ACCC-AER Annual Report 2014-15
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ANNUAL REPORT 2014–15 Contact us If you have any questions or ideas about this report, please contact: Director, Corporate Communications Australian Competition and Consumer Commission 23 Marcus Clarke Street Canberra ACT 2601 Australia Internet: www.accc.gov.au Email: [email protected] Phone: (02) 6243 1111 +61 2 6243 1111 (international) Fax: (02) 6243 1199 + 61 2 6243 1199 (international) Online version Web address of this report: www.accc.gov.au/annualreports ISSN 1327−4767 ISBN 978 1 922145 62 8 Australian Competition and Consumer Commission 23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601 © Commonwealth of Australia 2014 This work is copyright. In addition to any use permitted under the Copyright Act 1968, all material contained within this work is provided under a Creative Commons Attribution 3.0 Australia licence, with the exception of: • the Commonwealth Coat of Arms • the ACCC and AER logos • any illustration, diagram, photograph or graphic over which the Australian Competition and Consumer Commission does not hold copyright, but which may be part of or contained within this publication. The details of the relevant licence conditions are available on the Creative Commons website, as is the full legal code for the CC BY 3.0 AU licence. Requests and inquiries concerning reproduction and rights should be addressed to the Director, Corporate Communications, ACCC, GPO Box 3131, Canberra ACT 2601, or [email protected]. Important notice The information in this publication is for general guidance only. It does not constitute legal or other professional advice, and should not be relied on as a statement of the law in any jurisdiction. Because it is intended only as a general guide, it may contain generalisations. You should obtain professional advice if you have any specific concern. The ACCC has made every reasonable effort to provide current and accurate information, but it does not make any guarantees regarding the accuracy, currency or completeness of that information. Parties who wish to re-publish or otherwise use the information in this publication must check this information for currency and accuracy prior to publication. This should be done prior to each publication edition, as ACCC guidance and relevant transitional legislation frequently change. Any queries parties have should be addressed to the Director, Corporate Communications, ACCC, GPO Box 3131, Canberra ACT 2601, or [email protected]. ACCC 08/15_979 www.accc.gov.au EXECUTIVE OFFICE 2 October 2015 The Hon. Scott Morrison MP Treasurer Parliament House CANBERRA ACT 2600 Dear Treasurer We are pleased to present to you the Annual Report of the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Regulator (AER) in accordance with section 63 of the Public Service Act 1999. This report covers operations for the year ended 30 June 2015. The ACCC and AER have obligations under section 171 and section 44AAJ of the Competition and Consumer Act 2010 to provide an annual report to the responsible minister within 60 days of the end of the financial year. Accordingly, we provided a copy of this report to the responsible minister at the time, The Hon. Bruce Billson MP, on 28 August 2015. We certify that the ACCC and AER have prepared fraud risk assessments and fraud control plans. We have in place appropriate fraud prevention, detection, investigation, reporting and data collection procedures and processes that meet the specific needs of the agency and comply with the Commonwealth Fraud Control Guidelines. Rod Sims Paula Conboy Chairman, ACCC Chair, AER Contents Part 1 Year in review 1 Part 2 Overview of the ACCC and AER 11 Part 3 Report on performance 23 Program 1.1 Australian Competition and Consumer Commission 27 Goal 1: Maintain and promote competition 28 and remedy market failure Goal 2: Protect the interests and safety of consumers and support fair trading in markets affecting57 consumers and small business Goal 3: Promote the economically efficient operation of, use of, and investment in monopoly infrastructure in the long-term interest of end users 123 Program 1.2 Australian Energy Regulator 165 Goal 1: Delivering167 better network regulation Goal 2: Building consumer 179confidence in retail energy markets Goal 3: Supportingof energy the 190 efficientmarkets operation Part 4 Management and accountability 201 Goal 4: Increase our organisational effectiveness through a commitment to our people, planning, systems202 and stakeholder engagement Part 5 Financial statements 241 Part 6 Appendixes 317 Part 1 Year in review INTRODUCTION 1 Introduction In the year that marked the 40th anniversary of the Trade Practices Act 1974, the Australian Competition and Consumer Commission