COMPETITION AND CONSUMER NEWS

Welcome to Piper Alderman’s new bulletin looking at competition and consumer law. In this bulletin we seek to inform on developments in these areas of law and trade practices generally. The last two years have witnessed significant and far reaching changes to both competition law and consumer law. Considerable changes have been made to cartel provisions, price signalling and other aspects of Part IV provisions. Further, the introduction of the Australian Consumer Law has brought with it provisions relating to unfair standard form contracts, the introduction of consumer guarantees and wide remedies available to consumers and regulators. The ACL also introduces revised provisions in relation to misleading or deceptive conduct, unconscionable conduct and pricing representations which potentially impact on all levels of business activity. In addition, the ACCC in particular has been a proactive regulator and achieved a number of decisive and significant outcomes both in the courts as well as part of its broadened enforcement responsibilities and activities. The ACCC has also sought to engage more with industry, with lawyers and with the community generally regarding its conduct. For an in depth summary of the competition law and consumer law provisions of the Competition and Consumer Act, please click here.

Competition and Consumer News editorial team

Anne Freeman Bill Fragos Partner Senior Associate t +61 2 9253 9934 t +61 8 8205 3446 [email protected] [email protected]

www.piperalderman.com.au 1 March 2013 Contents

In the March 2013 edition:

ACCC proactive in enforcing ACCC cartel crackdown guarantees Associate, Stephen Morrissey looks Senior Associate, Bill Fragos looks at at how cartels are defined within the how the ACCC has been demonstrating Competition and Consumer Act and 3 its commitment to the area of consumer 10 examines the recent ACCC focus on guarantees, with separate proceedings commenced in cartel conduct. the last five months against Hewlett-Packard Australia and eleven Harvey Norman franchisees.

Prices too good to be true! Trade in peace Multiple, misleading and Senior Associate, Bill Fragos examines component pricing the implications for traders of a recent On 18 January 2013, the Federal 11 decision in the High Court of Australia 5 14 relating to the ability of local councils to Court imposed a $250,000 fine on The Jewellery Group Pty Ltd for misleading and deceptive pass specific types of by-laws and the potential for those conduct and false and misleading representations made by-laws to infringe implied rights of freedom of political about price of goods or services. Senior Associate, communication under the Australian Constitution. Bill Fragos and Lawyer, Nicola Caon look at how the ACCC has been proactive in instituting these types of proceedings.

ACCC announces its priorities Government decides insurance of 2013 contracts should be subject to On 21 February 2013 the Chairman unfair contracts terms laws of the ACCC, Rod Sims outlined the 12 In an article published in the Piper 8 ACCC’s priorities for 2013. Senior Alderman e-Bulletin March 2012 Anne Associate, Bill Fragos takes a closer look. Freeman reviewed the options being considered by the Commonwealth Government for unfair contract terms to apply to insurance contracts. Anne now provides an update.

www.piperalderman.com.au 2 March 2013 [PUBLICATION NAME]

ACCC proactive in enforcing consumer Contents guarantees The Australian Competition and Consumer Commission is demonstrating its commitment to the area of consumer guarantees. In the last five months the ACCC has commenced separate proceedings against Hewlett-Packard Australia Pty Ltd and eleven Harvey Norman franchisees. Both of these cases relate to representations made to consumers regarding consumer guarantees. Senior Associate Bill Fragos reviews the cases.

Harvey Norman franchisees It has been alleged that these companies Hewlett-Packard Australia Pty Ltd engaged in misleading or deceptive The ACCC commenced proceedings conduct by making false or misleading The ACCC commenced proceedings in in the Federal Court in Sydney against representations to consumers in relation to the Federal Court in Sydney alleging that a select group of Harvey Norman their consumer guarantee rights under the HP engaged in misleading or deceptive franchisees. They are: Australian Consumer Law (ACL). conduct by:

‡‡ Avitalb Pty Limited (Albany, WA) In these proceedings it has been alleged ‡‡ Making false or misleading by the ACCC that the franchisees misled representations to consumers in ‡‡ Bunavit Pty Limited (Bundall, Qld) consumers about their rights by representing relation to consumers’ statutory warranty and consumer guarantee ‡‡ Camavit Pty Limited (Campbelltown, that the franchisee had no obligation to rights. NSW) provide: ‡‡ Making false or misleading ‡‡ Gordon Superstore Pty Limited ‡‡ remedies if they had not been notified representations to retailers that HP (Gordon, NSW) about damaged goods within a specific period of time was not liable to indemnify them if they ‡‡ HP Superstore Pty Limited (Hoppers provided consumers with a refund Crossing, Vic) ‡‡ remedies for goods covered by a or replacement without HP’s prior manufacturer’s warranty authorisation. ‡‡ Ipavit Pty Limited (Ipswich, Qld) ‡‡ refunds or replacements for particular In the instance of the HP case, it is ‡‡ Launceston Superstore Pty Limited items or items priced below a specific important to note the allegations also (Launceston, Tas) amount. relate to representations made in the course of business by HP to retailers. ‡‡ Mandurvit Pty Limited (Mandurah, Further, the ACCC alleges that a Often the relationships as between a WA) representation was made that consumers manufacturer and retailer are governed by must pay a fee for the repair and return of private distribution agreements. ‡‡ Moonah Superstore Pty Limited faulty products. (Moonah, Tas) The ACCC alleges that HP represented: ‡‡ Oxteha Pty Limited (Oxley, Qld) ‡‡ remedies available for faulty HP goods ‡‡ Salecomp Pty Limited (Sale, Vic) were limited to HP’s sole discretion ‡‡ that consumers could only receive a replacement if there had been a previous attempt to repair the goods

Competition and Consumer News 3 March 2013 [PUBLICATION NAME]

‡‡ that warranties were limited to a The ACL also regulates the manner which ‡‡ check, and obtain advice regarding, specified express warranty period and warranties against defects are communicated terms and conditions of contracts with following the expiration of that period to consumers. That is, in the instance where consumers (this includes websites and consumers would have to pay HP for a representation is made to a consumer in-store signage) such repairs regarding remedies available to a consumer in the event goods or services are defective, ‡‡ check, and obtain advice regarding, ‡‡ that consumers could not return or the ACL specifies that particular information terms and conditions of contracts exchange HP goods purchased from is to be provided to consumers. Often such with manufacturers and retailers (this the HP Online Store unless otherwise information is included on goods packaging includes distribution agreements) agreed by HP at its sole discretion. and warranty cards supplied with goods. ‡‡ check, and obtain advice regarding, Consumer Guarantees The Federal Court has considered breaches warranties against defects of relevant provisions to be serious. In ‡‡ train staff appropriately in relation In early 2012, the ACCC identified the 2011 the Federal Court imposed penalties to consumer rights (this includes area of consumer guarantees as a national totalling $203,500 against MSY Technology having staff manuals and a compliance policy priority and a matter of particular Pty Ltd and four related companies for programme in place) concern. making false or misleading representations The ACL contains various provisions in regarding consumer warranties. ‡‡ ensure that any advertising material is clear and complies with the ACL. relation to consumer guarantees. Many Every year the ACCC receives a of these consumer guarantee rights considerable number of complaints cannot be excluded or limited. We and inquiries regarding guarantees and For further information contact: have previously prepared information warranties, recently estimated at 16,000 Bill Fragos, Senior Associate on consumer guarantees which can be per year by the ACCC’s Infocentre. It is accessed here. t +61 8 8205 3446 important that businesses supplying goods [email protected] Additional warranties can be offered and services make appropriate and accurate by businesses with respect to goods representations relating to consumer and services. Such warranties must be guarantees. To this end businesses should: additional to those guarantees provided under the ACL and must not limit those guarantees under the ACL.

Competition and Consumer News 4 March 2013 [PUBLICATION NAME] [PUBLICATION NAME]

Prices too good to be true! Multiple, misleading and component pricing On 18 January 2013, the Federal Court imposed a $250,000 fine on The Jewellery Group Pty Ltd for misleading and deceptive conduct and false and misleading representations made with respect to the price of goods or services. Recently, the ACCC has been proactive in instituting these types of proceedings and in some instances obtained penalties of up to $3.61m, as Senior Associate Bill Fragos and Lawyer, Nicola Caon discuss further.

