The ACCC's 2021 compliance and enforcement priorities

From travel businesses and funeral services to product safety, Rod Sims outlines the Australian Competition and Consumer Commission's focus areas this year.

Economics is, in essence, concerned with how we grow the “pie”, and how we divide the “pie”. The importance of the latter has, for a number of economists, waned in recent years, which is unfortunate. The ACCC does not directly target economic growth or inequality, but our work has important implications for both. For example, a lack of competition will see less investment, innovation and lower productivity. Unchallenged economic rents, of course, favour those who benefit from them at the cost of those who do not. These points are more important than ever with the continuing effect of and recovery from COVID-19.

The ACCC’s compliance and enforcement priorities include:

Pricing and selling practices of essential services

Combined with the lack of transparency in their pricing, these continue to be an area of concern. We have had to take a considerable number of enforcement actions in the electricity and telecommunications sectors. New prohibitions in the electricity market include a requirement that electricity retailers pass on to consumers the significant reductions in wholesale electricity costs we have seen over the past year. We are actively monitoring costs and retailers’ price responses — and asking certain retailers to justify their prices. Consumers saw their electricity prices rise enormously over many years; now they need to see them fall considerably. This is only fair.

Funeral businesses

The long-standing criticisms of funeral businesses, for their use of their significant market power to bundle services and block new entrants to the market, or to engage in unconscionable conduct, merits deeper examination this year, and we will take targeted action where appropriate.

Commercial construction

The ACCC’s specialised enforcement team focused on commercial construction will forcefully continue its activities. There have already been a number of cases and more will follow this year.

Finance sector

We are following through on the recommendations from the ACCC’s home loan price inquiry final report, released by the Treasurer in December 2020. They included a prompt to alert borrowers to available prevailing rates, and lowering the administrative burden on consumers who wish to switch home loan providers. We also have some important investigations underway and will be announcing important enforcement outcomes over the next few months.

Given the additional support provided by the government to businesses and individuals through this COVID-19 period, we have not seen growth in debt collection issues. As we return to more normal funding levels, more people may find themselves in a vulnerable position and we will watch closely for signs of concerning behaviour.

Travel and aviation

The continuing impact of the pandemic on the travel sector is well recognised. Consequently, the COVID-19 Enforcement Taskforce will be actively monitoring forward sales practices by travel businesses due to concerns about misrepresentations in advertising and marketing material, particularly given the huge uncertainty around the imposition and lifting of travel restrictions.

Competition in the aviation industry remains fragile and the ACCC is focused on behaviours that adversely affect the competitive process. The ACCC will be closely monitoring the plans by the regional operator Rex to enter the major domestic routes — including those connecting Sydney, Melbourne and Brisbane — with a particular focus on Rex’s ability to access slots at Sydney Airport.

Franchising

The ACCC will continue our work to ensure small businesses receive the protections guaranteed by the competition and consumer laws, with particular focus on the franchise sector. The ACCC continues to receive reports about misleading representations made by franchisors about franchises, in particular earnings capacity and the use of marketing funds.

Agriculture

Following the commencement of the Dairy Code of Conduct in January 2020, the ACCC undertook a range of education, compliance and enforcement activities. While it is too early to assess its full impact, we have observed that the code has brought significant positive changes. The ACCC continues to have concerns about the supply of perishable agriculture products and we will prioritise compliance with the Horticulture Code of Conduct.

Safety

The horrific deaths and injuries to children through the ingestion of button batteries led to our work drafting a package of four mandatory standards for safety and prevention. This world- first regulation, signed into law in December 2020, requires all consumer products to have battery compartments designed in such a way to be inaccessible to children. We will be implementing these new safety standards with a focus on promoting compliance through education during the 18-month transition period.

In 2020, 23 people died in quad bike accidents, where deficiency in design leads to instability and creates hazards even for the most experienced operators. The government’s first stage of new mandatory safety standard for quad bikes came into effect from 11 October 2020,and the important second stage will start from October 2021. We are working closely with the states and territories to conduct surveillance of compliance of stage 1 obligations. As well, we are conducting education and outreach activities to prepare suppliers for stage 2, when obligations to improve safe design by fitting operation protection devices and improving lateral stability commence.

Our market economy needs a growing “pie”, but world events show that it also needs an equitable sharing of the pie. Our current focus and advocacy will, in my view, help us to achieve both.