ACCCount 1 January to 31 March 2012 1... · Overview 6 1. Enforcement action and compliance work 8...

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1 January to 31 March 2012 A report of the Australian Competition and Consumer Commission’s activities accc ount

Transcript of ACCCount 1 January to 31 March 2012 1... · Overview 6 1. Enforcement action and compliance work 8...

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1 January to 31 March 2012

A report of the Australian Competition and Consumer Commission’s activities

acccount

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Australian Competition and Consumer Commission 23 Marcus Clarke Street, Canberra, Australian Capital Territory, 2601

© Commonwealth of Australia 2012

This work is copyright. Apart from any use permitted by the Copyright Act 1968, no part may be reproduced without prior written permission from the Commonwealth available through the Australian Competition and Consumer Commission. Requests and inquiries concerning reproduction and rights should be addressed to the Director Publishing, Australian Competition and Consumer Commission, GPO Box 3131, Canberra ACT 2601 or by email to [email protected].

ISBN 978 1 921964 75 6

ACCC 04/12_531

www.accc.gov.au

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ContentsAcronyms 4

Overview 6

1. Enforcement action and compliance work 8

Complaints and inquiries 8

Litigation commenced 10

Proceedings concluded 11

Court enforceable undertakings accepted 13

2. Communicating with businesses and consumers 15

Liaison and education activities 15

Product safety 19

3. Mergers 21

Merger reviews undertaken in the March 2012 quarter 21

Statement of Issues 23

Public competition assessments 23

4. Authorisations and notifications 27

Authorisations 27

Notifications 33

5. Regulatory affairs 35

Australian Energy Regulator 35

Communications 40

Transport and general prices oversight 42

Water 45

Fuel 48

6. International activities 50

Appendix 54

Speeches 54

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AcronymsACCC Australian Competition and Consumer Commission

ACL Australian Consumer Law

ACTF Australasian Consumer Task Force

AER Australian Energy Regulator

AHL Aussie Home Loans

APC Abbot Port Coal

ARTC Australian Rail Track Corporation

ASIC Australian Securities and Investments Commission

AWS Australian Workplace Safety Services Pty Ltd

CAL Copyright Agency Limited

CBH Cooperative Bulk Handling

CCA Competition and Consumer Act

CDRAC Compliance and Dispute Resolution Advisory Committee

CPL Cents per litre

DIY Do it yourself

DNSP Distribution Network Service Provider

DoHA Department of Health and Ageing

DPC Dudgeon Port Coal

DPPM Dudgeon Port Project Management

DTCS Domestic Transmission Capacity Service

EC European Commission

ESC Essential Services Commission

ESMS Electricity Safety Management Scheme

FAD Final Access Determination

FMCG Fast-moving consumer goods

FTA Free Trade Agreement

FTC Federal Trade Commission

HFC Hybrid Fibre-Coaxial

HRR Hunter Resource Recovery

ICN International Competition Network

IIO Irrigation Infrastructure Operator

LBAS Local Bitstream Access Service

LCS Local Carriage Service

LCS Local carriage service

LPG Liquefied Petroleum Gas

LSS Line Sharing Service

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MDB Murray Darling Basement

MDBA Murray Darling Basement Authority

MFAA Mortgage and Finance Association of Australia

NBN National Broadband Network

NECF National Energy Customer Framework

NER National Electricity Rules

NGL National Gas Laws

NGR National Gas Rules

NSP Network Service Plan

OECD Organisation for Economic Cooperation and Development

PPM Parts per million

PST Parliamentary Secretary to the Treasurer

PSTN Public Switched Telephone Network

REIWA Real Estate Institute of Western Australia

RIN Regulatory Information Notices

RPT Regular Public Transport

RULP Regular Unleaded Petrol

SAU Special Access Undertaking

SSU Structural Separation Undertaking

SVHA St. Vincent’s Health Australia

SWIFT Society for Worldwide Interbank Financial Transactions

TA Terminating access

TNSP Transmission Network Service Provider

ULLS Unconditioned Local Loop Service

VBRC Victorian Bushfire Royal Commission

WLR Wholesale line rental

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OverviewThe Australian Competition and Consumer Commission (ACCC) administers, enforces and ensures compliance with the Competition and Consumer Act 2010 (CCA), including the Australia Consumer Law (ACL). This work enhances the welfare of Australians by promoting competition and fair trading and protecting consumers from unfair business practices. The ACCC and Australian Energy Regulator (AER) also regulate national infrastructure services and other markets where there is limited competition and natural monopoly characteristics. In the March 2012 quarter, the ACCC undertook a range of activities that benefited both businesses and consumers.

In the March 2012 quarter the Full Federal Court imposed a pecuniary penalty of $3.61 million against Singtel Optus Pty Ltd for engaging in conduct that was liable to mislead in relation to the advertising of certain broadband plans as part of its ‘Think Bigger’ and ‘Supersonic’ promotional campaigns. Optus had appealed the primary judge’s decision on penalty on several grounds including findings on certain matters. While the Full Federal Court allowed the appeal, it imposed a substantial penalty and stated that the seriousness of the conduct and the many circumstances of the case warranted such a penalty.

The ACCC reaffirmed its commitment to protecting consumers from businesses which engage in anti-competitive conduct by instituting proceedings in the Federal Court against travel agency Flight Centre Limited. The ACCC alleges that Flight Centre attempted to induce competitors to enter into price fixing arrangements and the purpose and likely effect of the arrangements sought by Flight Centre was to maintain the level of Flight Centre’s commissions. In another case this quarter, the ACCC instituted proceedings against Apple alleging that it engaged in misleading conduct in relation to its launch and promotion of the latest version of its iPad with Wi-Fi + 4G.

To provide further guidance to business and consumers about their rights and obligations under the ACL the ACCC released its consumer guarantees national awareness campaign—‘If it’s not right, use your rights. Repair, Replace, Refund. This campaign aimed to increase consumers’ awareness of their rights when they buy goods and services that are faulty, unsafe or do not work as intended or fail to meet the specified requirements.

On 14 March 2012, the ACCC in collaboration with CHOICE hosted the Ruby Hutchinson memorial lecture which was delivered by the Age Discrimination Commissioner, The Hon Susan Ryan AO, entitled ‘Age discrimination and the internet—older people in the 21st century.’ The lecture highlighted the importance of facilitating the participation of older Australians in the online world through community education and assistance as a means of protecting both their human rights and their consumer rights.

To mark the fiftieth anniversary of President Kennedy’s statement to the United States Congress advocating for consumer rights, and to mark World Consumer Rights Day the ACCC hosted a consumer forum in Melbourne. The theme of the forum was ‘50 years of consumer rights—how far have we come’.

The forum allowed ACL regulators and consumer advocacy groups to reflect upon the operation of the ACL. The panel discussions at the forum covered a diverse range of topics including developing strategies to deal with issues faced by vulnerable consumers and engagement with government regulators.

During the quarter, the ACCC continued its work on raising awareness of scams in Australia. The Australasian Consumer Fraud Taskforce’s National Consumer Fraud Week ran from the 19 to 25 March and aimed to highlight scam delivery methods and educate Australians to ‘slam scams’ at the point of contact. The 2011 Targeting Scams Report was launched on 19 March 2012 to coincide with Fraud Week. The report compiles and analyses data gathered when consumers and small business contacted the ACCC to report scams or enquire about scam activity and is designed to raise awareness of scams and promote discussions on how the ACCC can best address the challenges posed by scams to the Australian community.

Important outcomes were also achieved in the ACCC’s consumer protection sphere. Following concerns that high concentrations of peroxides used in teeth whitener products resulted in gum and mouth chemical burns, the ACCC took action to notify suppliers that teeth whitening products containing high concentrations of peroxide should not be supplied to consumers. A compulsory recall of two unsafe DIY teeth whiteners was ordered by the Parliamentary Secretary to the Treasurer on 6 February 2012, after suppliers failed to remove the products from sale. The compulsory recall was the first under the ACL.

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Major merger matters decided during the March 2012 quarter included:• Caltex Australia Petroleum Pty Ltd proposed acquisition of capacity from terminals Pty Ltd as a new Port

Adelaide fuel storage terminal—the ACCC did not oppose the acquisition• Visy Industries Australia Pty Ltd proposed acquisition of PET and plastic assets of HP entities—the ACCC

did not oppose the acquisition• Amcor Limited proposed acquisition of the flexible packaging operations of Aperio Group Pty Ltd—the

ACCC did not oppose the acquisition• Google Inc proposed acquisition of Motorola Mobility Holdings Inc—the ACCC did not oppose

the acquisition• Johnson and Johnson proposed acquisition of Synthes Inc—the ACCC did not oppose the acquisition.

In its adjudication role, the ACCC granted a final authorisation to Australian Processing Tomato Growers to collectively bargain on the terms and conditions of contracts with tomato processors for a period of five years.

During the quarter the ACCC made a decision relating to Telstra’s involvement in the wholesale and retail telecommunications markets. On 27 February 2012, the ACCC accepted Telstra’s structural separation undertaking (SSU) and approved its draft migration plan. Telstra submitted its SSU to the ACCC in accordance with the legislative framework established in November 2010. The undertaking implements a progressive form of structural separation through Telstra ceasing to use its own networks to provide services and agreeing to use the national broadband network (NBN) as it is rolled out. During the transition to the NBN, the SSU specifies a range of measures that promote equivalence and transparency in Telstra’s supply of fixed-line access services to wholesale customers and its retail business. These measures should benefit consumers by promoting competition in fixed-line telecommunications markets as the industry moves to the new wholesale-only network.