The cases shed light on the approach breaches of sections 47 and 48 of the Section 48 prohibits component or partial of the ACCC and the courts, and the ACL, which prohibit multiple pricing and pricing of goods and services. A person is consequences for businesses should component pricing. The sections are aimed prohibited from making a representation they engage in conduct or make at regulating the sale of goods, and goods about the price of goods or services if the representations regarding price which and services in the case of section 48. represented price only constitutes part of are deemed to mislead the public. It is the total price of the goods or services, important that businesses are aware of Section 47 provides that a person must not unless the total price is also displayed as their obligations in relation to pricing laws, supply goods if: a single figure and in a prominent way. and not make misleading representations For example, a company may breach a. the goods have more than one displayed to consumers in relation to prices for the section where it displays the price price, and goods and services they supply. of a consumer good, but lists the cost of b. the supply takes place for a price that is GST or a surcharge separately and does Pricing Actions: Two broad types not the lower, or lowest, of the displayed not include this in the most eye-catching prices. or prominent figure displayed (See for In taking actions against companies in example, ACCC v Le Sands Restaurant,and relation to prices, the ACCC has referred The displayed price will include where Le Sands Café Pty Ltd t/as Signature to two separate parts of the Australian the price is: annexed to, written, printed, Brasserie (2011) ATPR 42-342). Consumer Law (ACL). stamped or located on the goods or anything used in connection with the good; A representation can be a verbal or The ACCC has referred to the ACL displayed on anything on which the goods written statement, and can include a provisions prohibiting misleading or are mounted for display; published in a promotional tool or publication, such as deceptive conduct (section 18) and false catalogue which is still current; or is in any a company brochure. The single price and misleading representations (section other way represented so that consumers is the total amount of costs payable 29). Conduct capable of being misleading could reasonably infer that the price is for the good or service at the time in relation to price may be where: applicable to the goods. It does not include the representation is made. It includes ‡‡ a price is displayed for a product where a price is displayed in a currency amounts such as taxes, levies, duties, fees, which does not show the full amount other than Australian or where the markings and any charge payable to the representor chargeable, for example omitting an on the goods are not considered the price (for example, set-up costs). or are a manifest typographical error. additional mandatory fee, or Certain exemptions apply, such as where ‡‡ the representation as to price is made Section 47 does allow for businesses to have the relevant charge is optional, or where to a reasonable person of the class to multiple pricing for the same goods available the charge is for transport of the goods which the conduct was directed, and in different locations/regions but only where from supplier to purchaser. However, the representation is in fact false or it is made explicitly clear in the relevant if the supplier is aware of the minimum would mislead that person. promotional material that the varied price amount to be paid for sending the goods, applies to a specific location or region only. this must be specified. A representation The ACCC has also taken action for

Competition and Consumer News 5 March 2013 [PUBLICATION NAME]

made in relation to a contract for also ordered Zamel’s to publish corrective penalty of $500,000 to be appropriate in periodic payments does not have to notices in newspapers and on its website, substitution of the order to pay a penalty display the single price for the contract as as well as implement a trade practices of $2m originally imposed by Justice prominently as the component prices. compliance programme. Further, they were Murphy. ordered to pay the ACCC’s costs. An Pecuniary penalties for breaches of appeal has been filed. The ACCC is appealing to the High Court sections 47 and 48 may be imposed. This in relation to the Full Court determination could be a maximum civil and criminal TPG Internet Pty Ltd v ACCC [2012] FCAFC that the advertisements were not penalty of $1.1m for a body corporate 190 misleading and further on the issue of and $220,000 for an individual with penalty. respect to section 48. The ACCC took action against TPG in relation to advertisements regarding Other recent cases Cases involving pricing internet services. TPG had revised its On 14 December 2012 in ACCC v Air misrepresentations initial set of adverts after complaint was made by the ACCC. There were to two Asia Berhad the Federal Court imposed a ACCC v Jewellery Group Pty Ltd (No 2) sets of advertisements which included TV, penalty of $200,000 against the company [2013] FCA 14 newspaper, radio and online. for breaching section 48 of the ACL.

