Keeping an eye on things

The ACCC’s first female chair plans for the impact of her service to well outlast her period at the helm of the regulator — and she is particularly focused on sustainability and technological change. 

In 2023, the agendas of boards and households don’t look too dissimilar. That’s no coincidence, according to Australian Competition and Consumer Commission chair and veteran of private competition practice Gina Cass-Gottlieb, who says the commission’s priorities are underscored by the relentless cost of living crisis. That looming pressure could hardly be more front of mind for Cass-Gottlieb, with the government granting her unprecedented powers to intervene on gas prices in January of this year, and fresh calls for her to investigate bank term deposit rates. So, what does she regard as the most important issues for directors to consider?

“All around us we have these challenges — sustainability, cost of living, the fast pace and complexity of digital change,” she says. “The first and the third offer real opportunity. The whole community and the business community is committed to see them achieved in as effective a way as possible — and regulation has a big role to play.”

The ACCC is zeroing in on greenwashing claims with its enforcement actions driven by a groundswell of consumer demand and escalating business feedback. On the eve of the publication of her sophomore set of enforcement priorities, the RBA Payments Systems board member offers in-depth insight into how the regulator is approaching the nuances of sustainability practices, the international imperative to modernise the internet, and how she is intending for the impacts of her tenure to endure. 

ACCC priorities

The ACCC is due to release its FY24 priorities in mid-March. What can business leaders expect?

“You will see a lot of continuity,” says Cass-Gottlieb. “Because in multiple areas, the key priorities will be long and continuing projects of priority for us, such as sustainability and the environment. We are now beginning its initiation, but it will develop, grow momentum and move from a guidance phase to a growing phase, in line with the enhancement of capacity amongst businesses and the ACCC to engage with this. First growth in capacity, knowledge and support — then we’ll move into an enforcement phase.”

The emphasis on the big picture is grounded by her experience in private practice. “I was always incredibly fortunate in my private practice to have opportunities to not only work on transactions that were part of the clients making critical changes in their markets and industries — I was always given the opportunity to see the broader impact of what was happening. We also acted for industry associations and, not infrequently, for governments looking at regulatory design, making submissions on finding new approaches to challenges.”

While contextual issues are pushing some priorities up the list, the bread and butter of the commission endures — including cartel detection, the culmination of long-vaunted reform to unfair contract term parameters and penalties, and a turbulent mergers and acquisitions (M&A) sector.

“We do not want [recognising cartel behaviour] to ever be outside the minds of senior members of companies, as we are certainly still seeing examples of that behaviour in a wide set of sectors,” says Cass-Gottlieb. “We want to keep that top of mind at a senior level — and in training throughout corporations.”

In a recent keynote address to the University of Sydney’s Let’s Talk About Corporations series in February, Cass-Gottlieb’s predecessor Rod Sims AO expounded on his already vocal calls for a mandatory M&A notification scheme. “The courts require evidence about what will happen after a merger has occurred, but it is hard to prove what has not yet happened,” he said. “The courts seem largely unwilling to accept commercial logic — that if you have market power you will use it. The courts can sometimes seem naive.”

On the maturity of Australia’s M&A infrastructure, Cass-Gottlieb says, “We are in the process now of receiving a higher number of merger authorisation applications, which bring to bear the capacity for the applicants to refer to public benefits, as well as the substantial lessening of the competition test. As we step through more of those — and not only experience them, but also look at some practices, which either push the boundaries, or do not notify us, or notify late — we’re considering where there would be useful reforms in order to enhance our ability to do reviews with all the information we require and in the most effective way. But in addition, to have greater clarity about the notification processes — the manner in which [we are notified] and the obligation to notify us. So we are thinking about this in a holistic way.”

Cass-Gottlieb has previously called out the “strategic” conduct of global players pursuing cross border transactions, telling the Law Council Competition and Consumer Law workshop in late 2022 that she had noted a tendency to delay their engagement with the ACCC until the 11th hour, when suddenly the matter becomes urgent.

“We accept that sometimes there may be legitimate reasons for this approach,” she said. “But I caution merger parties and their advisers against attempting to leverage positions reached with some agencies to limit the time available for other agencies to consider transactions. We will not hesitate to push back in these cases, so my view is that taking this approach simply slows the entire approval process down.” 

Sustainability

Greenwashing has the potential to undermine public trust in businesses, says Cass-Gottlieb. “It’s not too strong to say that consumers are demanding deliverable sustainability practices in products, business practices and household commitments.”

Addressing why substantiating environmental claims has climbed up her list of priorities, she notes the driving forces behind the escalating focus on greenwashing are the community and consumers. “When these claims are not met, trust in businesses is eroded, especially in a rising cost of living environment where consumers place a high value on sustainability. They feel they are not getting the value they seek, and often pay a premium for, which penalises consumers from both an environmental and cost of living perspective.”