and the Australian Energy Regulator continued to deliver economy-wide outcomes that enhance the welfare of all Australians. In the first half of 2014, we overhauled our internal corporate governance system, streamlined our organisational structure and reduced our staff numbers, to match available funding. The considerable synergies and organisational efficiencies between the ACCC and AER’s competition, consumer and small business, and infrastructure regulation means that in 2014–15 we have been able to continue to meet the high expectations of our stakeholders. Competition Competition underpins our market economy and brings innovation, efficiency and dynamic ways to meet consumers’ needs, but it needs well-defined boundaries on commercial behaviour. The ACCC has continued to vigorously pursue enforcement activities when market conduct will, or will have the potential to, harm the competitive process. Throughout the year the ACCC achieved some significant outcomes and instituted proceedings in a number of important competition matters, for example: • The Federal Court ordered $8.3 million in total penalties against businesses supplying forklift cylinder gas that were engaged in cartel activity. • We started proceedings against several of the major businesses in the supply chain for electrical cable, alleging cartel and exclusionary conduct. • We started proceedings alleging bid rigging involving mining exploration licences in the NSW Bylong Valley. • The ACCC took the CFMEU to court for alleged secondary boycott and undue harassment or coercion at Melbourne construction sites. • Cabcharge Australia Limited provided a court enforceable undertaking that clears the way for third parties to process Cabcharge cards, a first for the taxi payments industry. 2 ACCC and AER Annual Report 2014–15 The ACCC reviews mergers and acquisitions to assess whether they will substantially lessen competition. In the past year, we considered close to 320 matters and conducted around 40 public reviews. Our merger analysis covered a diverse range of industries, including pharmaceuticals, travel and building products. As a result, we accepted court enforceable undertakings to resolve competition concerns identified in seven matters. Another important area of our work involves authorisations and notifications. These processes provide legal protection for anti-competitive conduct when the public benefit INTRODUCTION outweighs the public detriment. In 2014–15, we issued 33 final authorisation decisions spanning industries such as aviation, agriculture and waste services. We also received more 1 than 750 exclusive dealing notifications. The ACCC continued to encourage governments planning to privatise significant infrastructure assets to ensure appropriate market structures or regulatory arrangements are in place prior to sale. Australia needs to be careful to ensure that privatisation boosts economic efficiency rather than detracts from it. The ACCC hosted the 2015 Annual Meeting of the International Competition Network (ICN) in late April. The three-day event was a great success. More than 400 delegates from over 70 countries attended the meeting which had a strong focus on the digital economy. It was an optimal time to host the meeting in our region given the significant developments in competition law and policy within ASEAN. The ACCC is delivering practical and targeted capacity building to our ASEAN counterparts under a Competition Law Implementation Program. As well as sharing our experience with emerging agencies, we also welcomed the opportunity to sign a cooperation arrangement with the Japan Fair Trade Commission. Our agreement paves the way for increased cooperation and investigative assistance on competition matters affecting Australian and Japanese markets. Consumer and small business Research commissioned by the ACCC shows there is an increased understanding, among consumers and small businesses, of the ACCC’s work. Our involvement in 44 proceedings under the Australian Consumer Law (ACL) may partly explain this trend. On top of court penalties, we also accepted eight consumer protection-related undertakings and received payment for 16 infringement notices in the past year. Our interventions covered everything from placing a bet, ‘discounts’ on energy bills and the rights of gamers when buying online. One high-profile case put the spotlight on how retailers deal with smaller suppliers. Coles Supermarkets settled two cases brought by the ACCC in the Federal Court by admitting it had engaged in unconscionable conduct in its dealings with certain suppliers. Following admissions by Coles and agreement on the facts, the Court ordered Coles to pay penalties totalling $10 million. Coles also provided an undertaking to the ACCC to establish