The ACCC completed its enquiry into the declaration of wholesale ADSL services. This declaration inquiry was initiated following complaints by access-seekers that a lack of regulated access to wholesale DSL services has impeded their ability to compete with Telstra. The ACCC considers that this will promote the long-term interests of end-users of fixed-line broadband internet services throughout Australia.

The ACCC released its annual Airport Monitoring Report for the 2010–11 financial year. This year’s report presented the monitoring results in relation to the airports’ supply of aeronautical and car parking services as well as outlining some options for the economic regulation of airports.

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1. Enforcement action and compliance work

Maintaining and enhancing compliance with the Competition and Consumer Act is a key objective of the ACCC. This is achieved by promoting competition and informing markets, encouraging fair trading and protecting consumers. The enforcement function of the ACCC is well supported by its liaison, analysis, outreach and compliance arms.

Complaints and inquiriesDuring the March 2012 quarter the ACCC responded to 50 737 complaints and inquiries from businesses and consumers (an increase of 11.14% from the December 2011 quarter) (email 19 315 [h14.77%), telephone 30 923 [h8.81%] and letter correspondence 499 [h23.55%]).

Of these, 42 064 complaints and inquiries were entered into the ACCC’s database with 569 matters flagged for further consideration. Complaints and inquires not entered into the ACCC’s database were considered to raise issues that fall outside of the ACCC’s role and responsibility.

During the first quarter of 2012, the ACCC received elevated numbers of complaints and enquiries with an immediate and sustained impact on contact levels following the launch of the ACCC’s campaign to raise consumers’ awareness of their consumer guarantee rights under the Australian Consumer Law which ran throughout February.

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Chart 1.1: The ten industries attracting the most complaints (excluding scams)

Scam contacts

Contacts about scam activity continued to be significant, accounting for 21 581 or 51 per cent of the complaints and enquiries entered into the ACCC’s database during the March 2012 quarter. The highest number of complaints was received in relation to advance fee fraud, and computer hacking scams (including the ‘Microsoft scam’).

Scam type Number of reported scams

Advanced fee / up-front payment (Nigerian style) 7851

Modem-jacking / key-logging (including computer hacking) 2917

Online auction & shopping 2607

Lottery & sweepstakes 2316

Banking & online account (including Phishing) 1637

Unexpected 'prizes' 765

Job & employment (including business opportunity) 760

Dating & romance (including adult services) 670

False billing (advertising, directories, domain names, office supplies) 538

Mobile phone (ringtones, competitions, missed calls) 264

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1. Enforcement action and compliance work

Enforcing the Act for businesses and consumersIn undertaking its enforcement and compliance activity, the ACCC remains committed to working in the interests of consumers. As Australia’s national consumer protection and competition agency, the ACCC manages its enforcement and compliance processes to achieve effective and efficient outcomes that serve the public interest, in accordance with the ACCC’s Enforcement and Compliance Policy, available at www.accc.gov.au. The ACCC works with the Treasury, Australian Securities and Investments Commission and state and territory Australian Consumer Law (ACL) regulators and in the committees established to facilitate ACL cooperation.

Litigation commencedThe ACCC commenced six first-instance litigation proceedings in the Federal Court of Australia during the March 2012 quarter for alleged breaches of the CCA or the former TPA.

FAIR TRADING AND CONSUMER PROTECTION

Air Asia Berhad

Justice Tracey | Federal Court Melbourne

Commenced 17 January 2012 | VID39/2012

The ACCC instituted proceedings in the Federal Court against Air Asia BHD alleging the airline’s website failed to display airfare prices inclusive of all taxes, duties, fees and other mandatory charges.

The ACCC alleges that in August and September 2011 the Air Asia website displayed a non-inclusive fare pricing for certain routes and only displayed the correct fare on a subsequent booking page.

Neighbourhood Energy & Anor

Justice Marshall | Federal Court Melbourne

Commenced 26 March 2012 | VID268/2012

The ACCC instituted proceedings in the Federal Court against Neighbourhood Energy and its former marketing company in relation to their door-to-door selling practices.

The ACCC alleges that the respondents engaged in misleading and deceptive conduct. It is alleged that the respondents breached the ACL by failing to immediately leave the premises at the request of the occupier. The ACCC contends that consumers requested the salespeople to leave by placing a ‘do not knock’ sign on their door.

AGL Sales Pty Ltd & Ors

Justice Middleton | Federal Court Melbourne

Commenced 26 March 2012 | VID267/2012

The ACCC instituted proceedings in the Federal Court against AGL Sales and its marketing company in relation to their door-to-door selling practices.

The ACCC alleges that the respondents engaged in misleading and deceptive conduct and made a range of false representations to consumers in the course of door-to-door selling.

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Apple Pty Ltd & Anor

Justice Bromberg | Federal Court Melbourne

Commenced 28 March 2012 | VID271/2012

The ACCC instituted legal proceedings in the Federal Court against Apple for misleading advertising.

The ACCC alleges that Apple’s recent promotion of the new ‘iPad with WiFi and 4G’ is misleading because it represents to Australian consumers that the product can, with a SIM card, connect to a 4G mobile data network in Australia, when this is not the case.

COMPETITION

Eternal Beauty Products Pty Ltd & Anor

Justice Murphy | Federal Court Melbourne

Commenced 30 January 2012 | VID79/2012

The ACCC instituted proceedings in the Federal Court against Eternal Beauty Products and its director Ms Penny Rider alleging the company engaged in resale price maintenance by inducing or attempting to induce two retailers not to sell products online at prices less than those specified by the company.

Flight Centre Ltd

Justice Logan | Federal Court Brisbane

Commenced 9 March 2012 | QUD177/2012

The ACCC instituted proceedings in the Federal Court against Flight Centre alleging the company attempted to induce competitors to enter into price fixing arrangements.

The ACCC alleges that on six occasions between 2005 and 2009, Flight Centre attempted to induce international airlines Singapore Airlines, Malaysian Airlines and Emirates to agree to stop offering their international airfares directly to the public at prices less than Flight Centre offered. It is alleged that the purpose and likely effect of the attempted arrangements sought by Flight Centre was to stop the airlines undercutting Flight Centre so that is was able to maintain the level of commissions it received from the airlines.

Proceedings concludedThree first-instance enforcement litigation proceedings relating to fair trading and consumer protection were finalised during the March 2012 quarter. One appeal was finalised during the March 2012 quarter.

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FAIR TRADING AND CONSUMER PROTECTION

Trade Quip Pty Ltd (first instance proceedings and contempt proceeding)

Justice Murphy | Federal Court Melbourne

Commenced 22 July 2011 | Concluded 29 February 2012 | VID792/2011, VID334/2006

Proceedings related to Trade Quip supplying four models of hydraulic trolley jacks that did not comply with the prescribed product safety standard, and supplying one model of trolley jack marked with a statement representing that the jack complied with the mandatory standards when it did not.

The contempt proceedings related to breach of orders made by Justice Weinberg on 1 August 2007.

First instance proceedings outcome | pecuniary penalty $100 000, injunction, establishment of a compliance program, corrective notices, contribution towards ACCC costs.

Contempt proceeding outcome | penalty $7 500.

Hooker Meats Pty Ltd

Justice Middleton | Federal Court Melbourne

Commenced 18 August 2011 | Concluded 23 February 2012 | VID889/2011

Proceedings in the Federal Court against Hooker Meats alleging misleading place of origin representations. Hooker Meats admitted they had engaged in misleading and deceptive conduct by falsely claiming that the meat it offered for sale was sourced from King Island.

Outcome | pecuniary penalty $50 000, declarations and undertaking.

Turi Foods Pty Ltd & Ors

Justice Tracey | Federal Court Melbourne

Commenced 5 September 2011 | Concluded 23 January 2012 | VID974/2011

Proceedings in the Federal Court against Turi Foods and others for alleged misleading and deceptive conduct and misleading representations regarding the space available for meat chickens to roam freely in various advertising. Turi Foods admitted they had engaged in the alleged conduct.

Proceedings against the second, third and fourth respondents are continuing.

Turi Foods Outcome | Declarations, injunctions, corrective advertising, pecuniary penalties $100 000, establishment of a compliance program.

OTHER

Singtel Optus Pty Ltd (appeal)

Chief Justice Keane, Justices Finn and Gilmour | Full Federal Court Sydney

Commenced 28 July 2011 | Concluded 7 March 2012 | NSD1245/2011

Proceedings related to advertising for the ‘Think Bigger’ and ‘Supersonic’ broadband internet plans. The ACCC alleged misleading and deceptive conduct, and false or misleading representations in relation to the advertising of these internet products. Optus appealed the extent of the penalty imposed by the court at first instance, raising issues including as to certain factual findings made by the primary judge.

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The Full Federal Court allowed the appeal and set aside the penalties originally ordered on the basis that the primary judge erred in making certain factual findings. However, the Full Federal Court supported the initial findings in relation to the seriousness of the conduct and the need for a substantial penalty.

Outcome | Pecuniary penalty $3.61 million.

Court enforceable undertakings acceptedThe ACCC accepted seven enforcement-related, court enforceable undertakings (under section 87B of the CCA) during the March 2012 quarter.

FAIR TRADING AND CONSUMER PROTECTION

Furniture Galore Pty Ltd

Undertaking given 10 January 2012

Undertaking related to misleading and deceptive conduct and false or misleading representations made in relation to the advertising of goods on sale. Furniture Galore has also paid three infringement notice penalties to the ACCC relating to this conduct.

Outcome | Furniture Galore has undertaken that it will refrain from engaging in similar conduct in the future, publish corrective notices, and implement a trade practices compliance program.