In August 2012, Justice Lander of the The advertisements featured a headline Between March 2011 and January 2012 Federal Court found that Jewellery Group price of $29.99 per month for unlimited the company did not display on its Pty Ltd (Zamel’s) had misrepresented ADSL2+ broadband service. In fact, the website some airfare prices inclusive of the savings that consumers would benefit consumer was required to also purchase all taxes, duties fees and other charges in from in purchasing items during sale home phone line rental from TPG, taking the a prominent way and as a single figure. In periods. Zamel’s made statements in total monthly cost to $59.99. There were his reasons, Justice Tracey commented six catalogues and a flyer, which were also up front charges payable at the start of that not only do such actions attract provided in store, on its website and via the contract and customers were required customers to a transaction which, but for letter box drop between November 2008 to contract for a minimum of 6 months. This the misleading price, they would not have and May 2010, with regard to 44 different additional information was not included as otherwise entered into, but a company jewellery items. The letterbox drop prominently as the headline, nor did the engaging in such practices will also gain an involved the distribution of approximately advertisements display a prominent single advantage over other competitors who 3 million copies of the catalogue. price for the plan displayed. The second set do the right thing. of advertisements had made the additional In July 2011, the Federal Court found that In essence, Zamel’s advertisements charges more obvious than the first set. displayed a sale price next to a ‘strike Optus breached the ACL in relation to through’ price, or text stating ‘Was The matter proceeded before Justice campaigns launched by Optus in 2010. Murphy of the Federal Court, who found X’ ‘Now X’. The Court found that The relevant conduct was television, that there had been breaches of the Zamel’s had not sold or had rarely sold newspaper, billboard and direct marketing misleading or deceptive conduct provisions the items at the higher price displayed advertisements made by Optus. The in that TPG conveyed to the relevant class in the 4 months prior to the start of representations were that that for a of consumers that they could purchase the the sale. This meant that consumers monthly payment, a consumer would product without additional charges to the would not in fact ‘save’ the difference receive a headline data allowance of $29.99 which appeared in the headline. between the displayed prices. This was broadband, which was split into peak and His Honour also found that there had intended, the Court found, to induce off peak data allowances. There was a been breaches of the false and misleading consumers to purchase the items during disclaimer in smaller and less prominent statements and single pricing provisions. the sale periods. The Court found that print noting that “Speed limited once the statements amounted to misleading On appeal, the Full Court on 20 December peak data exceeded”. This meant that, in and deceptive conduct and false and effect, once the peak data was exceeded, misleading representations as to price. 2012 upheld Justice Murphy’s orders generally (including the order that the TPG the speed of the service was lowered to On 18 January 2013, Justice Lander implement a trade practice compliance 64kbps, regardless of the amount of off imposed a civil penalty on Zamel’s of programme). However, the Full Court peak quota remaining. Justice Perram held $250,000 which His Honour said reflected found that when considering all TPG’s that the advertisements were misleading the seriousness of the conduct and advertisements in their full context, they or deceptive in nature and ordered the need to deter other retailers from were not misleading. The Full Court pecuniary penalties, restraining orders and engaging in similar conduct. The Court intimated that it considered an overall corrective orders against Optus. www.piperalderman.com.au 6 March 2013 [PUBLICATION NAME] [PUBLICATION NAME]

Optus appealed the decision to impose to which an advertisement is directed ‡‡ train staff appropriately in relation pecuniary penalties and the Full Court knowledge of the types of offers which to consumer rights, including of the Federal Court handed down its are generally made about a particular misleading or deceptive conduct, false decision in March 2012, imposing a product representations and pricing issues (this penalty of $3.61m. includes having staff manuals) ‡‡ the assessment of whether a pricing New proceedings representation breaches the misleading ‡‡ ensure that they have a trade practices or deceptive conduct and false and compliance programme in place The ACCC has also commenced misleading representation provisions will for both training, the reporting of proceedings against Abel Rent A Car, a turn heavily on the facts and individual incidences and dealings with regulators business operating in Brisbane. It alleges circumstances surrounding any particular including the ACCC. that online and in print advertising, the advertisement company misrepresented the true cost of hiring vehicles in that it did not include ‡‡ contraventions of pricing provisions in the displayed price additional fees for (sections 47 and 48) can be established For further information contact: administration and a ‘vehicle recovery regardless of whether the contravention Bill Fragos, Senior Associate fee’. The ACCC has alleged breaches in question was intentional conduct or t +61 8 8205 3446 of misleading or deceptive and false or caused by error [email protected] misleading representations sections of the ACL, and the matter is set down for the ‡‡ the Courts may view a series of Nicola Caon, Lawyer first hearing in March 2013. contraventions as arising from one act t +61 8 8205 3417 or error, correspondingly reducing the [email protected] Infringement Notices number of penalty orders it may apply

