park facilities across Australia. To manage container movements to and from Qube's container parks, Qube will require container transport operators to use a booking system administered by Containerchain Pty Ltd (Containerchain). Container transport operators will enter their details in Containerchain's system to obtain a time slot for the container transport operator to drop off and pick up their shipping containers. The container transport operator will pay a booking fee for this service. The Containerchain system requires container transport operators to have an active commercial account with Containerchain in order to be able to lodge a notification through the Containerchain website (www.containerchain.com) prior to pick up or drop off of containers at a facility.

- Currently Qube operates the following empty container parks:

o Qube Port Botany Empty Container Park (NSW)o Qubelink Port Botany (NSW)o Qube Central (WA)o Qube Irene (WA)o Qube MCD (WA)o Qube Tydeman (WA)o Brisbane Port Empty Park (Qld)o Dynon Empty Park (Vic)o Outer Harbour Empty Park (SA)

- The ACCC has sought submissions from interested parties as well as further information from Qube in relation to the notified conduct.

COLLECTIVE BARGAINING NOTIFICATIONS

1.37 Groups of small businesses can lodge a collective bargaining notification, to obtain protection from legal action for the collective bargaining activity. The protection provided by a collective bargaining notification comes into force automatically 14 days after the notification is validly lodged unless the ACCC objects to the notification, and continues for three years. Notifications can be reviewed at any time.

1.38 Businesses seeking to lodge a valid collective bargaining notification must satisfy a number of requirements—for example each member of the collective bargaining group must reasonably expect that they will make at least one contract with the target and that the value of each member’s transactions with the target will not exceed $3 million per year (this figure differs for certain industries). These requirements do not apply to the authorisation process.

ACCCount 1 January to 31 March 2013 18

Table 4:   Collective bargaining notification projects

Collective Bargaining Notifications January to March 2013

no. proposals (no. notifications)

Matters lodged in the quarter

(# of notifications)

1 (2)

Matters allowed to stand

(# of notifications)

0 (0)

Matters withdrawn/later deemed invalid (# of notifications)

0 (0)

Matters revoked (# of notifications) 0 (0)

Matters under consideration at end of quarter 1 (2)

1.39 Significant collective bargaining notifications lodged during the period were: Manning Valley dairy farmers

- On 25 March 2013 a group of seven dairy farmers in the Manning Valley area in NSW lodged collective bargaining notifications relating to a proposal to collectively negotiate the terms and conditions of raw milk supply agreements to be entered into between each of the farmers and Woolworths and an agreement which deals with the obligations of the farmers to work cooperatively to meet Woolworth's requirements. It is proposed that a representative of the farmers will negotiate the terms and conditions of the supply agreements with Woolworths and/or its agent, Milk2Market. It is also proposed that the farmers may collectively negotiate with and sell milk to Milk2Market.

- The ACCC expects to make its decision in April 2013.

GOVERNMENT ENGAGEMENT

Private Health Insurance

1.40 Following consultation with insurers, healthcare providers, industry representative bodies and consumer groups, the ACCC has finalised its report to the Senate on private health insurance.

1.41 Each year the ACCC is required to prepare a report to the Senate on ‘anti-competitive and other practices by health funds and providers in relation to private health insurance’, in accordance with a Senate order.

1.42 This year the report has focused on the practice by insurers of not recognising certain types of allied healthcare provider who offer the same or similar services as other types of ‘recognised’ provider.

1.43 The report was tabled in the Senate on 21 March 2013.

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2. PROTECTING CONSUMERS AND FAIR TRADING Protect the interests and safety of consumers and support fair trading in markets

CONSUMER PROTECTION OUTCOMES

Action to protect consumers

2.1 The ACCC has indicated that in 2013 consumer protection priorities will be

online consumer issues

the telecommunications and energy sectors

consumer guarantees

consumer issues impacting on Indigenous communities

credence claims, particularly in the food sector

unfair contract terms

2.2 In the March 2013 quarter the ACCC was involved in 28 proceedings relating to consumer protection.

22 cases were carried over from the previous quarter

4 first instance cases were commenced in the quarter

2 appeal cases were commenced in the quarter

6 cases were concluded in the quarter

2.3 22 cases remain ongoing at the end of the quarter In the period, the ACCC continued to undertake significant work relating to carbon price representations, consumer protection issues in indigenous communities, consumer guarantees, unsolicited selling, scams, and food labelling.

2.4 These actions and outcomes demonstrate the ACCC’s continuing efforts to protect the interests and safety of consumers and its support for fair trading in markets.

2.5 Since the introduction of new remedies and powers in the Trade Practices Act in April 2010 and the introduction of the Australian Consumer Law on 1 January 2011, the total penalties awarded under the ACL pecuniary penalty regime by the Federal Courts is $22.58 million in 34 consumer protection and fair trading proceedings, resolved as at 31 March 2013.

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Proceedings Commenced2.6 The following first instance proceedings were commenced in the March 2013 quarter:

Door to door sales ENERGY AUSTRALIA PTY LTD

Proceedings were instituted in the Federal Court Melbourne against Energy Australia Pty Ltd (formerly TRUenergy Pty Ltd) and four marketing companies engaged by Energy Australia in relation to their door to door selling practices.  The marketing companies are Sales Marketing and Real Technologies – SMART Pty Ltd, Aegis Services Australia Pty Ltd, Multiple Stories Pty Ltd (trading as Aegis Direct) and Australian Sales and Promotions Pty Ltd.  The ACCC alleges that EnergyAustralia and these marketing companies, through the conduct of certain sales representatives engaged by them or acting on their behalf, made false, misleading or deceptive representations while calling on consumers at their homes for the purpose of negotiating agreements for the supply of retail electricity and/or gas by EnergyAustralia. The ACCC also alleges one instance of failing to immediately leave the premises at the request of the occupier through the use of a ‘do not knock’ sign on their door, as required by the ACL. The ACCC is seeking injunctions, declarations, implementation of a trade practices compliance program, corrective notices, penalties and costs.

Misleading price advertising

NONCHALANT PTY LTD TRADING AS ABEL RENT-A-CAR

Proceedings were instituted in the Federal Court Brisbane against Nonchalant Pty Ltd trading as Abel Rent A Car for alleged misleading representations in relation to advertisement of car hire prices. The ACCC alleges that in both online and print advertisements, Abel mislead customers about the true cost of hiring some of its vehicles by advertising a price that did not include additional mandatory fees. The ACCC is seeking declarations, penalties and costs.

Consumer protection

HOMEOPATHY PLUS! AUSTRALIA

Proceedings were instituted in the Federal Court Sydney against Homeopathy Plus! Australia Pty Ltd and owners of the Homeopathy Plus! Website for alleged misleading claims on their website regarding the effectiveness of the whooping cough (pertussis) vaccine. The ACCC alleges that claims on the Homeopathy Plus! website are misleading and deceptive and include statements that the whooping cough vaccine is ‘unreliable’ and ‘largely ineffective’ in preventing whooping cough and that homeopathic remedies are a safe and effective alternative for the prevention and treatment of whooping cough. The ACCC is seeking injunctions and pecuniary penalties.

ACCCount 1 January to 31 March 2013 21

Credence claims LUV-A-DUCK

Proceedings were instituted in the Federal Court Melbourne against Luv-A-Duck Pty Ltd for alleged false, misleading or deceptive representations in relation to the promotion and supply of its duck meat products. The ACCC alleges that Luv-A-Duck engaged in false, misleading or deceptive conduct by using the statements ‘grown and grain fed in spacious Victorian Wimmera Wheatlands’ and ‘range reared and grain fed’ on its packaging, website and brochures. The ACCC alleges that the duck meat products sold or offered for sale were in fact processed from ducks that did not have substantial access to the outdoors or access to spacious outdoor conditions. The ACCC is seeking declarations, injunctions, corrective notices, implementation of a trade practices compliance program, pecuniary penalties and costs.

Proceedings Concluded

Credence claims KINGISLAND MEATWORKS AND CELLARS

Kingisland Meatworks and Cellars Pty Ltd was ordered to pay $50,000 in penalties for misleading place of origin representations. The Court found that Kingisland Meatworks had made false or misleading representations that the meat offered for sale through its Brighton shop was from King Island, when in fact very little or none of the meat was from King Island. The Court also ordered a three year injunction against Kingisland Meatworks and the managing director, corrective ads and costs.

Pyramid selling CRIMEGUARD INTERNATIONAL SECURITY SYSTEMS

The Federal Court made declarations by consent that Mr Leslie Forsyth Stott, a former director of Crimeguard International Security Systems Pty Ltd was knowingly concerned and a party to Crimeguard’s participation in a pyramid selling scheme. Mr Stott also engaged in false, misleading or deceptive conduct concerning representations about the profitability of the Crimeguard business. The Court also made an order disqualifying Mr Stott from managing a company for five years and a permanent injunction restraining Mr Stott from engaging in this conduct.

This case is the second time the ACCC has obtained orders from the Federal Court disqualifying an individual from managing a company.

ACCCount 1 January to 31 March 2013 22

Small business scam

ADEPTO PUBLICATIONS

The Federal Court ordered Adepto Publications Pty Ltd, its sole owner and director and a former manager to pay pecuniary penalties totalling $750,000 after they admitted they had made false and misleading representations in relation to advertising services that were never requested. The Court also ordered declarations, injunctions and costs.

Justice Cowdroy found that the conduct took place over several years and would probably have continued but for the intervention of the ACCC. The conduct was not only “misleading and deceptive” but “blatantly and knowingly deceitful” and Mr Mitchell and Ms McKay “carried on the scam for their personal gain”.

Court-enforceable undertakings 2.7 In addition to court-based outcomes, the ACCC often resolves contraventions of the Act by

accepting court-enforceable, non-court based undertakings under s. 87B of the Act. In these undertakings, which are on the public record, companies or individuals generally agree to:

remedy the mischief

accept responsibility for their actions

establish or review and improve their trade practices compliance programs and culture.