Australian Workplace Services Pty Ltd (AWS)

Undertaking given 10 January 2012

Undertaking related to false or misleading representations made in relation to the selling or promoting of safety products. AWS made representations that there was a requirement under relevant workplace safety laws of the state in which the business was located for the business to maintain information and material of the same nature as those supplied or offered for supply by AWS, when in fact there was no such requirement.

Outcome | AWS has undertaken it will refrain from engaging in similar conduct in the future, publish corrective notices on its website, and implement a trade practices compliance program.

John Gerard O’Halloran

Undertaking given 10 January 2012

As the director and day-to-day manager of AWS, Mr John O’Halloran has provided a separate court enforceable undertaking in relation to false or misleading representations AWS made in relation to the selling or promoting of their safety products.

Outcome | Mr O’Halloran has undertaken he will not make, or be directly or indirectly knowingly concerned in, or party to a corporation making representations to consumers that they are required by state or territory health and safety laws to maintain information and/or materials of the same nature as those supplied or offered for supply by AWS, when this is not the case.

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Under the Wing Pty Ltd

Undertaking given 25 January 2012

Undertaking related to resale price maintenance. Under the Wing, a sales agent representing designers of fashion handbags and other goods, attempted to induce an on-line reseller not to sell handbags below the recommended retail prices specified by the handbag designer.

Outcome | Under the Wing has undertaken it will refrain from engaging in similar conduct in the future, write to its clients to alert them to the undertaking and implement a trade practices compliance program.

Paul Maloney Fashion Agency Pty Ltd

Undertaking given 25 January 2012

Undertaking related to resale price maintenance. Paul Maloney Fashion Agency, a sales agent representing designers of fashion handbags and other goods, attempted to induce an on-line reseller not to sell handbags below the recommended retail prices specified by the handbag designer.

Outcome | Paul Maloney Fashion Agency has undertaken it will refrain from engaging in similar conduct in the future, write to its clients to alert them to the undertaking and implement a trade practices compliance program.

Edwards Essences Pty Ltd

Undertaking given 22 February 2012

Undertaking related to resale price maintenance. Edwards Essences has made it known to a distributor that it should not sell goods supplied to it by Edwards at a price less than the recommended retail price specified by Edwards.

Outcome | Edwards has undertaken it will refrain from engaging in similar conduct in the future, write to all Edwards distributors to advise them of the undertaking and the Director will attend a trade practices compliance program.

Noonkanbah Enterprise Management Company Pty Ltd

Undertaking given 13 March 2012

Undertaking related to false or misleading conduct in relation to selling some products well beyond ‘best before’ dates and displaying shelf prices that were lower than the actual purchase prices.

Outcome | Noonkanbah has undertaken it will refrain from engaging in similar conduct in the future, ensure store managers attend a compliance seminar on the CCA, display an in-store corrective notices and make the ACCC FairStore: a best practice guide for stores serving remote and indigenous communities publication available to customers.

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2. Communicating with businesses and consumers

Liaison and education activitiesThe ACCC works with other regulators, government departments, businesses, industry associations and consumer associations in monitoring emerging trade practices and consumer protection issues and educating relevant stakeholders.The ACCC also engages with industry associations, professional associations and consumer associations to promote greater understanding of the CCA and to respond to issues identified by those organisations. In the March 2012 quarter these engagements included:• meetings with a range of industry associations including a number of motor vehicle associations to discuss

the Australian Consumer Law with a particular focus on consumer guarantees• a meeting with Queensland Consumers Association to discuss the ACCC’s approach to the Unit

Pricing Code • renewal of ACCC’s Franchising Consultative Committee membership. The first meeting with the new

membership is scheduled for 27 April 2012• renewal of ACCC’s Small Business Consultative Committee membership. The first meeting with the new

membership is scheduled for 4 May 2012• on 15 March 2012, the ACCC hosted a consumer forum in Melbourne to coincide with World Consumer

Rights Day. This event brought together participants from ACL regulators and consumer groups across the country. The theme of the forum was ‘50 years of consumer rights—how far have we come’. The forum covered a wide variety of issues of concern affecting consumer organisations, industry bodies, multicultural associations and ACL regulators. Panel discussions at the forum covered a diverse range of topics such as the Australian Consumer Law in action, the vulnerable consumer and engagement with government regulators. The forum also provided an opportunity for emerging consumer issues to be canvassed in a research ‘soapbox’ session. Presenters delivered research reports on a range of issues including the experiences of Victorian Aboriginal consumers of energy and water (CUAC); a Refugee Community Education program which aims to equip refugees and newly arrived migrants with an introduction to telecommunications in Australia (Footscray Legal Community Centre); and a report on research into 16 codes of conduct relevant to Australian consumers when they engage in online activity (UNSW Faculty of Law, Cyberspace Law and Policy Centre).

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• The ACCC held its first Consumer Consultative Committee meeting for 2012 on 16 March 2012 in Melbourne, at which emerging consumer issues and how to address them were discussed. Matters of interest included telecommunications and the roll out of the National Broadband Network (NBN)

• meetings with a range of local government councils and organisations, multicultural and ethnic community organisations, and industry associations, to discuss methods for promoting the rights and obligations provided by the CCA to consumers and the small business sector. This has resulted in ACCC information being disseminated through new channels, such as the electronic newsletters and websites of local government associated in several states

• attending the Sydney Franchising and Business Opportunities Expo 2012 from 23 to 25 March. The ACCC and Australian Securities and Investments Commission (ASIC) shared an exhibition booth and distributed 1 000 promotional bags to attendees which included information relevant to franchisors, and current and potential franchisees. Promotional bags included information about the ACCC-funded Griffith University franchisee pre-entry education program and ACCC’s consumer guarantees campaign.

Product safetyThis quarter the ACCC released its fifth online product safety campaign: ‘EasterSafe’. Easter holiday safety tips were tweeted to @ProductSafetyAU Twitter followers and posted on the ACCC Product Safety Facebook page. Followers were encouraged to share safety tips.

The ACCC in partnership with NRMA Motoring & Services, CHOICE, EnableNSW and Vision Australia, released a national mobility scooter user survey on the Product Safety Australia website this quarter. The aim of the survey is to examine the safety issues associated with mobility scooters and to acquire a better understanding of how and why Australians are using them.

Australian Consumer LawThe ACCC continued to work with businesses, industry associations and consumer groups to promote awareness of the ACL and the rights and obligations that it provides. Key activities for the quarter included:• participation in monthly meetings of the Compliance and Dispute Resolution Advisory Committee (CDRAC)

and the Education and Information Advisory Committee which are comprised of ACL regulators• development of publications, post cards and articles on consumer protection issues for distribution to

consumers or inclusion in industry newsletters and journals, presentations at industry events and the dissemination of ACCC and joint-agency guidance material through the ACCC and other government agency networks including local government. The publications covered topics on the new law regarding warranties against defects, repair notices, consumer guarantees and consumer rights in relation to door-to-door sales practices.

These activities enable the ACCC, together with state and territory counterparts, to deliver consistent guidance to business and consumers about their rights and obligations under the ACL.

The ACCC continued to work closely with the Treasury, ASIC, and state and territory consumer protection agencies on national projects for:• Indigenous consumer issues: addressing a number of issues identified in the National Indigenous Consumer

Strategy as key to improving the trading practices of traders serving Indigenous consumers• unfair contract terms: taking a proactive compliance review of standard form contracts and appropriate

enforcement action for non-compliance• environmental claims: compliance with energy efficiency measures that are potentially misleading, vague or

false• consumer guarantees: educating suppliers of goods on the consumer guarantee provision of the ACL.

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This quarter the ACCC commenced work with other Australian consumer protection regulators to address consumer concerns regarding online group-buying traders. The national project team is led by the ACCC with Consumer Affairs Victoria and includes NSW Fair Trading with oversight from the CDRAC. Online group buying websites offer goods and services in a broad range of areas including fashion, holiday accommodation, lawn mowing, golfing packages, restaurant meals and hair and beauty treatments.

The ACCC also worked with the ACL regulators’ Education and Information Advisory Committee to develop a number of new fact sheets on emerging consumer issues and a toolkit providing consumer information for new migrants on the Australian Consumer Law. The kit will be used by organisations involved in settling newly arrived migrants into the Australian community.

Consumer protection issues in Indigenous communitiesThe ACCC’s Indigenous consumer protection strategy identifies and addresses consumer protection issues of concern to indigenous consumers. The ACCC is consulting with the appropriate agencies to facilitate more effective information sharing. The ACCC is also contributing to the work undertaken with the National Indigenous Consumer Strategy to address specific areas of concern of indigenous consumers, such as unfair trading practices and consumer literacy.

Unfair contract termsDuring this quarter, the ACCC continued its proactive review of standard form consumer contracts in a range of industries. Staff worked with business representatives on a cooperative, compliance basis to secure amendments to terms identified as potentially unfair. Through this review process, a number of patterns have been identified, including the following key types of unfair terms which were common to a number of industries: • terms that make consumers liable to pay all charges incurred on an account regardless of whether the

consumer authorised them is too broad because it holds the consumer liable for charges caused by the mistake or fraud of business employees

• terms that exclude liability for errors and inaccuracies on the business’ website may be unfair because it places the entire onus on the consumer and none on the business to ensure the product information is correct

• terms that enable the business to vary the contract terms can be unfair• terms that attempt to limit the business’ liability for what their employees say and do can be unfair• terms that contain ‘hidden’, unexpected or surprising obligations or limitations may be unfair• terms that attempt to discourage consumers from taking action against the business may also be unfair,

including attempts to restrict the jurisdiction in which a consumer can institute legal proceedings against the business

• terms that attempt to exclude consumer protection laws, for example the consumer guarantees, are unfair.