In 2012, Foxtel paid seven infringement ‡‡ it is unclear whether an inadvertent notices issued by the ACCC totalling breach of the relevant sections will act $46,200 for false and misleading as a mitigating factor in relation to the advertisements during the 2011 Christmas penalty imposed. period. The advertisements included a prominent headline that a subscription Having regard to the decisions, businesses could be acquired for $55 per month on should take care that they consistently a six-month contract. In fact, the fine display a single price for goods and print locked customers into a 12 month services, and not misrepresent the price contract with a price increase to $77 per or any discounts potentially afforded to month for the second 6 months. a consumer. The ACCC will not hesitate to issue infringement notices for breaches Implications for retailers and and institute proceedings for more serious companies breaches. To this end businesses should:

These cases highlight that: ‡‡ check, and obtain advice regarding, advertising and marketing campaigns ‡‡ the ACCC will prosecute cases and ensure that any advertising material involving pricing representations using is clear, accurate and complies with the combinations of provisions relating to ACL (this includes TV, radio, internet misleading or deceptive conduct, false advertising, websites, catalogues and in- or misleading representations and/or store signage). pricing ‡‡ not rely on external advertising agencies, ‡‡ the ACCC has targeted misleading designers or copywriters that the product pricing representations in the period they have provided to the business 2011 to present complies with the ACL.

‡‡ the Courts may be willing to attribute to the reasonable person in the class

Competition and Consumer News 7 March 2013 [PUBLICATION NAME]

ACCC announces its priorities for 2013 On 21 February 2013 the Chairman of the ACCC Rod Sims outlined the ACCC’s priorities for 2013. Senior Associate, Bill Fragos takes a closer look.

Background penalties imposed by the Federal Court on a of issues process (SOI). Likewise after number of airlines. receiving responses during the SOI By way of general background, Mr Sims process, the ACCC recognises the need outlined that the ACCC: Mr Sims has highlighted the priority areas for to work cooperatively with parties to the ACCC in 2013. address any remaining concerns. ‡‡ would continue with its policy of “strong enforcement”, noting that Competition Regulation: Part IIIA with strong enforcement comes the ability to effect change of behaviour of The ACCC will continue to focus on cartel The ACCC awaits the Productivity companies conduct, anti-competitive agreements and Commission’s report relating to the misuse of market power. Some specific National Access Regime. ‡‡ would also continue to be proactive, areas of focus are highly concentrated seeking to address “main problem sectors, which includes supermarkets and Regulation: National Broadband areas” fuel sectors. Network (NBN) ‡‡ needs to get “big and usually very Further emphasis has also been placed on Having received submissions, the ACCC public decisions right” in the context online competition and consumer is currently formulating its position with of authorisation, merger, enforcement issues, including conduct impeding emerging respect to the Special Access Undertaking and regulatory decisions online competition or limiting the ability of that will apply to the NBN. NBN Co small business to effectively compete online. ‡‡ needs to be “practical” and engage proposes that the Undertaking to apply with industry and parties until 2040 and as such, the ACCC is Mergers and Acquisitions proceeding accordingly, with regard to the ‡‡ recognises the role of competition The ACCC will continue to pay close long term interests of end users (LTIE). and the importance of regulating attention in areas where mergers raise The ACCC proposes to have a draft monopolies serious competition concerns and especially decision by March 2013. in large complex transactions and mergers in ‡‡ needs to explain what they are and are concentrated markets. Regulation: Electricity not doing, and why. More resources have been dedicated Particular focus will be had by the ACCC of It is evident that over the last 12 months to the Australian Electricity Regulator mergers in the supermarket, liquor and the ACCC has been successful on (AER). Of particular focus is the need to hardware sectors. Further, electricity several fronts. It has instigated and had have the interests of consumers “better generation is also another sector which a number of proceedings resolved in its represented in regulatory decision currently undergoing considerable activity favour. The ACCC has been increasingly making”. There is also a proposal to with long term implications. prominent with its achievements and develop a national consumer advocacy obtained considerable media coverage. At the same time, the ACCC recognises that body to “provide a consumer voice Likewise it has undertaken a number of it needs to be effective, transparent and for energy policy and regulatory educative initiatives, including with respect responsive to the needs of business when development”. to consumer guarantees and its ACCC administering its statutory processes. To Shopper App, its Knock, Knock, Who’s this end, it is currently revising the Informal Regulation: Wheat code There door to door campaign amongst Merger Process Guidelines and will continue to This sector is currently undergoing others. In the area of competition law, the work and be communicative with businesses legislative and regulatory changes, in ACCC has been considerably successful during the merger review process, allowing particular with respect to access to wheat with respect to cartel conduct in the submissions to address issues prior to the ports. airline freight sector, with significant public consultation stage - the statement

