07 May 2019
Competition and consumer laws are, around the world, in a state of flux and re-evaluation. Big questions are being asked about whether critical industries have been allowed to become too concentrated, whether existing legal frameworks are up to the challenges of regulating digital markets prone to oligopoly, and whether the core mission of such laws should be broadened to encompass issues such as employment, security, data privacy and media diversity.
While that introspection occurs, existing laws are already being applied by enforcement agencies including the ACCC to a much broader range of conduct than ever before – creating new, and often under-appreciated, risks for businesses.
Historically, the categories of conduct vulnerable to challenge were predictable. In broad terms, merger enforcement primarily focused on horizontal overlaps, market power enforcement focused on conventional categories of conduct such as predatory pricing, refusals to supply and bundling, and cartel enforcement focused on explicit collusion in relation to the pricing and supply of rivals’ output. In all cases, the focus was on the aggregation or use of economic power in a manner that could (or did) lead to increased prices, lower service levels or reduced output.
Examples of a new, more expansive approach to enforcement include:
Paired with the above issues are some increased practical risks.
Regulators are increasingly prepared to ‘chance their arm’ and may see a dignified loss in a marginal case as a worthwhile exercise – particularly in sensitive sectors. In Australia, the ACCC is also showing signs of a preference to litigate rather than settle certain cases and to seek fines of a different order of magnitude than it did previously. The prevalence of private damages claims following enforcement action has exploded in Europe (typified by the trucks cartel, in which total claims have been estimated to exceed €150billion), and the arrival of this trend to Australia is a matter of when not if.
The cutting edge of competition and consumer law enforcement has moved markedly in recent years. Large Australian corporates need to rethink the conventional assumptions about their exposure and ensure their compliance programs have kept pace.
A black-letter understanding of the laws will tell only half the story – a deep understanding of both the public policy pressures on an industry and the broader enforcement trends, in Australia and around the world, is critical.
The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.