The ACCC continues work on the CDRAC Unfair Contract Terms Working Group with Consumer Affairs Victoria. This national review covers a range of online sectors including online retail, travel, group buying, digital media and group buying sites.

Consumer guaranteesOn 5 February, the ACCC launched its consumer guarantees national awareness-raising campaign—‘If it’s not right, use your rights. Repair, Replace, Refund.’

The campaign aimed to increase consumers’ awareness of their rights when they buy goods and services that are faulty, unsafe or do not work as intended or fail to meet the specified requirements. The campaign also aimed to increase their confidence to go back to the business with a problem or contact their local consumer protection agency or the ACCC when businesses refuse to help. The campaign focused on those consumers who were identified to be more at risk of detriment, including consumers from culturally and linguistically

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2. Communication with business and consumers

diverse backgrounds, Indigenous communities, young consumers and consumers living in regional areas.

Through February and early March, campaign messaging was broadcast through a range of advertising and direct communications activities including radio, digital and select outdoor advertising.

As part of the campaign, the ACCC developed tools to educate consumers about their consumer guarantees rights, including an interactive problem solver available online and on mobiles, to assist consumers to determine when they can seek a repair, replacement or refund, and a consumer guarantees specific Facebook page—ACCCconsumerrights.

The ACCC and campaign stakeholders engaged in a range of education and awareness-raising activities to complement the advertising campaign, including the dissemination of campaign material through several key intermediaries in touch with the various target community groups, including indigenous communities, migrant communities and regional consumers. These engagement activities are continuing.

ScamsDuring the quarter, the ACCC continued work on initiatives to alert consumers to new and emerging scams. ‘SCAMwatch radars’ were issued covering:• distress emails targeting the Anangu Pitjantjatjara Yankunytjatjara lands• the targeting scams report• telephone scams including scammers posing as government or company representatives and scam SMS.

The ACCC worked closely with Consumer and Business Services in South Australia to alert consumers in the Anangu Pitjantjatjara Yankunytjatjara lands to scam distress emails. This alert was also issued via Twitter where it was retweeted a number of times by other social media users.

Throughout the last quarter the SCAMwatch website received an extremely high number of visits with over 7.2 million hits recorded, and almost 200 000 unique visitors. The SCAMwatch Twitter account issued almost 300 tweets and gained more than 500 new followers.

The 2011 Targeting Scams report was launched on 19 March 2012 to coincide with the Australasian Consumer Fraud Taskforce’s National Consumer Fraud Week. It compiles and analyses data gathered when consumers and small businesses contacted the ACCC to report scams or enquire about scam activity. The report is designed to raise awareness of the problem and extent of scams in Australia and promotes discussion about how we can best address the challenges posed by scams to the Australian community. Publication of the report received extensive media coverage via television, radio, print, online and social media coinciding with its launch. To read the report visit http://www.accc.gov.au/content/index.phtml/itemId/1039349.

ACFT National Consumer Fraud Week 2012The Australasian Consumer Fraud Taskforce (ACFT), established in 2005, comprises 22 federal and state government regulatory agencies and departments (including New Zealand) that have a responsibility for consumer protection in relation to fraudulent and scams activity. As Chair of the ACFT, each year the ACCC organises and hosts the National Consumer Fraud Week campaign. This annual coordinated information campaign aims to raise community awareness about scams and forms part of the International Consumer Protection and Enforcement Network’s Global Consumer Fraud Prevention Month.

In 2012 Fraud Week ran from 19 to 25 March and aimed to highlight scam delivery methods and educate Australians to ‘slam scams’ at the point of contact. Two publications: the ACCC’s 2011 Targeting Scams annual report on scams activity, and a new pocket-sized edition of The Little Black Book of Scams, were launched by ACCC Chairman Rod Sims at the start of the week. Also on 19 March 2012 the Australian Institute of Criminology hosted the ‘Consumer Fraud Offender’s Agency Forum’ and during the evening the ACCC hosted a ‘Slam Scams’ event. Both events were attended by participants

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from federal and state consumer law regulators, consumer advocacy groups, industry associations, community rights organisations and private businesses.

An important outcome of Fraud Week 2012 was the continued growth in the Partnership Program, with now over 120 partners supporting the ACFT and its efforts to raise awareness about scams. The week also received extensive media coverage via television, radio, print media and social media. ACFT partners helped to ensure the campaign achieved a significant online presence, publishing website features, blogging and tweeting to hundreds of thousands of Australians.

Industry code compliance auditsOn 1 January 2011 the ACCC was given the power to conduct audits to monitor compliance with industry codes prescribed under the CCA. This power enables the ACCC to obtain from a business any documents it is required to keep, to generate or to publish under the four current mandatory codes of conduct.

This quarter the ACCC served audit notices on nine businesses operating under the Franchising Code of Conduct and the Horticulture Code of Conduct. The ACCC has now served audit notices on 27 traders (18 franchisors and nine horticulture traders) since the power was introduced. The majority of businesses audited to date have been found to be compliant with the relevant codes.

Product safetyA significant product safety focus this quarter was on ‘do it yourself’ (DIY) teeth whitening products found to contain unsafe levels of active bleaching agents. In response to a supplier not removing their unsafe products from the marketplace following a voluntary recall initiated by the ACCC, a compulsory recall was ordered by the Parliamentary Secretary to the Treasurer.

Emerging hazards and product safety recallsDuring the quarter, the ACCC:• reviewed 611 mandatory reports of which 332 were referred to other regulators (predominantly food reports

referred to Food Standards Australia New Zealand) while the remaining 279 were assessed or are under assessment by the ACCC.

• received notification and uploaded details of 108 consumer product safety recalls to the Recalls Australia website (www.recalls.gov.au)—58 of these recalls were for consumer goods, which are recalls actively managed by the ACCC.

• significant recalls this quarter included Worthington: Map-Pro, Propylene & MAPP Gas Cylinders; Pro Teeth Whitening (Aust) Pty Ltd Teeth Whitening Kit and Pen; Woolworths Ltd—Home Collection & Abode 2000W Oscillating Fan Heater; and Sanyo Oceania Pty Ltd—Sanyo Convection Grill Microwave Oven.

The ACCC is pleased to see industry continue its high use of the recalls progress reporting e-form, with take-up remaining close to 100 per cent for another quarter. The form is one of the tools used by the ACCC when reviewing recall effectiveness and deciding whether to close a recall.

Minimising potential harm to consumersIn response to concern that high concentrations of peroxides used in the teeth-whitener products resulted in gum and mouth chemical burns, the ACCC took action in December 2011 and January 2012 to notify suppliers that products with high concentrations of peroxide should not be supplied to consumers. As a result 22 DIY teeth whitening products from eight different suppliers were removed from the marketplace by negotiation. A compulsory recall of two more unsafe DIY teeth whiteners was ordered by the Parliamentary Secretary to the Treasurer on 6 February 2012, as the supplier had not removed their unsafe products from

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the market. The compulsory recall was the first under the ACL and the first since the product safety function came to the ACCC. The ACCC is currently enhancing the teeth whitening information on the Product Safety Australia website to further educate consumers on the dangers of using teeth whitening products containing high concentrations of peroxide.

This quarter, the ACCC also progressed a number of chemical surveys including assessments of paraphenylenediamine (PPD) in hair dyes, succinic acid in amber beads and chemical hazards in artificial play surfaces/synthetic turf.

Regulatory policyThis quarter, the ACCC continued to progress work in relation to possible mandatory standards, including:• release of the draft regulation impact statement for mandated warning labels on domestic trampolines• considering public submissions made in relation to the discussion paper on mandated warning labels on

children’s portable swimming pools.

Case study: New Tobacco Labelling (Graphic Health Warning) StandardThe Competition and Consumer (Tobacco) Information Standard 2011 commenced on 1 January 2012 following its approval by the Parliamentary Secretary to the Treasurer (PST) on 23 December 2011. In order to implement the new standard to regulate tobacco graphic health warnings, the ACCC collaborated with four key areas/departments: the Treasury, the Department of Health and Ageing (DoHA), the Office of Legislative Drafting and Publishing, and the office of the PST.

Despite a tight timetable, there was extensive consultation on the underlying policy and the proposed legislative instrument. Three public consultations were conducted on the policy and proposed standard. Apart from working closely with other departments and agencies the project also included consultation with the state and territory consumer affairs and health agencies as key stakeholders in the Australian Consumer Law decision-making process.

The introduction of the standard replaces previous graphic health warning labelling requirements with larger graphics and updated warnings. Consumers will now better understand the specific risks of injury and illness related to smoking and other tobacco use through the graphic health warnings.

The standard covers a wider range of tobacco products than before and was drafted to ensure the different requirements are clear, streamlined and easy to follow. A tobacco supplier guide has been prepared for consultation with Policy Research Advisory Committee and DoHA. The guide will be published to assist industry and compliance and enforcement arrangements will be coordinated with the state and territory consumer affairs and health agencies.

The standard is fully enforceable on 1 December 2012, at the same time as the new tobacco plain packaging requirements. Compliance and policy staff from the ACCC have commenced exploring opportunities for synergies in compliance and enforcement of the graphic health warning and plain packaging legislation.

The major tobacco companies have each filed writs in the High Court of Australia challenging the plain packaging measure and the system of graphic health warnings.

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3. Mergers

In assessing mergers, acquisitions and asset sales under section 50 of the Competition and Consumer Act 2010 (CCA), the ACCC conducts thorough and rigorous processes to ensure transactions do not lead to a substantial lessening of competition in the marketplace.