Competition and Consumer News 8 March 2013 [PUBLICATION NAME] [PUBLICATION NAME]

Consumer Problems Consumer protection issues impacting Small business Given the introduction of the Australian on Indigenous communities There will be a continued focus on the Consumer Law over two years ago, it The ACCC recognises the need to ACCC on anti-competitive conduct has become apparent to the ACCC that empower indigenous communities and and unconscionable conduct particular areas require focus. instill a sense of confidence in dealings with impacting on small businesses. This business. Telephone plans in out of coverage extends to the exploitation of small Online consumer issues areas and misrepresentations about the businesses by other businesses with a authenticity, nature and characteristics of art superior bargaining position, including In addition to emerging competition will continue to be areas where enforcement in the context of supermarkets and mentioned above, the ACCC is continuing action will be taken. suppliers, and also within the online to look closely at online group buying sector. websites. It is also interested in “fake Credence claims, particularly in the testimonials” and reviews in an online Given a perceived imbalance of bargaining retail context, given the increased trend of food industry power by small businesses generally, online shopping. It is apparent that consumers place the ACCC will “continue to facilitate collective bargaining by suppliers, Telecommunications and energy importance on representations where, in many instances, such representations cannot including primary producers”. Of particular concern to the ACCC has be readily verified. In such cases, a consumer An industry working group is also been the conduct of some energy retailers is reliant or dependent on the supplier, proposing to establish a supermarket towards consumers, with respect to door manufacturer or producer on the provision code to apply to supply chain issues. to door sales. It will therefore continue of accurate information. The ACCC is of the view that such a with its education campaign including Unfair contract terms code should be given the force of the handing out “Do Not Knock” stickers. Competition and Consumer Act and The ACCC has also indicated that it will With respect to the new unfair contract feature meaningful enforceable provisions. terms provisions that were introduced along continue to be vigilant with respect to There is also a review currently representations made regarding goods with the Australian Consumer Law in late 2010 and 2011, the ACCC will soon release being undertaken with respect to the and services with respect to tech products Franchising Code of Conduct. and IP services. The ACCC has been a report in relation to clauses of concern, particularly in telecommunications sector, Consideration is being had as to particularly successful in this space over whether certain penalties should apply the last couple of years. airline sector, hire car industry and with respect to online trading. to contraventions in order to act as a deterrent. Further, the ACCC is Consumer guarantees Mr Sims has indicated that the ACCC has reviewing the range of remedies available Education of consumers and businesses spent a lot of time in the past year working for contraventions and potentially alike with respect to consumer guarantees with businesses to ensure they are not increasing and expanding options will be an issue for the next 12 months. infringing unfair contract terms, and now it available, including pecuniary penalties, will be shifting its emphasis to prosecuting against franchisors who have failed to It appears the ACCC will continue those who have not taken heed. comply with their obligations. initiating actions for alleged misrepresentation of consumer Carbon pricing guarantees provisions of the Australian For further information contact: Consumer Law. The ACCC will continue to consider unjustifiable price increases attributed to the Bill Fragos, Senior Associate “carbon tax”. t +61 8 8205 3446 [email protected]

Competition and Consumer News 9 March 2013 [PUBLICATION NAME]

ACCC cartel crackdown Associate, Stephen Morrissey looks at how cartels are defined within the Competition and Consumer Act and examines the recent ACCC focus on cartel conduct.