The ongoing increases in the consumer price index (CPI) have had a significant impact on both trust and family budgets, making the average consumer less tolerant of exaggerated and unsubstantiated claims.

Cass-Gottlieb emphasises that businesses are investing substantial sums to change their products and meet commitments or expectations from shareholders and customers. “However, untruthful sustainability claims by business rivals create a competitive disadvantage for businesses that are genuinely investing,” she says. “These claims are problematic, not only from a consumer protection and truth in advertising perspective, but also from a competition standpoint.”

The commission wants to get in front of the chilling effect poor practices may have among businesses capable of genuine innovation and impact. “We want to give incentives and assurance for the businesses that are genuinely making investments and being innovative in the way they take their steps to achieve commitments,” says Cass-Gottlieb.

Acknowledging the spectrum of greenwashing activity — where some actors with good intentions may simply err in their estimation of the scale or import of sustainability activities — the ACCC will issue guidance to clarify the most common misconceptions. In the meantime, directors would do well to note the information asymmetry at the heart of these transactions.

“It is important to remember that consumers have no capacity to validate a claim,” says Cass-Gottlieb. “They cannot know whether a claim that a product is combustible and compostable is true across the production chain. They have no capacity to test those claims. They also have no capacity to test a claim that a product is recyclable or has better attributes than a competitor’s product. Claims that are incredibly general — we are green, we are sustainable, we are a good component of the circular economy — are likely to mislead, even though they may give some confidence to some consumers.”

The ACCC is looking for definite statements as to what the claim is — across production, extraction, distribution — and it will need cross-industry recognition. “We will be taking a very informed, consistent approach for this,” says Cass-Gottlieb. “We are looking for clear and specific environmental claims substantiated by facts, scientific information and production information that shows how they apply.”

Opportunities for collaboration across businesses on sustainability — or other emerging board priority areas — can be assessed and accepted by the commission, for which Cass-Gottlieb says the public benefit test under the Competition and Consumer Act 2010 is well placed and fit for purpose.

“There are areas like cybersecurity, particularly in emergency situations. As happened after each of the disturbing data breaches last year, there was sharing of information under quite clear, protective circumstances.”

These circumstances included protecting customers from increased scam or financial loss exposure. “We worked very closely with relevant parties — telcos, financial institutions — and participated in the whole-of-government response to enable data being made available, subject to very clear protections, in order to protect customers. There will be circumstances in emergencies requiring quick action, and the ACCC participates in order to reduce the risk of significant losses for consumers.”

The legislative framework allows the commission to consider longer-term sustainability collaboration, where co-investment and collaboration could accelerate the pace of new technologies and processes, through a similar lens. “We recognise the innovation and leadership of certain companies in certain industries taking critical steps to introduce disruption and protection for customers against such risk,” says Cass-Gottlieb.

However, the regulator’s foundation criteria — public benefit through competition — remains the most relevant driving force. “There are real opportunities for competitive differentiation,” she says. “We want those to flourish and continue to be, in the way that competition is, a spur to investment, innovation and greater achievements in terms of sustainability. They’re the key factors for us and our authorisation process is well adapted to such examples to look where the detriment is. Where there aren’t independent competitive initiatives, but where the public benefit we can see achieves faster, broader, more innovative achievement, these are factors we’ll weigh up.”

Where industry and their representative bodies may yet feel the sting of the regulator’s scrutiny more acutely will be in environmental certification, which consumers rely on to cut through opaque and uncertain claims, but which Cass-Gottlieb says requires independent certification to ensure its robustness.

“We are worried about the use of trademarks and labels that are wholly misapplied or claimed to have a greater breadth and application to the product than they actually do. To overcome the problem of difficulty for consumers to know what’s truthful in a claim, we are trying to step through a specific, substantiated and clear claim process so everyone can have confidence.”

The ACCC will work with the Australian Securities and Investments Commission (ASIC) and in step with state-based consumer protection and enforcement bodies to enhance efforts in the area says the ACCC chair. Ongoing collaboration between regulators is now routine in the sustainability sector, and Cass- Gottlieb says she meets regularly with ASIC, the Clean Energy Regulator (on issues such as carbon credits and offsets where scientific expertise is required), and the Australian Prudential Regulation Authority (on the emerging prudential challenges of green loans and finance) to avoid duplication and increased regulatory burdens.

Digital platforms

Online business rules of engagement are due for a wholesale rewrite according to the ACCC’s signature report, the fifth instalment of its Digital platform services inquiry series. Interim report No. 5 Regulatory Reform looks different to its predecessors. Instead of a deep dive into areas like No. 4’s retail marketplaces, or upcoming No. 6’s focus on social media, the most recent instalment seeks to keep pace with global counterparts and hold tech giants to a higher standard of behaviour through a compulsory code of conduct.