Merger reviews undertaken in the March 2012 quarterIn the March 2012 quarter 44 matters were pre-assessed by the ACCC as not requiring review and reviews were conducted on 15 matters, including confidential and public merger reviews. Of the 15 matters reviewed, 87 per cent of merger proposals were cleared unconditionally by the ACCC. The ACCC expressed concerns following one confidential review proposal.

Table 3.1: Matters assessed and reviews undertaken, March 2012 Quarter

Confidential Public Total

Pre-assessed 1 January—31 March 2012 44 0 44

Total reviews undertaken

1 January—31 March 2012 3 23 26

Total reviews can be broken down into the following categories:

Not opposed 0 13 13

Finished—no decision (including withdrawn)1 1 0 1

Opposed outright 0 0 0

Confidential review—ACCC concerns expressed 1 0 1

Resolved through undertakings2 0 0 0

Variation to undertaking accepted 0 0 0

Variation to undertaking rejected 0 0 0

Total matters assessed and reviews undertaken 2 13 15

12

1 These are matters that were withdrawn or where no decisions were made. They are not included in the timings in table 3.3 below.2 Only public matters can be resolved through undertakings.

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Table 3.2 Matters assessed and reviews undertaken, financial year comparisons

2009–10 2010–11 YTD 2011–12

Total matters assessed and reviews undertaken 321 377 246

Matters assessed—no review required 153 236 181

Reviews undertaken 168 141 65

Total reviews can be broken down into the following categories:

Not opposed 131 110 50

Finished—no decision (incl. withdrawn) 16 14 10

Publicly Opposed outright 8 3 0

Confidential review—Opposed or ACCC concerns expressed 6 4 3

Resolved through undertakings 4 7 2

Variation to undertaking accepted 2 3 0

Variation to undertaking rejected 1 0 0

Time taken to assess mergers The following table breaks down the time taken by the ACCC to complete reviews of merger proposals in the March 2012 quarter. This does not include 44 pre-assessed matters (the majority of these are completed within two weeks), one matter where no decision was formed on a confidential basis, and two reviews of a completed acquisition.3

Table 3.3: Time taken to review merger proposals 1 January—31 March 2012

Total review days (less clock stoppers) Number of reviews

< 2 weeks 0

2–4 weeks 0

4–6 weeks 1

6–8 weeks 3

Total less than 8 weeks 4

More than 8 weeks 8

Note: Total review days = Total business days less public holidays and time during which the review was suspended for the reasons set out in the ACCC Process Guidelines. These totals are posted on the ACCC website for all completed public reviews.

3 Reviews of completed mergers are not included in table 3.3. Completed mergers are not subject to the same time frames as reviews of proposed mergers for several reasons, including that it often takes longer to obtain parties’ submissions because the time incentives of parties are altered. The tables do not include matters pre-assessed as not requiring substantive review, e.g. Foreign Investment Review Board notifications. The majority of matters that are pre-assessed as not requiring a review are dealt with in less than two weeks, but are not recorded in these tables because the tables list only the timing relating to substantive merger investigations.

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Statement of IssuesThe ACCC will publicly release a Statement of Issues outlining the basis and facts where the ACCC has come to a preliminary view that a merger raises competition concerns that require further investigation. The purpose of releasing a Statement of Issues is to increase transparency and allows for the ACCC to obtain further information that may either alleviate or reinforce the concerns of the ACCC and in some cases provides an opportunity for merger parties to consider putting forward undertakings to resolve competition concerns.

In the March quarter the ACCC released statements of issues on the following matters:• APA Group’s proposed acquisition of Hastings Diversified Utilities Fund—issued on 30 March 2012• ALH Group Pty Ltd’s proposed acquisition of hotels and takeaway liquor stores in NSW—issued on

8 March 2012• Visy Industries Australia Pty Ltd’s proposed acquisition of PET and plastic assets of HP entities—issued on

29 February 2012• Amcor’s proposed acquisition of Aperio—issued on 23 February 2012• Woolworths Limited’s proposed acquisition of a takeaway packaged liquor licence located at Rocherlea

Tasmania—issued on 9 February 2012.

Public competition assessmentsTo support the aim of fostering informed markets and provide an enhanced level of transparency in its decision-making, the ACCC provides public competition assessments outlining how decisions are reached on matters of particular public interest or those that have important precedence value.

The ACCC did not issue any public competition assessments during this quarter.

Major mattersMajor matters decided during the March 2012 quarter included:

Caltex Australia Petroleum Pty Ltd proposed acquisition of capacity from Terminals Pty Ltd at a new Port Adelaide fuel storage terminal

On 21 September 2011 the ACCC commenced a review of the proposed acquisition by Caltex Australia Petroleum Pty Ltd of a lease over the site of a new fuel storage terminal at Port Adelaide to be developed by Terminals Pty Ltd. The project is a greenfields development.

Caltex is one of the four refiner-marketers in Australia. Caltex sells petrol, diesel and LPG on a wholesale basis to customers including its own retail sites and independent fuel retailers (including Woolworths and Caltex-branded independent retailers).

The ACCC considered the proposed acquisition in the context of the market for the supply of fuel terminal services in Port Adelaide, which involved the services of fuel storage, loading (by ship) and unloading (by truck). The ACCC had regard to the fact that the supply of fuel terminal services in Port Adelaide is an important input for the wholesale supply of refined petroleum products in much of South Australia.

Factors informing the ACCC’s decision not to oppose the proposed acquisition included the significant increase in fuel storage capacity in Port Adelaide which would occur following the proposed acquisition, relative to the status quo. In the absence of the proposed acquisition, it did not appear likely that any alternative party would underwrite construction of a new fuel storage terminal at the site. The ACCC also had regard to the availability of alternative land at the Outer Harbour in Port Adelaide suitable for construction of an additional fuel storage terminal in the future and the potential for third parties to undertake fuel storage developments on part of the site if it remains undeveloped after Caltex’s five year exclusivity period ends.

Outcome | On 27 January 2012 the ACCC decided not to oppose the proposed acquisition.

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Visy Industries Australia Pty Ltd—proposed acquisition of PET and plastic assets of HP entities

On 23 December 2011 the ACCC commenced a review of the proposed acquisition of PET and plastic assets of HP entities by Visy Industries Australia Pty Ltd. Receivers and managers were appointed to the HP Industries Group on 6 December 2011.

On 29 February ACCC released a Statement of Issues outlining preliminary concerns in relation to the proposed acquisition.

The ACCC considered the proposed acquisition in the context of markets for the manufacture and supply of PET containers (including PET jars, bottles and containers), non-PET rigid plastic containers (including non-PET jars, bottles and containers), and small industrial plastic containers, in each of New South Wales and Victoria.

In assessing the competitive effects of the proposed acquisition, the ACCC considered the relationships and links between Visy and Pact Group Pty Ltd and their respective principals. However, for the purposes of the final assessment, the ACCC did not need to reach a concluded view on the likelihood of Pact providing an effective independent constraint on Visy.

While the proposed acquisition would result in the removal of a significant competitor in the manufacture and supply of PET containers in NSW and Victoria, and in the manufacture and supply of non-PET rigid plastic containers in NSW (HP did not have a significant presence in non-PET rigid plastic containers in Victoria), the ACCC determined that the merged firm was likely to be constrained by the existence of several alternative manufacturers and suppliers of PET containers and non-PET rigid plastic containers, independent of Pact.

Although these manufacturers are currently not as large as the merged firm or Pact, the ACCC considered that their ability to expand to meet the requirements of large customers meant that they were likely to provide a constraint on the merged firm. The ACCC also took account of the countervailing power held by many customers who would be able to bypass the merged firm by either sponsoring the expansion of smaller manufacturers or commencing in-house container production.

In the markets for the manufacture and supply of small industrial plastic containers in each of NSW and Victoria, the ACCC considered that the presence of other manufacturers and suppliers of small industrial plastic containers (independent of Pact) and low barriers to expansion are likely to constrain the merged firm.

Outcome | On 21 March 2012 the ACCC announced its decision not to oppose the proposed acquisition.

Amcor Limited—proposed acquisition of the flexible packaging operations of Aperio Group Pty Ltd

On 13 October 2011 the ACCC commenced a review of the proposed acquisition of Aperio Group Pty Ltd by Amcor Limited.

After an extensive public review, including the publication of a Statement of Issues on 23 February 2012, the ACCC formed the view that the proposed acquisition would not result in a substantial lessening of competition in any relevant market.

The ACCC carefully considered the likely impact of the proposed acquisition on the national market for the supply of valued-added flexible packaging, which includes packaging for goods such as confectionary, biscuits and frozen foods. In particular, the ACCC focused on the principal area of overlap between Amcor and Aperio, which was the supply of value-added flexible packaging to manufacturers of fast moving consumer goods (FMCGs).

The ACCC in its assessment noted that a merged Amcor and Aperio would account for a significant portion of sales of value-added flexible packaging, in particular to Australian FMCG packaging customers. The ACCC conducted detailed market inquiries on whether the proposed acquisition, through removing Aperio, would

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provide Amcor with the ability to increase prices of value-added flexible packaging and/or decrease service levels.

The ACCC concluded that were Amcor to attempt to increase prices and/or decrease service levels then domestic and overseas competitors already supplying Australian customers, along with potential suppliers located overseas, would be able to attract business and win market share from Amcor.

In particular, the ACCC’s public review indicated that actual and potential import competition would provide a direct constraint on Amcor. The ACCC noted that many FMCG packaging customers were successfully managing the supply chain issues associated with imports and realising significant cost savings through overseas sourcing of value-added flexible packaging. The ACCC’s review found that the volume and value of imports of value-added packaging had been increasing as it is relatively easy to transport and there were no significant barriers that would hinder further growth. The ACCC also noted that FMCG packaging customers generally employed sophisticated procurement practices, with a number obtaining imported supply or seeking quotes from manufacturers who had established relationships with their overseas affiliates.