It is an offence under Part IV of the In Australia in 2008, the ACCC pursued Competition and Consumer Act 2010 (Cth) to: Qantas alleging various breaches of the cartel provisions in its air cargo/ freight ‡‡ make a contract or arrangement, or division. Qantas received a fine of $20 arrive at an understanding, containing a million. “cartel provision”; or The ACCC has also pursued 15 local, ‡‡ give effect to that “cartel provision”. European and Asian based airlines for price- fixing in the Australian air cargo market. A “cartel provision” can be summarised as provision, between parties likely to be in As at December 2012, almost $100m in competition with each other, which has the fines have been issued to 13 airlines, the purpose of, or likely effect of: most recent being a $7.5million fine issued to Thai Airways. ‡‡ fixing, controlling or maintaining the price of any goods or services supplied Some of the more notable fines issued are: ‡‡ restricting or limiting production or Airline Amount Date supply by one or more parties Qantas $20m Dec 2008 ‡‡ markets sharing Singapore $11.5m Dec 2012 ‡‡ bid rigging. Airlines

In recent years, the ACCC has focussed on Cathay $11.25m Dec 2012 identifying, punishing and preventing cartel Pacific conduct, due to the detrimental effect of Emirates $10m Oct 2012 such conduct on competition.

In June 2006, competition regulators around In the Federal Court decisions against the world simultaneously raided the offices Emirates and Singapore Airlines, the ACCC of airlines in the United States and Europe was also awarded the amount of $500,000 for the purpose of investigating claims by in costs in each case. Lufthansa that many major airlines had colluded in the setting of their fuel and Speaking in relation to the recent judgment security surcharges. The cartel originated in of the Federal Court against Thai Airways, 1996. the Chairman of the ACCC, Rod Sims, said that the judgement was a “strong signal to In the United States, Qantas freight division the business community that cartel conduct was targeted for allegations of price- will not be tolerated”. fixing between 2000 and 2006. In 2007, Qantas agreed to plead guilty and incurred The ACCC has also instituted proceedings US$61 million in fines to be paid to the US which are currently before the Federal For further information contact: Department of Justice. The former head of Court against Air New Zealand, Cathay the freight division spent 6 months in US Pacific and Garuda Indonesia. Stephen Morrissey, Associate prison after also pleading guilty to charges t +61 2 9253 9987 relating to the price-fixing cartel. [email protected]

Competition and Consumer News 10 March [PUBLICATION NAME] [PUBLICATION NAME]

Trade in peace? On 27 February 2013 the High Court of Australia handed down its decision relating to the ability of local councils to pass specific types of by-laws and the potential for those by-laws to infringe implied rights of freedom of political communication under the Australian Constitution. Senior Associate Bill Fragos examines the implications for traders.