2.8 In the March 2013 quarter, the ACCC

secured 3s.87B undertakings for alleged breaches of the Australian Consumer Law

Credence claims premium

SAMSUNG ELECTRONICS AUSTRALIA

On 17 January 2013 the ACCC received a court-enforceable undertaking from Samsung Electronics Australia Pty Ltd in respect of what the ACCC considered were misleading comparative energy savings representations between its Bubble Wash washing machines and conventional washing machines. The energy savings representations by Samsung were made to consumers in an in-store demonstration kit incorporating a promotional video which was displayed at approximately 90 retail stores in the period from March 2011 to October 2011. Samsung undertook to offer an extension of the manufacturer’s warranty from 2 to 5 years to those customers who purchased the washing machine during the promotional period, send a letter to affected customers and place a notice on their website and enhance its trade practices compliance program.

Misleading advertising in motor vehicle advertising

TOYOTA MOTOR CORPORATION AUSTRALIA

On 31 January 2013 the ACCC received a court-enforceable undertaking from Toyota Motor Corporation Australia Pty Ltd in relation to the use of ‘leather’ claims in the promotion of certain Toyota vehicles. The ACCC found that from at least 2005 to 2009 Toyota Australia described the upholstery of certain vehicle interiors or components as ‘leather’, when in fact the upholstery was only partially leather. Toyota undertook to not engage in similar conduct in the future, publish a corrective notice, and implement a supplementary compliance program.

ACCCount 1 January to 31 March 2013 23

Horticulture Code V & A LIANGOS

On 21 February 2013 the ACCC received a court-enforceable undertaking from V&A Liangos Pty Ltd (VAL) for alleged breaches of the Horticulture Code, a mandatory industry code prescribed under the Act. The ACCC considers since the commencement of the Code, VAL contravened the Code by trading in horticulture produce with growers without entering into horticulture produce agreements and not preparing, publishing or making publically available a document that sets out the general terms and conditions under which it will trade with growers of horticulture product (Terms of Trade). VAL has undertook to not, within 3 years, trade in horticulture produce unless it has entered into a compliant agreement with the relevant grower, prepare, publish and make publically available a document that sets out its Terms of Trade, send a letter to each grower it has traded with since commencement of the Code and arrange for all VAL employees to attend trade practices compliance training.

2.9 Infringement Notices in the March 2013 quarter, the ACCC

Issued 9 infringement notices to 4 traders

Received payment from two traders:

- Super A-Mart Pty Ltd paid two infringement notices totalling $13 200 in relation to misleading representations regarding the application of the consumer guarantee provisions in relation to floor stock furniture offered for sale. The ACCC alleges that in August 2012 Super A-Mart falsely represented that the consumer guarantee provisions of the ACL did not apply to certain furniture items offered for sale at its Gepps Cross store in South Australia. Following ACCC action, Super A-Mart also changed the labelling of its ‘floor stock’ or ‘shop soiled’ furniture.

- Craftmatic Pty Ltd paid three infringement notices totalling $19 800 in relation to allegations of false or misleading representations by Craftmatic in relation to the price, warranty and promotion available on adjustable beds during an in-home sales presentation.

2.10 This takes the total infringement penalties paid up to March 2013 to over $634 000 under the Australian Consumer Law.

2.11 The payment of infringement notice penalties is not an admission of a contravention of the Act. The ACCC can issue an infringement notice where it has reasonable grounds to believe a person has contravened certain consumer protection laws.

Other significant activities

Carbon price representations 2.12 The ACCC continues to give priority to carbon pricing issues as directed by the Treasurer

pursuant to section 29(1) of the Act. This includes:

giving priority to the investigation of businesses who engage in practices concerning the impact of a carbon price

encouraging compliance with the Act by informing and educating businesses about their responsibilities under the ACL concerning any statements about impacts of a carbon price on the supply of goods and services in trade and commerce

raising awareness amongst consumers about their rights under the ACL and informing them that businesses are prohibited from engaging in misleading and deceptive conduct or making false or misleading representations about the impact of a carbon price on the supply of goods and services in trade or commerce.

2.13 In the March 2013 quarter the ACCC received over 120 carbon pricing complaints and inquiries. This forms part of over 2 900 complaints and inquiries received since the implementation of the carbon price mechanism on 1 July 2012. Complaint numbers continue to decline since the implementation of the carbon price mechanism.

ACCCount 1 January to 31 March 2013 24

2.14 Energy is the largest complaint category, constituting 41% of all contacts received since 1 July 2012. A significant number of contacts have also been received about the refrigerant gas, landfill and construction sectors.

2.15 The ACCC continues to actively assess carbon pricing complaints as they arise for evidence of conduct that may raise concerns under the Act and a number of in-depth and initial investigations remain ongoing. Enforcement outcomes for the period include two formal warning letters.

2.16 On the stakeholder front, the ACCC continues to engage with businesses on carbon pricing issues as required, including through sending 3 educative letters and 5 informal warning letters to traders in the period.

Consumer guarantees2.17 The free iPhone and Android mobile device app for consumers name ‘ACCC Shopper’ released

in early December 2012 has now been downloaded more than 8 200 times. The app includes consumer information on warranties, refunds and lay-bys, and allows users to set reminders for their gift vouchers and warranties, and stores photos of receipts. It also includes information about country of origin food labelling and olive oil claims.

Food labelling2.18 The ACCC together with the state and territory consumer protection agencies (ACL Regulators)

have been considering a range of consumer protection concerns regarding food labelling practices. This includes concerns about country-of-origin labelling of food and the labelling of olive oils in Australia.

2.19 To complement compliance and enforcement activities, the ACL Regulators developed guidance material for consumers that explains Australia’s country-of-origin labelling framework as well as a handy buying guide for consumers which provides information about the different grades of olive oil products, and how they differ. These publications provide important guidance for consumers so they are able to make more informed purchasing decisions. The information was also incorporated into the ACCC Shopper app.

Fuel price boards2.20 Following an agreement reached on 6 July 2012 to work towards a consistent national framework

on fuel price board signage Ministers responsible for Consumer Affairs released a public consultation paper on a proposed national petrol information standard on 7 December 2012. The consultation period closed on 15 February 2013.

2.21 The aim of the consultation paper is to stimulate discussion on fuel price transparency with a view to increasing competition and enabling consumers to accurately compare fuel prices at different retailers. The public consultation paper proposes three options:

a No new regulation. Generic consumer protections against false, misleading and deceptive conduct, bait advertising and multiple pricing.

b Basic national standard. Only undiscounted fuel prices on signs permitted, although fuel discount schemes may be included.

c Detailed national standard. All fuel retailers must maintain a fuel price board, displaying in equal prominence the undiscounted prices of a specified minimum number of fuels.

2.22 In February, the ACCC participated in a series of working group of Commonwealth, state and territory officials which met with key stakeholders, including industry groups, motoring associations and consumer groups. Outcomes of the consultation will be used to develop a final proposal to be decided by consumer affairs ministers.

Review of the Franchising Code of Conduct2.23 On 4 January 2013 the Minister for Small Business announced the commencement of a review

of the Franchising Code of Conduct, to be conducted by Mr Alan Wein. In February 2013 the ACCC made a submission to the review with a number of recommendations and in March 2013 provided further supplementary information upon request, including that:

ACCCount 1 January to 31 March 2013 25

a Civil pecuniary penalties and infringement notices be made available for breaches of the Code

b The scope of the industry code audit power to be extended to allow the ACCC to more accurately assess a franchisor’s level of compliance with the code

c Franchisors be required to provide prospective franchisees with a short summary document or risk statement that accompanies (or forms part of) the disclosure document.

Scams2.24 During the quarter the ACCC continued to work with other agencies and implemented

educational initiatives to protect Australians against scam activity.

2.25 The ACCC’s SCAMwatch website, the Australian Government’s website for information on scams. SCAMwatch includes a free subscription service to alert the public to new scams. Four SCAMwatch radars were issued in the quarter covering:

‘Beware bogus bushfire appeals – scammers also appeal to your generous side’ – in January 2013 the ACCC urged consumers considering donating to help those affected by the summer bushfires to make sure that their money went to a legitimate charity, cause or appeal

‘Protect your wallet and your heart this Valentine’s Day’ – in February 2013 the ACCC advised Australians looking for love online not to fall for scammers around Valentine’s Day

‘Think carefully about unsolicited offers to register domain names overseas’ – in February 2013 the ACCC warned businesses to treat with caution unsolicited invitations to register or renew internet domain names in China and other countries

‘Police scareware scam continues to target Australians’ – in March 2013 the ACCC urged people to continue to be alert to a scareware scam where scammers posing as the Australian Federal Police tried to scare them into handling over money to regain control of their computer

2.26 SCAMwatch is also on Twitter. During the quarter SCAMwatch attracted 240 000 unique visits and to date has issued 85 tweets, and almost 4 500 followers.

Unsolicited selling2.27 The ACCC continued to distribute its suite of other door-to-door educational material to the public

via stakeholders and its Infocentre. To date approximately 75 000 ‘Do Not Knock’ stickers and 20 000 brochures have been distributed. The ACCC also produced a video on door to door sales as part of a series of videos aimed at Indigenous consumers.

Unfair contract terms review2.28 On 15 March 2013 ACCC Chairman Rod Sims announced the findings of the review that

examined consumer contracts in the airline, telecommunications, fitness and vehicle rental industries, as well as some contracts commonly used by online traders and travel agents. Following the industry specific review and engagement by the ACCC, unfair contract terms used in standard form consumer contracts have been changed or removed. National legislation to protect against unfair contract terms was introduced as part of the Australian Consumer Law which came into effect on 1 July 2010. Under these laws, a court may determine that a term of a standard form consumer contract is unfair and therefore void.

2.29 The aim of the review was to evaluate compliance, and work with business to achieve positive changes to standard form consumer contracts. The ACCC found that in most cases, the businesses under review chose to make changes to their standard form contracts. Problematic terms were identified and either amended or deleted. As one example, Jetset Traveland has removed clauses which required consumers to waive their charge back rights through credit and debit cards. The ACCC considered these terms were unfair.