The ACCC additionally considered that there were a number of domestic value-added packaging manufacturers that would constrain the merged firm and had demonstrated a willingness to invest to win new FMCG packaging customer contracts. Industry feedback also indicated that FMCG packaging customers held a degree of countervailing power due to their ability to sponsor entry or expansion of value-added flexible packaging manufacturers.

Outcome | On 28 March the ACCC announced its decision not to oppose Amcor Limited’s proposed acquisition of Aperio Group Pty Ltd.

Google Inc—proposed acquisition of Motorola Mobility Holdings Inc

On 13 October 2011 the ACCC commenced a review of the proposed acquisition of Motorola Mobility Inc by Google Inc.

Google’s business primarily involves web search, online advertising, operating systems and platforms, as well as providing web-hosted applications. Relevantly, Google is the lead developer of the Android operating system for smartphones and tablets (mobile devices).

Motorola is a provider of mobile and wireless digital communication products and services. Relevantly, Motorola installs the Android operating system on mobile devices it supplies and has a patent portfolio which includes telecommunications standard essential patents which must be used by mobile device manufacturers in manufacturing Mobile Devices.

The ACCC considered the proposed acquisition in the context of the following markets: • supply of Mobile Device operating systems• supply of Mobile Devices• supply of internet advertising• supply of payment systems on mobile devices.

The proposed acquisition represents vertical integration by Google, in so far as it supplies the Android operating system, into supply of mobile devices. The proposed acquisition also would have a conglomerate effect insofar as Motorola’s ownership of telecommunications standard essential patents for mobile devices may complement Google’s supply of an internet search tool and internet advertising services for mobile devices.

The ACCC recognised that Google has an advertising-based business model and considered that the merged firm was likely to have a strong incentive to maintain supply of Android to third party mobile device manufacturers. The ACCC also considered that the merged firm’s provision of access to Motorola patents by rival mobile device manufacturers was likely to be constrained by rival mobile device manufacturers’ ownership of key portfolios of standard essential patents. The ACCC also took account of Motorola’s relatively

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small market share and the strong competition for supply of mobile devices from established global players. The ACCC considered that rival suppliers of mobile device operating systems could integrate into supply of Mobile Devices and vice versa. A further factor in the ACCC’s assessment of the proposed acquisition was the innovative and dynamic nature of the technology markets in which Google and Motorola operate.

The ACCC also noted the public statements made by Google and other key market participants in which they clarify their respective approaches to the fair, reasonable and non-discriminatory use of their standard essential patents by competitors.

After a detailed review which included liaising closely with overseas regulators, the ACCC considered that the proposed acquisition would be unlikely to substantially lessen competition in any market.

Outcome | On 21 February 2012 the ACCC announced its decision not to oppose the proposed acquisition of Motorola Mobility Inc by Google Inc).

Johnson and Johnson proposed acquisition of Synthes Inc

On 21 October 2011, the ACCC commenced a review of the proposed acquisition of Synthes by Johnson & Johnson. Johnson & Johnson is headquartered in the United States and is engaged in the manufacture and supply of a broad range of products in the health care industry on a global basis. Johnson & Johnson is organised into three businesses: consumer products; pharmaceutical; and medical devices and diagnostics. Synthes, also headquartered in the United States, is a global medical device company, specialising in the development, manufacture and marketing of instruments, implants and biomaterials for the surgical fixation, correction and regeneration of the human skeleton and its soft tissues.

The ACCC focussed its assessment on the overlap in the merger parties’ activities in the supply of thoracolumbar interbody devices, which are used to treat spinal degeneration in the thoracolumbar part of the spine and anatomical plating systems for the wrist, which are used to treat wrist fractures.

The ACCC did not reach a definitive view on market definition as the proposed acquisition was unlikely to raise concerns in any potential market.

In particular, the ACCC considered that in each product market, there were a number of well established alternative suppliers, providing products of comparable quality, similar characteristics, and clinical function together with high levels of service. These alternative suppliers would maintain competitive options for customers in the acquisition of these medical devices.

The ACCC also considered the recent history of new entry, particularly in the supply of spinal devices, through overseas-based medical device companies and Australian-based distributors importing and supplying medical devices, which have been approved for use overseas. The ACCC considered that the threat of expansion by these new entrants as well as the prospect of further new entry would also provide a constraint on the merged firm.

ACCC staff liaised with the European Commission (EC) and the Federal Trade Commission (FTC) in relation to the proposed acquisition. The EC and the FTC decided not to oppose the proposed acquisition.

Outcome | On 8 February 2012, the ACCC announced its decision not to oppose the proposed acquisition of Synthes by Johnson & Johnson.

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4. Authorisations and notifications

AuthorisationsDuring the March 2012 quarter, the ACCC issued six final determinations; six draft determinations; and made five interim decisions. The ACCC received five new authorisation applications covering three projects in the quarter.

Table 4.1: Authorisations received and decisions issued—January to March 2012Total authorisations received 1 January—31 March 2012 5New 5Revocation and substitution 0Minor variations 0Decisions issued 1 January—31 March 2012 23Draft determinations 6Final determinations 6Interim decisions 5

Major authorisationsMajor authorisations of note decided during the March 2012 quarter included:

Australian Processing Tomato Growers—A91270

Summary | On 26 August 2011 the Australian Processing Tomato Growers, a branch of the Victorian Farmers Federation’s Horticulture Group, sought authorisation on behalf of 22 named tomato growers and any future members, to collectively bargain on the terms and condition of contracts with tomato processors.

Result | On 24 February 2012 the ACCC issued a final determination granting authorisation for a period of five years.

The scope of the conduct authorised does not extend to allowing growers who operate a tomato processing business or have an interest in a tomato processing business to participate in the collective bargaining activities of the group.

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Australian Writers’ Guild Limited—A91274

Summary | On 6 September 2011 the Australian Writers’ Guild Limited sought authorisation, on behalf of its current and future members, to collectively negotiate model agreements which can be used by current and future members of the Australian Writers’ Guild when contracting with producers of either film or television. The Australian Writers’ Guild proposes negotiating the model terms of engagement with the Screen Producers Association of Australia. The model terms of engagement will include a set of common terms relating to the price of services supplied (and the price of goods and intellectual property incidentally supplied in connection with the services) by members of the Australian Writers’ Guild who choose to utilise the model terms of engagement in negotiations with producers. The Australian Writers’ Guild also hopes the terms of engagement will serve as a benchmark for Screen Australia as to what constitutes ‘fair and reasonable conduct’ when public funding recipients engage writers (as part of the Screen Australia Terms of Trade).

Result | On 25 January 2012 the ACCC issued a final determination granting authorisation until 28 February 2017

Abbot Point Coal Export Terminal Producers—A91275

Summary | On 7 September 2011 Carabella Resources Limited, Macarthur Coal Limited, Middlemount Coal Pty Limited, New Hope Corporation Limited and Peabody Energy Australia Pty Limited (the APC Consortium) sought authorisation to:

i) collectively discuss and negotiate the terms and conditions, including price, under which access to below rail infrastructure for the purpose of transporting coal to the Abbot Point Coal Terminal, will be acquired from QR Network Pty Ltd (QR Network)

ii) collectively discuss matters relating to those discussions and negotiations

iii) enter into and give effect to contracts, arrangements or understandings with QR Network (or any successor or assignee) containing common terms and conditions, including price, upon which access to the below rail infrastructure will be acquired.

On 4 November 2011, the parties sought to amend authorisation application A91275 to add Rio Tinto Coal Australia Pty Limited (Rio Tinto) to the list of applicants seeking authorisation, and extend the scope of the authorisation application to include Rio Tinto’s access to the below rail infrastructure required to service its proposed coal terminal at Abbot Point (the Rio Tinto Terminal) in the collective bargaining arrangements described above.

Below rail infrastructure refers to all activities associated with the provision and management of rail infrastructure, including the construction, maintenance and renewal of rail infrastructure assets.

Result | On 16 February 2012 the ACCC issued a final determination granting authorisation for a period of fifteen years to the applicants and any future users of the applicants’ proposed coal terminal developments at the Port of Abbot Point that require access to the below rail infrastructure.

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Dudgeon Point Coal Export Terminal Producers—A91278

Summary | On 28 September 2011 Carabella Resources Limited, Macarthur Coal Limited, Middlemount Coal Pty Limited, New Hope Corporation Limited and Peabody Energy Australia Pty Limited (the DPC Group) sought authorisation to:

i) collectively discuss and negotiate terms and conditions with QR Network Pty Ltd (QR Network), including price, for access to the below rail infrastructure necessary to service Dudgeon Point Project Management’s (DPPM) proposed coal terminal development at Dudgeon Point, within the Port of Hay Point (the DPPM Terminal)

ii) discuss among themselves matters relating to those discussions and negotiations

iii) enter into and give effect to contracts, arrangements or understandings with QR Network (or any successor or assignee) containing common terms and conditions, including price, upon which access to the below rail infrastructure will be acquired.

On 4 November 2011 the parties sought to amend authorisation application A91278 to add Rio Tinto Coal Australia Pty Limited (Rio Tinto) to the list of applicants as a likely user of the DPPM Terminal.

Result | On 16 February 2012 the ACCC issued a final determination granting authorisation for a period of fifteen years to the applicants and any future users of the DPPM terminal proposed for Dudgeon Point that require access to the below rail infrastructure.