Whilst on first blush the decision in The High Court had to consider whether which is compatible with the Attorney General (SA) v Corporation of the such by-laws were “an unreasonable maintenance of the constitutionally City of Adelaide would appear to have exercise” of the by-law making power prescribed system of representative little to do with the rights of traders and “not a reasonably proportionate or and responsible government, and the and retailers, the implications of the proportionate exercise of the power”. The procedure prescribed by section 128 decision are such that local councils may High Court was consistent in determining of the Constitution for submitting pass laws regulating the conduct of the that such by-laws are reasonable. That is, a proposed amendment of the public, maintaining the peace on roads the High Court found that it is necessary for Constitution to the informed decision and in public areas generally and the use councils to be able to regulate activities on of the people. of permits in order to engage in certain roads and in other public places to ensure Whilst the answer to the first proposition activities. good governance and for the convenience, was yes, the answer to the second was comfort and safety of its inhabitants. This particular case involved members no. The High Court found that the by- of a particular congregation, “Street Chief Justice French said that the by- laws were “reasonably appropriate and Church”, who preached to the public in laws were “a rational mechanism for the adapted to serve the legitimate end of the Rundle Mall, Adelaide. Council by-laws regulation by proscription, absent permission, by-law making power”. As such, councils were in place regarding such activities of conduct on roads which involves unsolicited are able to pass by-laws to regulate and further that they required permission communication to members of the public. such behaviour, provided that they are from the Council. The relevant by- They were not, on their face, capricious or reasonably appropriate and sufficiently laws required permission from Council oppressive. Nor did they represent a gratuitous provide for political communication to to “preach, canvass, harangue, tout for interference with the rights of those affected occur . business or conduct any survey or opinion by them. They provided a mechanism for The broader ramifications for traders and poll” and further to “give out or distribute protecting members of the public from retailers are evident. Given the abilities to any bystander or passer-by any handbill, gratuitous interference with their freedom to of councils to regulate such behaviour, book, notice, or other printed matter”. choose whether and, if so, when and where councils may be able to restrict types they would be the subject of proselytising Several Rundle Mall traders and a retailers of conduct in certain areas. It may be, communications. They were directed to modes group expressed their concerns at the for example, that a council does not and places of communication, rather than time about the noise being made by issue permits in particular malls, streets content” . Street Church, that it was impacting on or centres. This also invites traders their businesses and in particular deterring The next step that the High Court was and retailers and retail groups to open customers . Indeed, further complicating required to take was to consider whether dialogue with councils about the kind of the situation was that the Street Church the by-laws impacted on the implied conduct to be permitted and where it attracted gatherings of people protesting freedom of political communication under should be permitted. and drowning out the messages of the the Australian Constitution. The Court Likewise, whilst not specifically in issue in Street Church . applied the following a two-fold test, namely: this case, by-laws can regulate the manner The High Court was required to 1. Whether the law, in its terms, operation in which traders and retailers “tout for consider the meaning of phrases including or effect, effectively burdens freedom of business”. This can impact on traders “preach”, “canvass” and “harangue”. communication about government or directly, including on the use of spruikers Whilst it was not necessary to go further political matters; and if so and mascots. in this particular case, it is evident that the by-laws also concerned with persons who 2. Whether the law nevertheless For further information contact: “tout for business”. Similar by-laws are reasonably appropriate and adapted quite common around Australia. to serve a legitimate end in a manner Bill Fragos, Senior Associate Competition and Consumer News 11 t +61 8 8205 3446 March 2013 [email protected] [PUBLICATION NAME]

Government decides insurance contracts should be subject to unfair contracts terms laws In an article published in the Piper Alderman e-Bulletin last year which you can read here, Anne Freeman reviewed the options being considered by the Commonwealth Government for unfair contract terms to apply to insurance contracts. Anne now provides an update.

The final form Regulation Impact or sets the upfront price payable under the Statement was released in November contract. Contact us 2012, addressing the question of whether unfair contract terms (UCT) regimes We will report further on this development which presently exist in legislation once draft legislation is tabled. Sydney including the Competition and Consumer Level 23 Governor Macquarie Tower Act and the ASIC Act should be extended For further information contact: 1 Farrer Place to insurance contracts, and if so, in what Sydney NSW 2000 Anne Freeman, Partner DX 10216, Sydney Stock Exchange manner. t + 61 2 9253 9999 t +61 2 9253 9934 f + 61 2 9253 9900 Since that time, the Commonwealth [email protected] Treasury has determined that UCT laws Melbourne should apply to insurance contracts. Level 24 The Government has decided that 385 Bourke Street it will introduce legislation amending Melbourne VIC 3000 GPO Box 2105 the Insurance Contracts Act, effectively Melbourne VIC 3001 adopting the regime applying under the DX 30829, Collins Street t + 61 3 8665 5555 ASIC Act, with some adjustment. f + 61 3 8665 5500 In summary, the proposed regime: Brisbane ‡‡ will apply to standard form insurance Riverside Centre contracts Level 36 123 Eagle Street Brisbane QLD 4000 ‡‡ will not apply to life insurance contracts GPO Box 3134 Brisbane QLD 4001 ‡‡ will apply such that if a term is found to DX 105, Brisbane be unfair, the insurer will be in breach t + 61 7 3220 7777 f + 61 7 3220 7700 of the duty of utmost good faith

‡‡ will be able to be agitated by a Adelaide consumer as well as ASIC Level 16 70 Franklin Street Adelaide SA 5000 ‡‡ will provide ASIC with the same range GPO Box 65 of enforcement powers available to it Adelaide SA 5001 DX 102, Adelaide currently in relation to UCT under the t + 61 8 8205 3333 ASIC Act. f + 61 8 8205 3300

Of note, the proposed regime will not [email protected] apply to a term to the extent that it www.piperalderman.com.au Follow us on Twitter @PiperAlderman defines the subject matter of the contract

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www.piperalderman.com.au 12 March 2013