2.30 The ACCC also called on all businesses to consider the terms and conditions of their own standard form contracts in light of the ACCC’s findings, and to make changes where necessary to ensure their contract terms are compliant. Good contract terms offer an opportunity for

ACCCount 1 January to 31 March 2013 26

businesses to deal up front with areas of consumer dissatisfaction and dispute, thereby reducing complaints.

Indigenous consumer protection2.31 On 26 February 2013 the ACCC announced the ‘Your Rights Mob Tiwi Islands’ Facebook for

Tiwi Islanders in the Northern Territory. The aim is to pilot the concept in the Tiwi Islands before expanding it to other Indigenous communities.

2.32 The ACCC’s ‘Your Rights Mob Tiwi Islands’ Facebook page offers a way for Indigenous consumers to report issues directly to ACCC staff through a private message or wall post enabling early reporting of contraventions of consumer law. The page also allows the ACCC to reach Indigenous consumers with important consumer educational messages.

2.33 As part of this initiative the ACCC produced five short films with Indigenous residents of the Tiwi community. The films cover topics such as consumer guarantees, telemarketing, door to door sales and product safety. These films will be available on Facebook via YouTube.

2.34 The ACCC is working closely with Northern Territory Consumer Affairs, the Consumer Affairs agencies of other states and the Australian Capital Territory, and organisations such as the Indigenous Consumer Assistance Network to ensure that the rights of Indigenous consumers are protected.

Product safety

Recalls2.35 In the March 2013 quarter the ACCC received notifications for 79 consumer product safety

recalls, all of which were published on the Recalls Australia website. Of these, 46 relate to consumer goods that are actively managed by the ACCC.

2.36 Of those 46 recalls, 24 recalls were independently initiated by suppliers without intervention by regulators.

2.37 17 recalls of over 260,000 unsafe goods resulted from negotiations initiated by the ACCC and five recalls were negotiated by other ACL regulators.

Table 5:   Recalls Negotiated – 1 January to 31 March 2013

Recalls Negotiated by the ACCC 17

Consumer complaint 3

Supplier’s mandatory report of consumer injury 7

Overseas recall intelligence 2

ACCC on-line survey of unsafe goods 2

ACCC compliance survey of regulated goods 1

ACCC, supplier and/or retailer negotiated outcomes 2

Recalls Negotiated by other ACL regulators 5

Emerging hazards and product safety recalls

ACCCount 1 January to 31 March 2013 27

2.38 During the quarter the ACCC:

conducted an investigation into multipurpose ladders. The investigation included surveillance and testing of a number of ladders and to date, has led to three recalls of multipurpose ladders.

reviewed 669 mandatory reports (a report of a product related injury under the Australian Consumer Law) of which, 338 were referred to other regulators. The remaining 331 were assessed or are currently under assessment. Of these, four reports were assessed as posing a significant risk and five reports were assessed as posing a moderate risk

received 758 reports related to the safety of unregulated products and 42 reports related to the safety of regulated products. These reports have been assessed, or are currently under assessment.

The reports that have been assessed include two that have been assessed as posing an extremely high risk, four that have been assessed as posing a very high risk, and 15 that have been assessed as posing a high risk.

- Those reports assessed as having an extremely high risk rating both involved button batteries accessed by children.

- The reports assessed as having a very high risk rating involved two swimming pool gate latches, one toaster which presented an electric shock hazard (now recalled) and one related to the hazards presented by unstable televisions.

- From the reports assessed as having a high risk rating, four presented a fire hazard from a rechargeable lithium-ion batteries in portable DVD players (now recalled), two presented a potential crush hazard from furniture, one presented a hazard from lithium-ion batteries in products on an aircraft and the remaining involved products which have now either been recalled or are under assessment for recall.

New standards and bans2.39 A new safety standard for portable swimming pools received ministerial approval in January 2013

and will come into effect on 30 March 2014.

2.40 The reviewed safety standard for baby walkers came into effect on 15 February 2013.

2.41 Work continues to progress on safety standards for disposable lighters, folding cots, motorcycle helmets, baby bath aids, sunglasses, projectile toys, bean bags, balloon blowing kits and elastic luggage straps.

Hazards associated with chemicals in consumer goods 2.42 Significant projects progressed by the ACCC during the March 2013 quarter include:

Cosmetics Injury Reporting Project – analysis of data from cosmetics post injury assessment; drafting of final report.

Contact with Poisons Scheduling Secretariat seeking clarification of its decision to allow dental practitioners to supply higher-strength teeth whitening products to consumers.

An issues paper on paraphenylenediamine (PPD) in hair dyes was finalised.

Finalised the assessment of the hazards associated with liquid laundry pods. The outcomes of this assessment included collaboration with industry to improve the safety and packaging of these products. With the assistance of Accord, industry has acknowledged ACCC concerns and has signalled that changes will be made. Expected changes include the redesign of the outer packaging and labelling so it features prominent warning labels and consistent safety information. The ACCC also collaborated with the United States Consumer Product Safety Commission to produce a joint media release on this issue.

2.43 Chemical research surveys that are in development include a microbiological quality of higher risk cosmetics in lip balms, eye creams and shampoos. Examples of chemical assessments conducted during the March 2013 quarter include:

High lead levels in water tanks

Formaldehyde in cosmetics products – response to injury and ‘passing-off complaints’

ACCCount 1 January to 31 March 2013 28

Cosmetics labelling – ingredient labelling queries and confidentiality exemption requests

Lead in cadmium – advice to Customs on Prohibited Import Regulations for lead and cadmium in ceramic dinnerware

Bee venom in face masks

Nitrosamines in teething toys

Compliance campaigns2.44 During this quarter, the ACCC completed surveillance work focussed on the area of fire related

safety standards.

The ACCC led a joint ‘things that burn’ product safety surveillance program with the state and territory consumer protection agencies covering fire-related standards.

Covering a range of products, the aim of this surveillance initiative was to ensure that banned products are not available in the Australian marketplace and to help ensure that products that can pose a fire risk met Australian mandatory product safety standards.

The survey program involved surveying products from over 2,700 retailers Australia-wide. More than 22,300 product lines were surveyed and over 7,200 non-compliant products were immediately removed from sale or seized.

The ACCC negotiated with eBay for the removal of 190 online suppliers of banned sky lanterns from their website.

2.45 In addition to the ‘things that burn’ surveillance program, the ACCC conducted an investigation into multipurpose ladders. The investigation included surveillance and testing of a number of ladders and to date has led to 3 recalls of multipurpose ladders.

ACCCount 1 January to 31 March 2013 29

3. EFFECTIVE REGULATION Promote the economically efficient operation of, use of and investment in monopoly infrastructure

ENERGY3.1 The Australian Energy Regulator (AER) is Australia’s national energy market regulator and an

independent statutory authority. The AER is funded by the Commonwealth, with staff, resources and facilities, provided by the ACCC. This section of the report details the AER’s achievements in the March 2013 quarter.

Better Regulation Program

Increased Communication3.2 On 15 February 2013 the AER published its first Better Regulation Program newsletter and a

program calendar to keep stakeholders informed on the progress of the reform program. The newsletter highlights events for January and February and provides information on the rate of return project. A second newsletter was released on 18 March 2013 to provide information on the expenditure forecast assessment project.

3.3 Information on the current status of the reform program is available from the Better Regulation reform program page of the AER website.

Consumer Reference Group3.4 The AER sought expressions of interest for the establishment of a Consumer Reference Group

(CRG) to facilitate customer input in the Better Regulation reform program. Expressions of interest closed on 28 January 2013. 21 customer representative groups were selected to participate. Meetings of the full group will be held monthly and were held on 7 February and 14 March 2013. A number of meetings were also held with CRG subgroups established to provide consumer input into the development of specific Better Regulation guidelines.

3.5 The purpose of the CRG is to make it easier for consumer groups to provide input into the ‘Better regulation’ consultative process without necessarily writing formal submissions. The CRG provides a mechanism for co-ordinated and informed input from a cross-section of consumer groups. It will also give guidance on where consumer representative groups can invest their limited resources to most effectively contribute to future regulatory processes.

Consumer Challenge Panel3.6 On 28 March the AER called for expressions of interest in its Consumer Challenge Panel (CCP).

The AER will establish the CCP as part of reforms to ensure that decisions on network costs properly incorporate consumers’ interests. The CCP forms part of the AER’s Better Regulation reform program and was a key component of the Council of Australian Governments’ energy reform agenda agreed on 7 December 2012.

ACCCount 1 January to 31 March 2013 30

3.7 The CCP will sit within the AER to provide expert advice as part of the AER’s assessment of energy network businesses’ spending and regulatory proposals and the Guidelines that set out our approach to this work. The CCP will have the distinct role of engaging with network businesses' proposals and advising the AER through the regulatory determination process, ensuring our decisions reflect the long term interests of consumers.

3.8 The establishment of the CCP is in line with the AER’s approach to enhanced engagement with consumers and their representatives and is aimed to ensure that consumers’ views, particularly those of residential and small business consumers, are properly considered throughout these technical and complex processes.”

3.9 The AER will appoint individuals to the CCP by 1 July 2013 for a term of three years. Individuals with regulatory or energy (or similar regulated utility sector) experience and expertise should consider applying to be a member of the CCP. Members appointed to the CCP will be paid for their services.

3.10 Visit the Australian Government Tender System, AusTender for information on the application process and to submit an Expression of Interest application, Prospective candidates should consider the description of the CCP, its Charter and application requirements.

3.11 Applications close 5pm AEST on Monday 29 April 2013.

Confidentiality guideline issues paper3.12 On 18 March 2013 the Confidentiality guideline issues paper was released for consultation. The

guideline sets out how confidential information will be considered for regulator determinations. The guideline will cover the types of information that is considered confidential and the process for disclosure to ensure more information is available for stakeholders to engage in the regulatory determination process. Submissions close on 14 May 2013. The AER will host a stakeholder forum on the guideline on 4 April 2013.