Dudgeon Point Coal Export Terminal Producers—A91277

Summary | On 28 September 2011 Carabella Resources Limited, Macarthur Coal Limited, Middlemount Coal Pty Limited, New Hope Corporation Limited and Peabody Energy Australia Pty Limited sought authorisation to:

a) collectively bargain with Dudgeon Point Project Management (DPPM) on the terms and conditions, including price, for:

i) the development of and access to the port facilities at DPPM’s proposed Dudgeon Point coal terminal (DPPM Terminal)

ii) expansions to the DPPM Terminal

iii) associated infrastructure necessary to support the DPPM Terminal.

b) all services related to those port facilities and infrastructure for the receipt, storage, handling and loading of coal for export

c) enter into, and give effect to, contracts, arrangements or understandings with DPPM regarding the development of and provision of access to port facilities, the DPPM Terminal, associated infrastructure and services, and allocation of port capacity

d) discuss related matters, including price and capacity allocations, amongst themselves.

Result | On 16 February 2012 the ACCC issued a final determination granting authorisation for a period of fifteen years to the applicants and any other coal producers which wish to negotiate access to the DPPM Terminal proposed for Dudgeon Point.

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CALMS Ltd—A91276

Summary | On 23 September 2011, CALMS Ltd lodged an application for re-authorisation to agree and set fee caps for the provision of after-hours primary medical care in the ACT. The arrangement has been previously considered by the ACCC and authorised on a number of occasions, most recently in 2008.

Result | On 27 February 2012 the ACCC issued a final determination granting authorisation for a period of ten years, revoking authorisation A91092 and substituting authorisation A91276.

Draft determinations (not otherwise appearing above)Draft determinations issued during the March 2012 quarter included:

Retirees WA (Inc)—A91279

Summary | On 7 November 2011 Retirees WA lodged an application on behalf of itself and the Western Australian Funeral Directors’ Association seeking re-authorisation for ten years for collective bargaining arrangements to allow it to continue to assist its members to obtain basic, pre-paid, low-cost funerals. Similar collective bargaining arrangements have been authorised since 1986. The applicants also sought interim authorisation of the collective bargaining arrangements.

Result | On 16 February 2012 the ACCC issued a draft determination proposing to grant authorisation of the proposed conduct for ten years. The ACCC also granted interim authorisation from 29 March 2012.

The Real Estate Institute of Western Australia (Inc) (REIWA)—Revocation & Substitution—A91280

Summary | On 7 November 2011 The Real Estate Institute of Western Australia (Inc) (REIWA) lodged an application for revocation and substitution of authorisation A91026, which was originally provided for its Articles, Members’ Codes of Practice, Auction Code of Conduct, Multiple Listing Service By-Laws and Standard Exclusive Agency Agreements (together, REIWA’s membership framework).

Result | On 16 March 2012 the ACCC issued a draft determination proposing to grant conditional authorisation in respect of REIWA’s membership framework for five years.

Australian Payments Clearing Association Limited—A91281, A91282 &A91283

Summary | On 25 November 2011 the Australian Payments Clearing Association Limited lodged an application seeking reauthorisation for High Value Clearing System Regulations 5.2(h) and 5.16 to 5.31 (inclusive) and clauses 5.1 and 5.2 of the High Value Clearing System Procedures. These provisions relate to suspension and termination of the High Value Clearing System membership in certain circumstances and the requirement that members join the Society for Worldwide Interbank Financial Transactions (SWIFT) and use the SWIFT Payment Delivery System in clearing and settling payments.

Result | On 21 March 2012 the ACCC issued a draft determination proposing to grant authorisation of the proposed conduct for ten years. The ACCC also granted interim authorisation from 25 January 2012.

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Homemakers South Ltd t/a Homemakers Furniture & Sleepzone Bedding—A91284

Summary | On 6 December 2011 Homemakers South Limited, trading as Homemakers Furniture & Sleepzone Bedding (Homemakers), lodged an application seeking authorisation to collectively bargain on behalf of its members with suppliers of furniture, bedding and related stock, advertising and marketing services, and ancillary services such as insurance and finance arrangements and transport and distribution services.

Homemakers is a buying, advertising and marketing group currently comprising 55 independent furniture retailers in Victoria, New South Wales, South Australia, Tasmania and Western Australia.

Participation in the bargaining group will be voluntary for both Homemakers’ members and the suppliers.

Result | On 15 March 2012 the ACCC issued a draft determination proposing to grant authorisation of the proposed conduct for five years. The ACCC also granted interim authorisation at this time.

Virgin Australia and Skywest Airlines—A91287 & A91288

Summary | On 8 December 2011 Virgin Australia and Skywest Airlines applied for authorisation to make and give effect to their Corporate Alliance Framework Agreement, Frequent Flyer and Lounge Agreement and Joint Sales Agreement. The Corporate Alliance will enable the applicants to jointly offer and supply an integrated air travel offer to corporate customers, comprising charter services, domestic (i.e. intrastate and interstate) regular public transport (RPT) services, international RPT services, the use of Virgin Australia’s airport lounges and the ability to accrue Virgin Velocity status credits on Skywest flights. The Corporate Alliance does not extend to air cargo services.

The applicants propose to coordinate tendering, contracting, pricing, flight scheduling and ground services, such as check-in and airport operations, to the extent they form part of the integrated service offering to corporate customers.

Result | On 22 March 2012 the ACCC issued a draft determination proposing to grant authorisation of the proposed conduct for five years. The ACCC also granted interim authorisation from 25 January 2012.

Hunter Resource Recovery—A91289

Summary | On 1 December 2011 the ACCC received an application for authorisation for a twelve year period from Hunter Resource Recovery (HRR) on behalf of itself and the Cessnock City Council, Lake Macquarie City Council, Maitland City Council and Singleton Council. The applicants are seeking authorisation for joint tendering and contracting arrangements in relation to dry recyclables collection, sorting and disposal.

HRR is incorporated as a not for profit joint venture company limited by guarantee, for the purpose of administering waste recycling and waste management services on behalf of its member Councils. HRR is a delegate of the Councils. It has also been appointed as a trustee of the Councils’ recycling collection fund.

Result | On 1 March 2012 the ACCC issued a draft determination proposing to grant authorisation of the proposed conduct for twelve years. The ACCC also granted interim authorisation from 25 January 2012.

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Authorisations under considerationAuthorisations of interest under consideration during the quarter included:

NBN Co Limited—A91290 and A91292

Summary | On 23 January 2012 NBN Co Limited (NBN Co) lodged applications seeking authorisation of certain provisions of an agreement entered into with SingTel Optus and other Optus entities (Optus) to migrate Optus’ hybrid fibre-coaxial (HFC) subscribers to the national broadband network.

Under the agreement, among other provisions, NBN Co will make progressive payments to Optus based on the actual number of customers that migrate from the Optus HFC network to the national broadband network, and Optus will progressively decommission parts of the HFC network that do not provide ongoing support for mobile infrastructure and business customers.

The ACCC has sought submissions from NBN Co and interested parties and the matter is under consideration.

Note: In August 2011 NBN Co lodged applications A91271–A91273 with the ACCC for arrangements similar to those proposed by the January 2012 applications. NBN Co withdrew the August applications to take account of amendments that had been made to the proposal (now reflected in applications A91290–A91292).

Viscopy Ltd and Copyright Agency Ltd—A91285 and A91286

Summary | On 6 December 2011 Viscopy Limited (Viscopy) and Copyright Agency Limited (CAL) (the Applicants) lodged applications seeking authorisation to enter into a service agreement under which CAL will provide various services to Viscopy and Viscopy members. While Viscopy will retain an independent Board, the service agreement will result in CAL fully managing and administering the day-to-day operations of Viscopy’s business.

The Applicants seek authorisation to jointly discuss and negotiate terms and conditions for the services they provide to their respective members and licensees under the service agreement for a period of 5 years.

The Applicants are copyright collecting societies that provide services to visual artists and licensees of artistic works under the Copyright Act 1968.

The ACCC’s decision is expected to be issued in April 2012.

St Vincent’s Health Australia & Ors—A91295

Summary | On 23 March 2012 St Vincent’s Health Australia Ltd and others (the SVHA Group) applied for authorisation for proposed joint negotiations by the SVHA Group with suppliers of goods and services and also with health insurers and other funding organisations as well as limiting, preventing or restricting the supply or acquisition of goods and services by any or all of the SVHA Group. The proposed conduct also includes exclusive dealing arrangements such that the supply of goods or services at St Vincent’s Private Hospital is conditional on a third person acquiring goods or services from another entity in the SVHA Group.

The applicants include St Vincent’s Health Australia Limited, The Holy Spirit Northside Private Hospital Limited, Trustees of Mary Aikenhead Ministries, and The Congregation of Religious Sisters of Charity of Australia trading as St Vincent’s Private Hospital Sydney.

The authorisation is sought for as long as the SVHA Group are related bodies corporate or are directly or indirectly owned and controlled by the Sisters of Charity.

The ACCC has sought submissions from interested parties and the matter is under consideration.

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Private Hospital Collective Bargaining Group—A91293

Summary | On 28 February 2012 the Private Hospital Collective Bargaining Group sought authorisation to collectively negotiate contract terms on behalf of small independent private hospitals and small private hospital groups with medical suppliers and other businesses such as health insurers.

The ACCC has sought submissions from interested parties and the matter is under consideration.

South Australian Inghams Chicken Growers—Authorisation—A91294

Summary | On 15 March 2012 the South Australian Farmers Federation, on behalf of 16 members who are South Australian chicken growers for Inghams (the Applicants), lodged a collective bargaining authorisation application.