At the time of print, the recommendations are subject to a Treasury consultation process, with commentators flagging that the reforms could be included in the upcoming May budget.

“It’s the right time because 2023 is a pivotal year,” says Cass-Gottlieb, noting that a new EU framework was legislated and commenced at the end of last year, with its application to become clear by the middle of this year. “They’re engaging closely with the digital platforms in relation to their interoperability, choice architecture and services protections for consumers.”

The ACCC is also closely watching developments in the UK. At the time of printing, a new regulatory framework was due to be introduced into the UK parliament.

Cass-Gottleib is aiming for Australia to keep pace with key global jurisdictions, while weaving together the best components of various foreign regimes.

“You will see that on consumer measures we’ve taken an approach similar to the European approach, similar to parts of the Japanese approach,” she says. “They are legislative protections and apply broadly. In competition measures, we’re being more selective and focused, as the recommendation we’ve made is more in line with the UK approach than the EU one. So we’re not saying that legislation can take account of all of this.”

Cass-Gottlieb says the reforms prioritise the most significant online platforms. “Platforms that will be designated have a key role in respect of each particular service in terms of transactions used by consumers — a critical gatekeeper-style role in order to be designated. That designation will then occur in respect of the particular service where that position is held.”

However, smaller platforms and businesses transacting online are not immune from the commission’s focus, the urgency again compounded by consumer demands for protection against surging rates of digital scams, the squeeze of which is exacerbated by rising household budget pressures. Cass-Gottlieb says the ACCC has seen a doubling of scams on digital platforms year-on-year, and increased activity in the final months of 2022.

“The first part of our consumer reforms is urgent and we want to apply them across platforms, including small ones such as Australian-based e-commerce platforms,” she says. “From a competition measures point of view, it’s an important time to have as much competition as possible, more innovation, more benefits and a rising cost of living.”

Cass-Gottlieb says the question of which body is placed to enforce the potential new code sits with the government, which will determine who will make the designation decision between government and regulator.

Women in leadership

In 35 years as a competition lawyer, Gina Cass-Gottlieb was often the only woman in the room. She shares some advice for women and people from diverse backgrounds who still face the burdens of cutting through as a minority and excelling in their careers.

“The most important point is to hold yourself to account, [to ensure] that at every meeting you’re heard, which means being prepared, being confident. You choose the point, but you are there, and you are there to contribute. So you have the courage in your own voice. You can choose the manner in which you do it, the time and the point — but don’t allow yourself [to be affected] by the dynamics, because there can be dynamics in a room that are not easy, not well-known and not welcoming for a new person.

This is changing, but it is not uniformly changing, which means you need to put the work in. Be prepared, but don’t sit there thinking, ‘I’d like to say this point,’ and then not have the confidence to do it. Actually say, ‘I’m here and I’m going to do it.’ It assisted me because when you’re a private practitioner, your client is paying for you to be in that room. If you don’t make meaningful progress on behalf of your client in that room, you shouldn’t be there. This provides the absolute requirement and incentive that you must be as effective as possible.

When I apply that more broadly — if you’re in an internal meeting or a more informal situation, or you’re in a not-for-profit — you [should] have worked through what is important, what, according to your values and interests [you want] to achieve, and then you carry it through. And you carry it through every time. That doesn’t mean you are heard more than anyone else.That’s very unlikely. But [it means] you’re heard at least once.

I always used to get myself [heard] at least once, and then I would move up. You are heard on the points that are important to you in that meeting.

What a person of diversity brings is a focus that otherwise is not likely to be there — a critical point, which otherwise would be missed. And it achieves — in terms of the business of that meeting — broader insights and the likelihood of better decision-making. Over time, it also changes the mindset of the organisation you are contributing to.”

Models of leadership learning

Gina Cass-Gottlieb’s board experiences as a former director of the Sydney Children’s Hospital and sitting member of the RBA Payment Systems Board, have informed her leadership approach. “Both boards have given me key insights into the importance of open and effective engagement between private sector investment and initiatives and government policy, in the first case private (individual and corporate) philanthropy supporting and developing public health, and in the second, regulation of the payments system in the interests of efficiency, safety, innovation and competition.”

An alternative mentoring model is also proving instructive in an evolving approach to leadership and learning. Cass-Gotlieb takes part in the ACCC’s reverse mentoring program, where she is being coached by the head of their First Nations employment network.

“She’s mentoring me so that I understand the issues she’s seeing in community outreach, that she has experienced through her own personal experiences.”

Cass-Gottlieb says the relationship gives her better perspective to appreciate the disproportionate and continuing impacts of First Nations dispossession, and the importance of remaining deeply engaged culturally with family and community.