Expenditure incentives guideline issues paper3.13 On 20 March 2013 the Expenditure incentives guideline issues paper was released for

consultation. The guideline will set out how we will apply improved incentives for network businesses to incur efficient capital expenditure, so customers only fund the investment necessary to provide a safe and reliable network. We are also reviewing the incentives for efficient operating expenditure. In particular, we will consider revisions to the current efficiency benefit sharing scheme that applies to network businesses. Submissions close on 2 May 2013. The AER will host a stakeholder forum on the guideline in April 2013.

Demand management and embedded generation connection incentive scheme information paper

3.14 On 26 March 2013 the AER released an information paper on the demand management and embedded generation connection incentive scheme (DMEGCIS) as part of the Better Regulation reform program 2013. The paper discusses the AER’s proposed approach to applying a demand management incentive scheme to ACT and NSW DNSPs as part of the next distribution determination process. It also outlines our proposed approach for consulting on matters relevant to the form of any new DMEGICS and other issues which fall within the Power of Choice work stream.

Shared asset guideline issues paper

3.15 On 28 March the AER released and called for submissions on an issues paper on shared assets as part of its Better Regulation program. Submissions will close on 17 May 2013. The AER may host a stakeholder forum on the shared asset guideline in April/May 2013 subject to stakeholder interest.

3.16 A shared asset is any electricity supply asset providing both standard regulated electricity supply services and unregulated services. The shared asset guideline will set out the AER’s approach to reducing the regulatory value of such assets to reflect costs recovered through charging for unregulated services. The revised National Electricity Rules recognise that, without shared asset cost reductions, businesses may recover regulated asset costs more than once.

ACCCount 1 January to 31 March 2013 31

Decisions and determinations

Gas networks regulation matters

Victorian gas access arrangement review – 2013-17

3.17 On 15 March 2013 the AER released its final decisions on the price reviews for the three Victorian gas distribution service providers SP AusNet, Envestra and Multinet and the gas transmission service provider, APA GasNet. The decision will determine prices for use of the Victorian gas distribution and transmission networks, and the Albury distribution network, for the next five years.

3.18 The final decision will result in a slight reduction in rates charged by all businesses except Envestra. If the reduction in allowed revenue is passed through to consumers, the impact on a typical residential bill (in nominal terms) could be as follows

Multinet – not expected to change from 1 July 2013

SP AusNet – prices could be expected to fall by approx $5 each year

Envestra Victoria – prices could be expected to increase by approx $16 each year

APA GasNet – prices could be expected to fall by approx $5 each year (on top of the change in distribution charges).

3.19 The final decision cuts $1.1 billion ($nominal) from the four network businesses’ initial proposals, which represents a 26 per cent reduction. The AER’s decisions on the rate of return accounts for most of the difference between the decisions and the businesses’ proposals. The AER also rejected the businesses’ proposals particularly where proposed capital and operating expenditure is well above historical levels or not justified. Also rejected were elements of the businesses’ capital expenditure proposals and, in particular, the distribution businesses’ asset replacement proposals.

Victorian gas distribution business performance report 2009-2011

3.20 On 13 March 2013 the AER issued the 2009-2011 gas performance report for Victorian distribution network service providers (DNSPs). The DNSPs covered in the report are Envestra, Multinet and SP AusNet.

3.21 The report provides information on the financial performance, reliability and customer service outcomes of Victorian distribution networks managed by the DNSPs, and how they are performing in comparison to performance targets.

3.22 Gas reliability performance is generally high across the DNSPs and reliability continues to remain high. For a small number of customers connected to Envestra and Multinet’s network there has been an increase in repeated and lengthy interruptions over the period.

3.23 Multinet and Envestra have spent less capital expenditure than the amount that has been funded by customers over the period. This was principally due to these businesses not achieving the target levels of replacement expenditure for old parts of the network which are more prone to leakages.

3.24 DNSPs continue to earn substantially more returns on assets than forecast, despite energy sales being in line with expectations. This resulted in additional earnings in aggregate areas across the businesses of around $120 million over 2009-2011. These additional returns were principally due to businesses spending less on network replacement expenditure over the period.

Electricity network regulation matters

Approval of ACT and QLD feed in tariff pass through applications

3.25 On 10 January 2013 the AER published three determinations relating to pass through applications from ActewAGL Distribution (ActewAGL), Energex Limited (Energex) and Ergon Energy Corporation Limited (Ergon Energy). These applications reflect the changing costs ActewAGL, Energex and Ergon Energy experienced during 2011-12 as a result of feed-in payments made under the solar bonus schemes (SBS) operating in the ACT and Queensland (QLD).

ACCCount 1 January to 31 March 2013 32

3.26 From 1 July 2013 ActewAGL will decrease its approved revenue by $727 564 (a decrease of 0.5 per cent from the determination). The decrease will be returned to customers in the form of lower network charges.

3.27 From 1 July 2013 Energex will increase its approved revenue by $78 560 900 (an increase of 6% from the determination) and Ergon Energy will increase its approved revenue by $27 808 270 (an increase of 2% from the determination). The increases can be recovered from customers through higher network charges.

3.28 The increased feed-in costs in QLD reflect the fact that consumer participation in the SBS (through the installation of photovoltaic systems, or solar panels) has been significantly greater than forecast.

Draft decision on Electranet's revenue proposal

3.29 On 16 January 2013 ElectraNet submitted a revised revenue proposal in response to the AER’s draft decision for the regulatory control period 1 July 2013 to 30 June 2018.

3.30 Submissions in response to the revised revenue proposal, draft decision and consultant report closed on 19 February 2013. Nine submissions were received.

Draft Murraylink determination

3.31 On 16 January 2013 Murraylink submitted its revised revenue proposal in response to AER’s draft determination for the period 1 July 2013 to 30 June 2023. Murraylink also sought to reduce the regulatory control period to end on 30 June 2018.

3.32 Submissions in response to the revised revenue proposal, draft decision and consultants’ reports closed on 19 February 2013. One submission was received.

Regulatory investment test for distribution

3.33 On 21 January 2013 the AER released its issues paper for consultation on the Regulatory Investment Test for Distribution (RIT-D) and application guidelines. The RIT-D will replace the current Regulator Test for distribution projects. The application guidelines will guide RIT-D proponents in applying the RIT-D and will enhance transparency and consistency in investment decisions. Submissions closed on 25 February 2013. Twelve submissions were received.

Approval of ActewAGL cost pass through application

3.34 On 22 January 2013 the AER released is determination on ActewAGL’s pass through application for costs associated with its National Energy Customer Framework (NECF) implementation. ActewAGL proposed a positive pass through amount of $1 997 929.42 which included the time cost of money.

3.35 The AER determined that ActewAGL can increase its approved expenditure by $1 997 929.42 (an increase of 1.065% from the determination). From 1 July 2013 the increase can be recovered from customers through higher network charges.

Network service provider exemption guideline

3.36 On 31 January 2013 the AER published a draft version of its revised Network service provider registration exemption guideline for consultation. Submissions closed on 15 February 2013. No submissions were received.

3.37 The Network Service Provider Registration Exemption Guideline (Network Exemption Guideline) relates to a privately-owned embedded or exempt network (private network). A private network is any network supplying electrical energy to a third party, but not a transmission or distribution network registered with AEMO.

3.38 The final version will replace the current Network Exemption Guideline.

Rejection of SP Ausnet smart meter expenditures

3.39 On 11 February 2013 the AER released a revised decision on SP AusNet’s smart meter expenditures for the 2012-15 period, following a review requested by the Australian Competition Tribunal (Tribunal). The AER has rejected significant increases to expenditure allowances, as sought by SP AusNet, as this would have meant customers paying more because of cost overruns in SP AusNet’s choice of communications technology.

ACCCount 1 January to 31 March 2013 33

3.40 The Tribunal agreed with the AER that a reasonable business in SP AusNet’s circumstances would have undertaken a thorough reconsideration of its communications solutions when it realised that its original cost estimates had blown out. However, the Tribunal required the AER to examine the cost of changing to another technology, including whether switching costs would have been incurred if SP AusNet had changed technology.

3.41 While no increases were considered necessary to account for switching costs, the AER has increased SP AusNet’s allowance by a small amount for foreign exchange contracts and project management, as required by the Tribunal. This will increase SP AusNet’s allowance by $17.5m. The effect is that current meter prices will increase by approx 3 per cent each year in 2014 and 2015 on top of the 7 per cent previously allowed by the AER.

Direct control services in NSW and the ACT

3.42 On 12 February 2013 the AER published a discussion paper on the formulae to apply to direct control services in NSW and the ACT. On 15 February 2013 a revised version of the discussion paper was released. Submissions closed on 20 February 2013 and two submissions were received.

Approval of Powerlink nominated cost pass through event

3.43 On 8 March 2013 the AER made a decision to include certain cost pass through events in Powerlink’s 2012 -17 transmission determination . However, the AER made amendments to the events proposed to ensure those events better reflect the National Electricity Rules.

Stage one Framework and Approach for NSW and ACT distribution determination process

3.44 On 25 March 2013 the AER published papers on stage 1 of its framework and approach to determinations for NSW and ACT electricity distribution network service providers (DNSPs) – Endeavour Energy, Essential Energy and Ausgrid in NSW and ActewAGL in the ACT.

3.45 The papers outline the AER's likely classification of DNSP services, the form of control to apply to those services and the AER's decision on dual-function assets.

3.46 The AER is required to prepare and publish the framework and approach paper under the National Electricity Rules (NER) as part of its preparations to undertake the next distribution determinations for the New South Wales and ACT electricity DNSPs.

3.47 The determinations will cover the transitional (1 July 2014 to 30 June 2015) and subsequent regulatory control periods (1 July 2015 to 30 June 2019). 

3.48 Transitional regulatory proposals from each DNSP are due by 31 January 2014. The AER will be carrying out this work under the new NER.

3.49 The AER must publish stage 2 of the framework and approach, setting out the likely application of the AER's incentive schemes and guidelines to the NSW and ACT DNSPs, in early 2014.

SP Ausnet’s cost pass through application for easement tax change event for 2013–14

3.50 On 26 March 2013 the AER released a final determination relating to a negative cost pass through application it received from SP AusNet (for its licensed entity, SPI PowerNet). SP AusNet submitted that the actual Easement Land Tax (ELT) ($103.4 million ($nominal)) payable by SPI PowerNet in 2013–14 is less than the amount ($115.4 million ($nominal)) allowed for in the AER’s 2008 determination of network costs.

3.51 SP AusNet applied for the difference to be passed back to transmission network users. The AER determined that the required pass through amount of -$11,974,298.21 ($nominal, GST exclusive) should be passed through to SP AusNet’s Transmission Network Users in the 2013–14 regulatory year.

Energy wholesale markets

Quarterly compliance report

3.52 On 26 February 2013 the AER released its quarterly compliance report for the quarter ending 31 December 2012. The report summarises the AER’s compliance monitoring and enforcement activities in the wholesale gas and electricity markets.

3.53 One focus of the report was the conclusion of a project on the quality of data for the gas short term trading market (STTM). The STTM commenced on 1 September 2010 with hubs at Sydney

ACCCount 1 January to 31 March 2013 34

and Adelaide, with a hub added at Brisbane on 1 December 2011. The project aimed to reduce the amount of missing, late or incorrect data submitted by STTM pipeline operators. Failure to provide timely and accurate information to the STTM can lead to inefficient pricing and market outcomes, resulting in random wealth transfers between participants.

3.54 The AER’s efforts to improve the quality of pipeline data, and companies’ positive response to those efforts, have led to a marked reduction in the number of STTM data errors. Following concerning levels of errors from market start, the AER is pleased to announce that there were no such errors in the final two quarters of 2012.

3.55 While this project is now closed, the AER will continue to monitor pipeline data through its regular compliance work to ensure future compliance, and the complementary process of auditing STTM facility operators will continue throughout 2013.

Energy retail markets

Commencement of Retail law in South Australia

3.56 On 1 February 2013 the National Energy Retail Law commenced in South Australia (SA). The Retail Law provides specific rules for energy retailers operating in South Australia, including requirements around how energy retailers market their offers, and responsibilities for retailers to help customers experiencing financial hardship. 

South Australian consumers now have the power to compare

3.57 Energy Made Easy , the AER’s energy price comparison website, is now available for SA residential and small business customers. It provides clear, current and consistent information to help energy customers make more informed decisions about offers that best suit their needs.

3.58 The website has several useful features for consumers, including a price comparator, household electricity usage benchmarks, energy efficiency tips and information about consumer rights.

3.59 Residential and small business customers in South Australia can visit Energy Made Easy, enter their postcode and immediately compare gas and electricity offers available to them. It is a simple and easy to use website and the AER encourages consumers to go online and compare energy offers.

Retail Energy Market Updates for July - December 2012

3.60 On 28 March 2013 the AER published the following Retail Energy Market Updates for July to December 2012:

The second quarterly update on retail market performance. The update provides an overview of key market and retail performance indicators for the ACT and Tasmania from October to December 2012 including customer switching levels, customers experiencing payment difficulties, hardship, disconnections and reconnections, and complaints.

Our first update on retail market compliance, which discusses levels of compliance in the ACT and Tasmania from July to December 2012 and the AER’s compliance and enforcement activities in that period.

A new, complementary update for consumer caseworkers and intermediaries, providing background information on areas of the National Energy Retail Law and Rules discussed in our compliance update.

Improving energy literacy

3.61 Consumer protection in the energy market was one of the key themes of the 2013 National Consumer Congress, held in Sydney on 15 March 2013.  AER Chairman Andrew Reeves took part in a panel discussion with consumer advocates Jo Benvenuti, Gerard Brody and Carolyn Hodge and facilitated by AER Chief Executive Officer, Michelle Groves on the future of consumer protection in the energy sector. The discussion covered the AER and ACCC’s role in ensuring businesses comply with consumer protection rules, as well as the importance of clear information to help consumers shop around and find the best energy offer.

3.62 AER staff attended a number of other conferences during the quarter, including:

The NSW Federation of Housing Associations’ 2013 Community Housing Conference, in Sydney (12 March 2013)

UnitingCare Australia’s Energy Affordability Forum, Canberra (19 March 2013) ACCCount 1 January to 31 March 2013 35

The Australian Council of Social Service 2013 National Conference ‘Community – heart of the economy’, in Adelaide (25-26 March 2013)

TELECOMMUNICATIONS

Decisions and determinations

Cost-based prices for wholesale broadband services on Telstra’s copper network

3.63 On 12 March 2013 the ACCC released draft report proposing price and non-price terms for the declared wholesale ADSL service, to apply nationwide until 30 June 2014. The ADSL service is used by retail telecommunications service providers to provide broadband internet services to consumers and businesses over Telstra’s copper network. The draft report seeks views from interested parties prior to the ACCC making a final access determination (FAD).

3.64 Telstra currently retains dominant positions in the markets for both retail and wholesale fixed-line broadband services despite the deployment of competitive broadband infrastructure in some areas over the past decade. Draft prices for the wholesale ADSL FAD have been calculated using the Building Block pricing framework which was used to develop prices for other declared fixed-line services provided over Telstra’s copper network.

Other significant events

Consultation on the policies and procedures for the list of POIs 3.65 On 19 February 2013 the ACCC released a consultation paper inviting submissions on the

policies and procedures that relate to the identification of listed Points of Interconnection (POIs). The consultation paper follows the ACCC’s publication of the list of POIs to the National Broadband Network (NBN) as required by section 151DB of the Competition and Consumer Act (2010) (the Act) in November 2012. The Act requires the ACCC to conduct a review of the policies and procedures relating to the identification of listed POIs to the NBN and the review should be completed by 30 June 2013.

ACCC directs Telstra to amend measures developed under the Migration Plan

3.66 On 7 February 2013 the ACCC directed Telstra to improve four processes that will support the migration of customers onto the National Broadband Network (NBN). The ACCC issued this direction as it considers that Telstra’s proposed processes would not provide appropriate protections to consumers and competition during migration. The direction requires Telstra resubmits the amended processes to the ACCC within 40 business days.

3.67 The processes are referred to in Telstra’s Migration Plan as Required Measures and relate to:

the disconnection of services (from copper or hybrid fibre-coaxial cable networks) that have not migrated to the NBN within the applicable switchover period

the building of new copper lines to supply services that cannot yet be provided over the NBN

the protection of information that NBN Co provides to Telstra under the Definitive Agreements so that Telstra cannot use it to gain an unfair commercial advantage over wholesale customers.

3.68 The ACCC, in assessing Telstra’s draft measures to comply with the principles outlined in the Telecommunications (Migration Plan) Determination 2011, considered the submissions received in response to its discussion paper which was issued in November 2012.

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Reports Released

Telecommunications annual reports for 2011-12

3.69 On 26 February 2013 the ACCC’s annual telecommunications reports for 2011-12 under the requirements of the Act were tabled in Parliament. The reports relate to the competitive safeguards within the telecommunications industry and the prices paid for telecommunications services in Australia.

3.70 The main points highlighted in the reports include:

consumers continue to benefit through falling prices for telecommunications services - Prices paid by consumers for telecommunications services fell by 2.2 per cent in real terms in 2011-12. Prices are almost 20 per cent lower than they were in 2006-07.

notable price falls for fixed-to-mobile services – Prices for fixed-to-mobile calls fell by over 10 per cent in 2011-12. Significant price falls in the last five years are likely to be due to increased competition and ACCC reductions in the regulated wholesale price for mobile call termination.

varying plan inclusions - Service providers tend to maintain the nominal price of their mobile and internet plans at certain price points and ‘price changes’ are then made by changing the inclusions of those plans. Therefore, the ACCC encourages consumers to shop around and consider different offers by different services providers.

real price increases for wireless internet services – Real prices for wireless internet services increased by 1.7 per cent in 2011-12 following significant price falls in the previous years, which helped drive strong take-up of wireless internet services. The turnaround in prices may reflect carriers’ response to the challenge of rapid traffic growth and the emerging risks of network congestion.

growth in data downloads - Total data download volumes grew by 51 per cent in 2011-12. Service providers will either need to invest in more capacity, adjust pricing or encourage their customers to shift their usage to less busy times in order to manage growing demands into the future. The reports highlight that while the NBN will account for much of this investment, related investment for example in transmission capacity by other carriers will be required.

more call minutes from mobiles, more data on fixed-lines – For the first time, more call minutes were made from mobile phones than fixed-lines. However, Australians increasingly favour a fixed-line for internet downloads. Fixed-line downloads in 2011-12 accounted for 94 per cent of total downloads.

Telstra continued to strengthen its position - Telstra continued to strengthen its market share in mobile handsets and wireless broadband markets in 2011-12.

Accounting separation reports for the December 2012 quarter 3.71 On 26 March 2013 the ACCC published the imputation and non-price terms and conditions report

for the December 2012 quarter under the accounting separation regime for Telstra. The imputation report provides imputation testing results for core telecommunications services supplied by Telstra to its access seekers. The non-price terms and conditions report provides results in relation to 11 key performance indicators on non-price terms that compare Telstra’s performance between retail and wholesale services.

FUEL PRICE MONITORING3.72 The ACCC closely follows developments in the petroleum industry and monitors the retail prices

of petrol, diesel and automotive liquefied petroleum gas (LPG) in all capital cities and around 180 regional locations.

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Price movements in the March 2013 quarter

PETROL

3.73 The ACCC monitors movements in domestic retail petrol prices against movements in international benchmark prices. In the case of regular unleaded petrol (RULP), movements in seven-day rolling average retail RULP prices in the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) are compared with movements in seven-day rolling average prices for Singapore Mogas 95 Unleaded (lagged by 10 days) in Australian cents per litre (cpl).

3.74 Chart 1 shows movements in these prices over the period 1 January to 31 March 2013. Retail RULP prices are shown on the left hand side of the chart and Singapore Mogas 95 Unleaded prices are shown on the right hand side.

3.75 A comparison of movements in these two prices is indicative rather than an exact science and factors other than international benchmark prices can influence retail petrol prices in the short run. This caveat also applies to the comparisons of movements between retail diesel and automotive LPG prices and their respective international benchmarks.

Chart 1: Movements in retail RULP prices and internationalbenchmark prices—1 January to 31 March 2013

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Note: the cyclical movements in the seven-day rolling average retail price series arise because petrol price cycles in 2013 have been longer than seven days. Traditionally the ACCC has used a seven-day rolling average to smooth out the effects of the petrol price cycle.

3.76 As illustrated in the chart, both retail RULP prices and Singapore Mogas 95 Unleaded prices increased in the March 2013 quarter. Seven-day rolling average retail RULP prices in the five largest cities increased from 136.6 cpl at the beginning of January 2013 to 140.3 cpl at the end of March 2013—an overall increase of 3.7 cpl during the quarter. RULP and Singapore Mogas 95 Unleaded prices were broadly stable in January, before increasing in February and then decreasing In March.

3.77 The increase in Singapore Mogas 95 Unleaded prices in February was influenced by:

relatively strong economic data from the United States

supply concerns stemming from geopolitical tensions in the Middle East.

3.78 The subsequent decrease in Singapore Mogas 95 Unleaded prices during March was influenced by:

political uncertainty in Italy and financial instability in Cyprus leading to renewed European debt concerns

concerns over a slowing Chinese economy.

ACCCount 1 January to 31 March 2013 38

DIESEL

3.79 The ACCC monitors the movement of retail diesel prices against the price of Singapore Gasoil with 10 parts per million (ppm) sulphur content. Chart 2 shows daily average retail diesel prices on the left hand side of the chart and seven-day rolling average Singapore Gasoil 10 ppm prices (lagged by 11 days) on the right hand side.

3.80 Despite fluctuations, daily average retail diesel prices in the five largest cities ended the March 2013 quarter as they began it—at 148.6 cpl. Singapore Gasoil 10 ppm prices increased slightly over the quarter. Gasoil prices increased in February before decreasing in March to end up 0.7 cpl higher over the quarter.

Chart 2: Movements in retail diesel prices and internationalbenchmark prices—1 January to 31 March 2013

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AUTOMOTIVE LPG

3.81 The ACCC monitors the movement of retail automotive LPG prices against the average of Saudi Aramco contract prices for propane and butane, which are issued on the first day of the month (see Chart 3).

3.82 Average retail automotive LPG prices in the five largest cities (on a seven-day rolling average basis) decreased by 5.1 cpl over the March 2013 quarter—from 75.6 cpl to 70.5 cpl. The Saudi Aramco contract prices decreased slightly over the quarter.

ACCCount 1 January to 31 March 2013 39

Chart 3: Movements in retail automotive LPG prices and internationalbenchmark prices—1 January to 31 March 2013

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RAIL ACCESS

Decisions and determinations

Hunter Valley Access Undertaking3.83 The Hunter Valley Access Untertaking requires the Australian Rail Track Corporation to submit

documentation for the purposes of an annual compliance assessment to be conducted by the ACCC. On 8 March 2013 ARTC resubmitted its compliance documentation for the 6 month period from 1 July to 31 December 2011. On 4 April 2013 the ACCC made a Determination that this revised submission complied with the relevant provisions in the HVAU.

Interstate Rail Network Access Undertaking3.84 The ACCC is currently assessing a variation application submitted by ARTC on 4 September

2012 to include the Southern Sydney Freight Line (SSFL) and associated access charge into the existing Interstate Access Undertaking. The SSFL runs between Sefton and Macarthur in southern Sydney and was constructed by ARTC to assist in alleviating the major bottleneck in the rail freight network in Sydney that is caused by freight trains sharing the existing rails lines with the Sydney metropolitan passenger services. On 6 February 2013 the ACCC released a Draft Decision to consent to the variation application. The ACCC is currently considering submissions received in response to the Draft Decision. The ACCC is required to make a Final Decision by 17 April 2013.

BULK WHEAT EXPORT – ACCESS TO PORT TERMINAL SERVICES

Access Undertakings3.85 During 2011 the ACCC accepted undertakings under Part IIIA of the Act regulating access to

services for the export of bulk wheat at port terminals operated by GrainCorp at seven port terminals on the East Coast, Australian Bulk Alliance (ABA) at the Port of Melbourne, Viterra at six ports in South Australia and Cooperative Bulk Handling (CBH) at four ports in Western Australia.

ACCCount 1 January to 31 March 2013 40

3.86 The ACCC has a role in access arrangements for wheat exporters as part of the ongoing deregulation of the wheat industry. The Wheat Export Marketing Act 2008 (WEMA) requires that in order to export bulk wheat, port operators with their own vertically integrated trading arm must pass an ‘access test’. As part of the access test, vertically integrated port operators are required to provide the ACCC with a Part IIIA access undertaking. The undertakings allow for third party exporters to access the port terminals operated by vertically integrated port terminal operators, ensuring competition in this significant export market.

3.87 Since accepting the undertakings, the ACCC has been ensuring each of the port operators comply with their respective undertakings. This includes examining the access arrangements between port terminal operators and wheat exporters and monitoring various reporting outputs of each of the port terminal operators.

3.88 On 22 March 2013 CBH applied to vary its 2011 undertaking to make certain changes to its auction capacity allocation system; to allow more flexibility in repositioning booked port capacity; and to introduce a process for CBH to acquire allocated capacity in certain circumstances. The ACCC will be consulting on and assessing the undertaking variation over the coming months.

3.89 On 25 March 2013 ABA lodged an undertaking to apply from 1 October 2013, when its current undertaking expires, to 30 September 2014, when the WEMA access test requirements are expected to be repealed. The undertaking largely reflects ABA’s 2011 undertaking, but seeks to make some changes, primarily to the Standard Terms and Port Loading Protocols. The ACCC will be consulting on and assessing the undertaking over the coming months.

3.90 On 28 March 2013, the ACCC announced that it would not be objecting to GrainCorp’s variations to its Port Terminal Service Protocols. Among other changes, the new protocols will allow exporters to transfer booked port capacity to other exporters if they are not able to themselves use the capacity.

Legislative amendments3.91 The WEMA requires port terminal operators to comply with Continuous Disclosure Rules (CDRs),

which means they must publish details as to the allocation of capacity and forward shipping program of individual ports. Amendments to the WEMA which came into effect in December 2012 made the existing CDR obligations a compulsory element of the access undertakings required to pass the access test. On 10 December 2012 the ACCC took on the role of monitoring the port terminal operators’ compliance with the CDRs. The ACCC has continued to work with port terminal operators to develop an effective and efficient way of carrying out this monitoring task.

3.92 The legislative amendments also now provide for the WEMA to be repealed on 1 October 2014, if the Minister for Agriculture, Fisheries and Forestry approves an industry code of conduct governing port access and that code is declared as a mandatory code under the Act. A Code Development Advisory Committee (CDAC), including representatives from port terminal operators, exporters and growers, was formed to provide industry views on the development of the code to the government. The ACCC has observer status on the CDAC. On 6 March 2013, the CDAC reached a consensus agreement on a draft set of key principles and detailed provisions for elements of the Code for consideration by the Minister.

3.93 The Department of Agriculture, Fisheries and Forestry, the ACCC and The Treasury all have a role in the development of the Code. The government and CDAC are currently working to finalise the set of key principles, before developing a draft Code.

PART IIIA3.94 The Productivity Commission (PC) is currently undertaking an inquiry into the National Access

Regime. In February 2013, the ACCC made a submission to the PC review that supports the retention of Part IIIA of the Competition and Consumer Act 2010, noting that the economic rationale for infrastructure access regulation is to redress market failure caused by the natural monopoly characteristics of certain infrastructure operators. The PC’s draft report is scheduled for release in May 2013 with its final report to Government due in October 2013. The ACCC continues to engage with the PC to assist with the review.

ACCCount 1 January to 31 March 2013 41

WATER

State Water price approval/determination pre-application consultation

3.95 Between November 2012 and March 2013 ACCC staff ran information sessions in major regional centres in New South Wales to provide information to State Water’s customers on the upcoming price approval/determination process for State Water’s regulated charges to apply for the 2014 to 2017 regulatory period. The information sessions also discussed the change from State Water being regulated by the Independent Pricing and Regulatory Tribunal to being regulated by the ACCC.

3.96 Sessions were conducted in Moree, Dubbo, Lithgow, Goondiwindi, Narrabri, Deniliquin, Condobolin and Leeton. In addition to explaining the upcoming process to stakeholders, ACCC staff developed a greater appreciation of the pricing issues relevant to the areas to be regulated by the ACCC. Further public consultation is planned after State Water provides its’ pricing application to the ACCC in May 2013 and after the ACCC releases its draft decision in November 2013.

ACCCount 1 January to 31 March 2013 42

4. INCREASING ENGAGEMENT Increase our engagement with the broad range of groups affected by what we do

OUTCOMES FROM INTERNATIONAL FORUMS AND CONFERENCES

International partnerships and collaboration

4.1 The ACCC continued to engage closely with competition and consumer protection counterparts around the world. The need for international cooperation has grown as trading across jurisdictional borders has become more frequent and consumers have become exposed to more complex transactions occurring across multiple jurisdictions.

4.2 In February 2013 the Chairman and the CEO travelled to New Zealand to meet with officials of the New Zealand Commerce Commission (NZCC) and its Ministry. During the visit, the respective Chairs signed a cooperation arrangement to facilitate the sharing of compulsorily acquired information and investigative assistance between the two agencies. A copy of this arrangement is available on the ACCC’s website.

4.3 In February 2013 the ACCC participated in the OECD Competition Committee meetings and Global Forum on Competition. At the meetings, the ACCC’s Commissioner Dr Jill Walker’s appointment to the OECD Competition Committee Bureau was confirmed.

4.4 In March 2013 the Chairman delivered the opening address at the International Bar Association 9th Competition Mid-Year Conference in Sydney.

4.5 In March 2013 the Chairman met with the European Commission (EC) Vice President and Commissioner for Competition Mr Joaquin Almunia. Following the meeting the ACCC and the EC issued a joint communiqué outlining the desire for both agencies to continue to work together to combat anti-competitive conduct damaging economies in Australia and Europe.

4.6 In March 2013 the Chairman met with Commissioner Hiroyuki Odagiri of the Japan Fair Trade Commission to discuss international cooperation and competition issues relevant to the Asia Pacific region.

4.7 The ACCC is the current chair of the Organisation for Economic Co-operation and Development Product Safety Working Party, which is progressing a range of initiatives aimed at improving information sharing. Enhancements are being made to a global recall data base that was launched in October 2012 and the second phase, which includes the introduction of languages other than English, is under development. Participants are also working to maximise use of a password protected extranet where members are able to share information and developments; generate funds to progress a proposed global injury data base; and develop a second workshop and documentation on risk assessment.

4.8 The ACCC also participates in the International Consumer Product Health and Safety Organisation forum for the exchange of ideas and information on health and safety issues related to consumer products manufactured and marketed in the global marketplace.

4.9 The ACCC regularly engages and exchanges information with other regulators internationally in respect of investigations and merger assessments. This quarter, the ACCC:

ACCCount 1 January to 31 March 2013 43

received and responded to 15 requests for information from agencies in Brazil, Canada, Israel, Japan, Malaysia, New Zealand, Papua New Guinea, Singapore, Taiwan, the United Kingdom, and Zambia

made six requests for information to agencies in the European Community, the United Kingdom and the United States of America.

4.10 Recognising the value of effective competition and consumer protection regulation and regional cooperation, the ACCC continues to commit efforts to relationship and capacity building in the Asia-Pacific region, and beyond. During the March quarter this support included:

Providing training for the Hong Kong Customs & Excise Department in relation to new consumer protection laws which are being introduced to Hong Kong.

participation at the OECD-Korea Policy Centre training seminar

participation at an APEC Competition Policy and Law Group Conference

hosting delegations from Cambodia and China.

International cooperation

4.11 The ACCC attended the annual International Consumer Product Health and Safety Organization (ICPHSO) conference and held discussions about the Australian conference which will be jointly hosted by the ACCC and ICPHSO in October 2013.

4.12 The ACCC attended an International Consumer Product Safety Caucus (ICPSC) meeting held on 1 March 2013 and progressed work on issue forecasting with a view to encourage collaboration on new issues. The ICPSC work agenda also includes three alignment projects.

4.13 In January, the ACCC attended the East-Asia and Pacific Infrastructure Regulatory Forum Strategic Planning Workshop.

4.14 A delegation of senior Cambodian civil servants visited the ACCC’s Melbourne office on 28 February 2013. The delegation was conducting a study tour of Australia to learn more about regulatory activity across a variety of agencies.

4.15 The delegation met with ACCC staff to discuss our regulatory role in communications, energy and transport and our functions in enforcing and ensuring compliance with competition and trade practices law.

CONSUMER ENGAGEMENT

Ruby Hutchison Memorial Address

4.16 On 14 March 2013, the ACCC and CHOICE hosted the Ruby Hutchison Memorial Address in Sydney. This important annual event honours the founder of the Australian Consumers’ Association, the organisation we now know as CHOICE.

4.17 This year’s memorial address was given by Ms Carolyn Bond AO, co-Chief Executive Officer of the Consumer Action Law Centre. In her speech titled ‘Consumer framework – a driver for broader strategic advocacy’, Carolyn argued that the strategic integration of casework with other advocacy strategies can lead to better outcomes for consumers. Carolyn also shared her experience as a consumer advocate over more than 30 years, using examples of specific cases and consumer issues.

2013 National Consumer Congress

4.18 On 14 March 2013 the ACCC hosted the 2013 National Consumer Congress in Sydney. The Congress is a key annual event in the consumer landscape and coincided with World Consumer Rights Day. Tying in with the global day’s theme of ‘Consumer justice now!’, the Congress focused on the role of advocacy in empowering, protecting and advancing the interests of consumers.

4.19 The Congress covered a wide range of topical consumer issues from energy issues, financial distress, superannuation, food and health to virtual markets, behavioural economics and campaigning.

ACCCount 1 January to 31 March 2013 44

4.20 Over 150 representatives from the consumer, community and government fields attended and engaged in thought-provoking discussions about how to improve consumer justice and welfare.

Consumer Consultative Committee

4.21 The Consumer Consultative Committee (CCC) meets three times a year to discuss issues affecting consumers and to provide tangible outcomes for consumers through work undertaken in combination with CCC members and the ACCC. Members of the CCC include representatives from CHOICE, Financial Counselling Australia, the Indigenous Consumer Assistance Network; the Council on the Ageing; the Consumer Law Action Centre, and others. The ACCC recently appointed three new members to the CCC: the Australian Council of Social Services, Youth Action and Policy Association and Australian Multicultural Education Services.

4.22 On 14 March 2013, the ACCC held a joint meeting with the CCC and ASIC’s Consumer Advisory Panel. The meeting focused on elderly consumer issues and featured a workshop with presentations by the Department of Health and Ageing, New South Wales Fair Trading and a range of consumer groups on aged care and retirement accommodation.

4.23 The ACCC will conduct a review of CCC membership later this year.

BUSINESS ENGAGEMENT

Franchising Consultative Committee

4.24 On 26 February 2013 the ACCC held a meeting of its Franchising Consultative Committee (FCC) which is made up of franchisors, franchisees, lawyers and academics. This meeting was attended by Mr Alan Wein, who has been appointed by the Department of Industry, Innovation, Science, Research and Tertiary Education to conduct a review of the Franchising Code. Mr Wein and the FCC members discussed issues being considered as part of the review, including penalties for breaches of the code, end of term arrangements and good faith.

Small Business in Focus report

4.25 In January 2013 the ACCC launched its latest Small Business in Focus report, as part of a campaign to give small businesses practical information on their rights and obligations under Australia’s competition and consumer laws.

4.26 The report provides a summary of the ACCC’s work and activities in the small business sector. The report also provides guidance on ACCC priority areas and highlights trends in ACCC complaint data, including by comparing the most common issues raised by small business complainants with those raised by franchisees.

4.27 Work has continued on the development of the new ACCC online training program, which will be launched on 10 April 2013. This program will be available free of charge to small businesses.

4.28 During this quarter the ACCC Education and Engagement managers delivered about 30 presentations to business and consumer audiences, exhibited at seven expos, distributed over 8 000 publications and generated more than 15 articles in industry media.

Utility Regulators’ Forum

4.29 The Utility Regulators Forum (URF) was established to encourage co-operation between Commonwealth, state and territory based regulators. The ACCC provides the secretariat for the URF as well as producing and editing its quarterly newsletter, Network.

4.30 The URF met in Melbourne on 8 March 2013 to discuss a range of current regulatory issues shared across Australia and New Zealand.

ACCCount 1 January to 31 March 2013 45

MAJOR SPEECHES

4.31 During the March quarter the ACCC delivered 30 addresses including:

Economic philosophy & the ACCC (& we are all economic philosophers)27 March 2013Rod Sims, ChairmanNational Press Club, Canberra

Opening Address: IBA Competition Conference21 March 2013Rod Sims, ChairmanInternational Bar Association 9th Competition Mid-Year conference, Sydney

Championing the rights of consumers15 March 2013Rod Sims, ChairmanACCC Consumer Congress, Sydney

Observations on audiovisual content delivery in Australia28 February 2013Ed Willett, CommissionerBroadcasting Summit, Sydney

Closer ties across the Tasman27 February 2013Rod Sims, ChairmanVictoria University, Wellington

The ACCC’s 2013 priorities21 February 2013Rod Sims, ChairmanCommittee for Economic Development of Australia, Sydney

Driving prosperity through effective competition8 January 2013Rod Sims, ChairmanThe Mexico Forum, Mexico City

ACCCount 1 January to 31 March 2013 46

5.APPENDICESCOMPLAINTS AND INQUIRIES5.1 During the March 2013 quarter the ACCC received 49 304 complaints and inquiries from

businesses and consumers (email 24 814, telephone 24 098 and letter correspondence 392).

5.2 Of these, 278 matters were escalated for enforcement assessment.

Table 6:   ACCC complaints, investigations and litigation progression

Category March 2013 quarter

Contacts received (phone, email and letters) 49 304

Under assessments commenced 278

Initial investigations commenced 103

In-depth investigations commenced 38

First instance litigation commenced 5

Table 7:   Geographic location of inquirers and complainants recorded in the national database

State ACL Scams (ACL + Scams)

Anti-competitive Practices

Industry Codes

Other

Total

NSW 3 258 5 256 8 514 179 29 1 153 9 875

Vic. 3 264 4 185 7 449 154 27 1 059 8 689

QLD 2 847 4 351 7 198 134 34 844 8 210

WA 1 268 1 892 3 160 61 15 386 3 622

SA 1 305 1 699 3 004 27 5 465 3 501

ACT 729 1 138 1 867 25 3 254 2 153

Tas. 229 501 730 7 2 65 804

NT 125 165 290 1 0 35 326

Overseas 110 2 551 2 661 3 0 36 2 700

Not Supplied

404 88 492 14 5 99 610

ACCCount 1 January to 31 March 2013 47

Note: single contacts may involve multiple issues. Contacts recorded differ from contacts received as

not all contacts received are entered into the ACCC database and some may be entered at a later

date.

Table 8:   Complaints and inquiries – top ten by industry

Industry Contacts

Non-store retailing (predominantly online sales) 1 178

Wired telecommunications network operation 472

Other store-based retailing 466

On selling electricity and electricity market operation 430

Motor vehicle manufacturing 390

Department stores 377

Car retailing 372

Air transport 337

Other electrical and electronic goods retailing 332

Supermarket and grocery stores 325

Note: single contacts may involve multiple industries

Table 9:   Top 10 scam categories reported to the ACCC

Scam category Contacts

Advanced fee /up-front payment 4 805

Lottery and sweepstakes 3 398

Phishing and identity theft (incl. banking & online account) 2 565

Online auction and shopping 2 080

Computer hacking (incl. malware and viruses) 1 932

Unexpected prizes 1 134

Job and employment 847

Dating and romance (including adult services) 727

False billing 624

Mobile phone (ringtones, competitions and missed calls) 368

ACCCount 1 January to 31 March 2013 48

Table 10:   Top possible contraventions of the Competition and Consumer Act (2010) (excluding scams and other miscellaneous categories)

Fair trading and consumer protection including Australian Consumer Law

Contacts

Guarantee as to acceptable quality 3 108

Guarantee as to due care and skill 707

Guarantee relating to the supply of goods by description, sample or demonstration 346

Guarantee as to fitness for any disclosed purpose etc. 306

Guarantees as to fitness for a particular purpose etc. 300

Guarantee as to reasonable time for supply 205

Consumer guarantees total 4 972

Misleading or deceptive conduct 3 217

Wrongly accepting payment 881

False representation price 271

False representations goods - standard, quality, value, grade, composition, style etc. 173

False representations total 444

Effective competition and informed markets part IV and IVB Contacts

Contravention of industry codes 124

Misuse of market power 101

Exclusive dealing 98

ACCCount 1 January to 31 March 2013 49

ENFORCEMENT OUTCOMES & MATTERS IN COURT

Litigation commenced

COMPETITION

Misuse of market power Visa (Inc) & Orscommenced | 4 February 2013jurisdiction | Federal Court Sydney

CONSUMER PROTECTION

Door-to-door selling EnergyAustralia Pty Ltd (formerly TRUenergy Pty Ltd) & Orscommenced | 7 March 2013jurisdiction | Federal Court Melbourne

Consumer protection Homeopathy Plus! Australia Pty Ltd & Orscommenced | 19 February 2013jurisdiction | Federal Court Sydney

Credence claims Luv-a-Duck Pty Ltdcommenced | 15 March 2013jurisdiction | Federal Court Melbourne

Vulnerable and disadvantaged person

Lux Distributors Pty Ltd (appeal)commenced | 1 March 2013 jurisdiction | Federal Court Melbourne

Misleading conduct The Jewellery Group (trading as Zamels) (appeal)commenced | 29 January 2013jurisdiction | Federal Court Adelaide

Misleading price advertising Nonchalant Pty Ltd trading as Abel Rent-a-Carcommenced | 14 January 2013jurisdiction | Federal Court Brisbane

ACCCount 1 January to 31 March 2013 50

Litigation ongoing

ACCCount 1 January to 31 March 2013 51

COMPETITION

Cartels Air New Zealand Ltdcommenced | 12 May 2010jurisdiction | Federal Court Sydney

Price fixing ANZ Banking Corporation Ltdcommenced | 25 July 2007jurisdiction | Federal Court Brisbane

Misuse of market power Cement Australiacommenced | 12 September 2008jurisdiction | Federal Court Brisbane

Price fixing Flight Centre Ltdcommenced | 9 March 2012jurisdiction | Federal Court Brisbane

Cartels P. T. Garuda Indonesia Ltdcommenced | 2 September 2009

jurisdiction | Federal Court Sydney

Cartels Prysmian Cavi e Sistemicommenced | 23 September 2009jurisdiction | Federal Court Adelaide

Cartels Yazaki Corporation & Australian Arrow Pty Ltdcommenced | 13 December 2012jurisdiction | Federal Court Melbourne

Cartels Renegade Gas Pty Ltd, Speed-E-Gas Ltd & Orscommenced | 23 August 2012jurisdiction | Federal Court Sydney

CONSUMER PROTECTION

Unfair contract termsAdvanced Medical Institute Pty Ltd & Orscommenced | 21 December 2010jurisdiction | Federal Court Melbourne

Door-to-door sales AGL Sales Pty Ltd & Orscommenced | 26 March 2012jurisdiction | Federal Court Melbourne

Small business scam Artorios Ink Pty Ltdcommenced | 10 September 2012jurisdiction | Federal Court Melbourne

Consumer protection Bajv Pty Ltd t/as Europcarcommenced | 10 November 2011jurisdiction | Federal Court Hobart

ACCCount 1 January to 31 March 2013 52

Consumer protection Breast Check Pty Ltdcommenced | 21 December 2011jurisdiction | Federal Court Perthawaiting judgment

Product safety Dateline Imports Pty Ltdcommenced | 25 June 2012jurisdiction | Federal Court Brisbane

Credence claims DuluxGroup (Australia) Pty Ltdcommenced | 5 December 2012jurisdiction | Federal Court Perth

Vulnerable and disadvantaged person

Excite Mobile Pty Ltdcommenced | 7 December 2011jurisdiction | Federal Court Adelaide

Awaiting judgment

Consumer guarantees Hewlett-Packard Australia Pty Ltd

commenced | 16 October 2012jurisdiction | Federal Court Sydney

Consumer guarantees Launceston Superstore Pty Ltd & Ors (trading as Harvey Norman)commenced | 19 November 2012jurisdiction | Federal Court Sydney

Consumer protection Safe Breast Imaging Pty Ltd & Anorcommenced | 21 December 2011jurisdiction | Federal Court Perth

Small business scam Safety Compliance Pty Ltd & Orscommenced | 16 April 2012jurisdiction | Federal Court Sydney

Scam Sensaslim Australiacommenced | 16 June 2011jurisdiction | Federal Court Sydney

Awaiting judgment

Telecommunications TPG Internet Pty Ltd (appeal)commenced | 4 July 2012jurisdiction | Federal Court Melbourne

Credence claims Turi Foods Pty Ltd & Orscommenced | 5 September 2011jurisdiction | Federal Court Melbourne

Continues following settlement with some of the parties.Awaiting judgment

Alleged contempt Peter Forstercommenced | 11 November 2011jurisdiction | Federal Court Sydney

ACCCount 1 January to 31 March 2013 53

Unfair contract termsAdvanced Medical Institute Pty Ltd & Orscommenced | 21 December 2010jurisdiction | Federal Court Melbourne

ACCCount 1 January to 31 March 2013 54

Litigation concluded

CONSUMER PROTECTION

Small business scam Adepto Publication Pty Ltd & Orscommenced | 30 September 2010concluded | 25 March 2013jurisdiction | Federal Court Sydneyoutcome | $750,000, declarations, injunctions

and costs for false and misleading representations in relation to advertising services that were never requested.

Online advertising Google Inc (appeal)commenced | 22 June 2012concluded | 6 February 2013jurisdiction | High Court of Australiaoutcome | Google Inc’s appeal upheld and the

High Court determined that Google did not itself engage in misleading or deceptive conduct.

Credence claims King Island Meatworks & Cellars Pty Ltd & Orscommenced | 18 August 2011concluded | 5 February 2013jurisdiction | Federal Court Melbourneoutcome | $50,000, three year injunction,

corrective ads and costs for misleading place of origin representations

Vulnerable and disadvantaged person

Lux Distributors Pty Ltdcommenced | 10 May 2012concluded | 8 February 2013jurisdiction | Federal Court Melbourneoutcome | ACCC case dismissed. The ACCC

has appealed this decision.

Pyramid selling Leslie Forsyth Stottcommenced | 19 July 2012concluded | 7 February 2013jurisdiction | Federal Court Melbourneoutcome | Disqualification order for managing

a company for 5 years, declarations and permanent injunction.

Misleading conduct The Jewellery Group (trading as Zamels)commenced | 5 April 2011concluded | 18 January 2013jurisdiction | Federal Court Adelaideoutcome | $250,000, declaration, corrective

orders, implementation of a trade practices compliance program and costs for misleading consumers regarding savings made on jewellery. The Jewellery Group has appealed the decision.

ACCCount 1 January to 31 March 2013 55

Undertakings accepted, Infringement Notices Paid, Audit Notices Issued

87B Undertakings

COMPETITION AND CONSUMER ACT

“To promote vigorous lawful competition and informed markets”

Alleged anti-competitive conduct

All Homes Pty Ltd

S87B undertaking dated 26 February 2013This undertaking relates to concerns that All Homes had attempted to induce real estate agents to arrive at an understanding where they would not charge less than two per cent of the sale price of a property for the supply of real estate agents services.

AUSTRALIAN CONSUMER LAW

“To encourage fair trading, protection of consumers and product safety”

Credence claims premium Samsung Electronics Australia Pty Ltd

S87B undertaking dated 17 January 2013This undertaking relates to allegations of misleading comparative energy savings representations between its Bubble Wash washing machines and conventional washing machines. The energy savings representations by Samsung were made to consumers in an in-store demonstration kit incorporating a promotional video which was displayed at approximately 90 retail stores in the period from March 2011 to October 2011.

Misleading advertising in motor vehicle advertising

Toyota Motor Corporation Australia Ltd

S87B undertaking dated 31 January 2013This undertaking relates to concerns relating to misleading and deceptive conduct by Toyota Australia in relation to the use of descriptions including the expressions 'leather’, ‘all leather', 'leather accent' and 'leather accented' in advertising and promotional materials.

Horticulture code V & A Liangos Pty Ltd

S87B undertaking dated 21 February 2013This undertaking relates to alleged breaches of the Horticulture Code of Conduct (a mandatory industry code prescribed under the Competition and Consumer Act 2010) by trading in horticulture produce with growers without entering into horticulture produce agreements with those growers; and not preparing, publishing or making publically available a document that sets out the general terms and conditions under which it will trade with growers of horticulture product.

ACCCount 1 January to 31 March 2013 56

Infringement Notices

TRADER DATE PAID AND AMOUNT

Super A-Mart Pty Ltd 5 March 20132 notices totalling $13 200

Craftmatic Pty Ltd 28 March 20133 notices totaling $19 800

Audit Notices

TRADER DATE ISSUED AND INFORMATION REQUIRED

Rushlyn Pty Ltd 12 March 2013Documents relating to the Trade Practices (Industry Codes – Franchising) Regulations 1998

ACCCount 1 January to 31 March 2013 57