The Applicants seek authorisation for ten years for themselves and future South Australian Inghams chicken growers to collectively bargain with Inghams over:a) growing fees and other terms and conditions of broiler chicken growing contractsb) adjustment and review of growing fees and other matters arising from time to time under the terms of broiler

chicken growing contractsc) resolution of disputes which arise from time to time under broiler chicken growing contracts.

The ACCC has sought submissions from interested parties and the matter is under consideration.

Notifications

Exclusive dealing notificationsNotifications of interest decided or under consideration during the quarter included:

Co operative Bulk Handling Ltd—N93439

Summary | On 29 June 2011 the ACCC issued a notice revoking exclusive dealing notification N93439 lodged by Co-operative Bulk Handling Limited (CBH). CBH lodged an application for review of the decision by the Australian Competition Tribunal on 19 July 2011.

The notified conduct involves CBH requiring Western Australian grain growers who use CBH’s up-country storage facilities to also use CBH’s transport services to move grain to port.

The Tribunal heard most of the review proceedings between 5 and 22 March 2012. The final two days of the proceedings are scheduled to be heard by the Tribunal on 7 and 8 May 2012.

Football Queensland Limited—N93402

Summary | On 15 December 2011 the ACCC issued a notice to revoke exclusive dealing notification N93402 lodged by Football Queensland Limited. Football Queensland Limited lodged an application for review of the decision by the Australian Competition Tribunal on 5 January 2012.

Football Queensland Limited lodged exclusive dealing notification N93402 on 28 April 2008 regarding the ‘Teamwear Program’, which requires clubs that participate in Football Queensland competitions to use only ‘Teamwear’ from licensed suppliers during those competitions. ‘Teamwear’ includes tracksuits, playing shirts, playing shorts, playing socks and balls.

The Tribunal has listed this matter for a hearing in Brisbane during the week commencing 30 July 2012.

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Gladstone Port Corporation Limited—N93770

Summary | On 6 February 2009 Gladstone Port Corporation lodged exclusive dealing notification N93770 regarding a requirement that all vessels requiring towage services in the Port of Gladstone use the services of the holder of an exclusive licence. On 1 May 2009 the ACCC decided to take no further action in relation to this notification. On 23 November 2011 the ACCC received a submission from Svitzer Australia Pty Ltd requesting that the ACCC undertake a review of the notification. The ACCC subsequently consulted interested parties to seek their views on the issues raised by Svitzer’s submission and the matter is under consideration.

Port of Townsville Ltd—N93775

Summary | On 10 February 2009 the Port of Townsville lodged exclusive dealing notification N93775 regarding a requirement that all vessels requiring towage services in the Port of Gladstone use the services of the holder of an exclusive licence. On 10 March 2009 the ACCC decided to take no further action in relation to this notification. On 23 November 2011 the ACCC received a submission from Svitzer Australia Pty Ltd requesting that the ACCC undertake a review of the notification. The ACCC subsequently consulted interested parties to seek their views on the issues raised by Svitzer’s submission and the matter is under consideration.

Aussie Home Loans (AHL) N92787, Virgin Money Australia N93141 & N93142; ING N93186; Mortgage Choice N93329

Summary | In 2007 and 2008 the above exclusive dealing notifications were lodged with the ACCC which broadly required that the employees of various lending businesses be members of the Mortgage and Finance Association of Australia (MFAA). The ACCC considered these matters at the time and allowed them to stand.

The ACCC has commenced a review of the above notifications due to the material change in circumstances as the notifications were lodged with the ACCC prior to the commencement of the national regulatory regime for the credit industry. The matter is under consideration.

Collective bargaining notificationsNo collective bargaining notifications of interest were received or decided during the quarter.

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Australian Energy Regulator

First AER Customer Consultative Group for 2012 meets in MelbourneOn 23 February 2012 the AER hosted its seventh Customer Consultative Group meeting. It was the first meeting for 2012 and the first for the newly reconstituted Group. The meeting covered topics relevant to energy customers, including:• a presentation by the ACCC on its approach to carbon price claims when the Carbon Pricing Scheme

commences on 1 July 2012, with an emphasis on ensuring compliance with the ACL and raising consumers’ awareness of their rights under the ACL

• an update from the Joint Implementation Group—established to ensure a coordinated national approach to the implementation of the National Energy Customer Framework (NECF)—on progress made by each of the participating states and territories and the development of a national NECF communication strategy

• an update on the AER’s preparation for the commencement of the NECF, in particular work underway on the price comparator website (Energy Made Easy); approval of retailers’ customer hardship policies; and compliance and performance reporting

• an overview from Cynthia Gebert, the new Energy and Water Ombudsman Victoria.

ACCC Commissioner and AER Board member Mr Ed Willett, acting for AER Chair Mr Andrew Reeves, briefed the group on AER’s activities since the last meeting in October 2012. The meeting was also an opportunity for members to update the AER on their current activities and priorities.

The Customer Consultative Group meets up to three times a year and has ten current members—Australian Council of Social Service, Australian Council on the Ageing, Australian Industry Group, Consumer Action Law Centre, Consumer Utilities Advocacy Centre, Public Interest Advocacy Centre, Queensland Council of Social Service, Saint Vincent de Paul Society, Tasmanian Council of Social Service and UnitingCare Wesley Adelaide.

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Gas network regulation matters

Meridian SeamGas Joint Venture and WestSide Corporation application for exemption from ring fencing requirementsOn 21 February 2012 the AER received an application from the Meridian SeamGas Joint Venture and WestSide Corporation for exemption from ring fencing obligations under ss. 139–141 of the National Gas Law.

The AER is required to make a decision in accordance with the criteria under 31 of the National Gas Rules. An essential criterion for granting exemptions for the ring fencing requirements is that the cost of compliance must outweigh the public benefit resulting from compliance.

The AER sought submissions from interested parties by 11 April 2012, and will make a draft decision after reviewing all submissions.

Tribunal decision on AER gas distribution access arrangements for Queensland and South AustraliaOn 12 January 2012 the Australian Competition Tribunal handed down its decision on the review of the AER’s June 2011 gas access arrangements decisions for the South Australian and Queensland gas distribution network operators, Envestra and APT Allgas. The AER’s decision recognised the need for significant capital expenditure to address network reliability, safety and to reduce gas leakage.

Envestra and APT Allgas both applied for a review of the AER’s decision on the cost of debt. Envestra also applied for a review of the return on equity and aspects of the AER’s decision in relation to its operating expenditure allowance for its South Australian network.

The Tribunal made a decision rejecting the AER’s approach to calculating the cost of debt and overturned the AER’s decision to not allow Envestra to recover the network management fee. The Tribunal, however, affirmed the AER’s decisions on the allowance for the return on equity and cost of gas leakages.

Electricity network regulation matters

Endeavour Energy retail project event pass-through application—Decision (March 2012)On 26 March 2012, the AER published its decision on a pass-through application made by Endeavour Energy. On 12 January 2012, Endeavour Energy applied to the AER for a retail project event pass-through in relation to the sale of its retail business to Origin Energy in March 2011.

In its application Endeavour Energy stated that it did not intend to pass through any approved amount to its customers but had made the application to ensure that the cost impact on its network business would be taken into account in the operation of the AER’s efficiency benefit sharing scheme.

The AER released its decision on Endeavour Energy’s pass-through application, approving a pass through amount of $48.8 million.

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Determination on Powercor Australia Ltd’s VBRC cost pass-through applicationOn 9 March 2012 the AER released its determination on Powercor Australia Ltd’s (Powercor) cost pass-through application of 13 December 2011 for recovery of costs arising from the Victorian Bushfire Royal Commission (VBRC) recommendations.

Under section 6.6.1 of the National Electricity Rules (NER), where a positive change event occurs, a Distribution Network Service Provider (DNSP) may seek the approval of the AER to pass through to Distribution Network Users a positive pass-through amount. The pass-through provisions of the NER allow a DNSP to recover additional costs that will be incurred during a regulatory control period where certain conditions are satisfied. Powercor submitted a pass through application to the AER to recover costs arising as a result of Energy Safe Victoria’s decision to accept Powercor’s Revised Electricity Safety Management Scheme (ESMS), and from the imposition of a program to transition toward a shorter inspection cycle for network assets in high bushfire risk areas. Powercor’s Revised ESMS and asset inspection cycle incorporate two of the VBRC recommendations. In its application, Powercor sought to recover expenditure of $85.14m ($2012), over the course of the 2011–15 regulatory control period.

The AER determined that a positive pass through event occurred and approved additional capital and operating expenditure of $73.98m ($2012). This represents a reduction to Powercor’s proposed capital and operating expenditure of $11.16m ($2012).

ActewAGL’s application for revocation and substitution of its 2009–14 distribution determinationOn 27 February 2012 ActewAGL Distribution (ActewAGL) notified the AER that it has identified two errors relating to the forecast superannuation costs in the 2009–14 ACT electricity distribution determination. ActewAGL requests that the AER use its discretion under clause 6.13 of the transitional National Electricity Rules to correct the errors. Under this clause the AER can revoke and substitute a distribution determination if it appears to the AER that the determination is affected by a material error or deficiency.

Interested parties were invited to comment on ActewAGL’s application for revocation and substitution of its distribution determination, with submissions closing 30 March 2012. The AER will make a decision regarding the application in April 2012.

Ausgrid: Application for approval of prices for new public lighting luminairesOn 15 February 2012 Ausgrid sought AER approval of charges for three new energy efficient lighting types, known as Active Reactor High Pressure Sodium Luminaires. Ausgrid and the Councils in its supply area proposed that the new lights provide a number of benefits including lower costs, reduced energy consumption, reduced greenhouse gas emissions and improved reliability. The councils obtained funding under the NSW Energy Saving Scheme to replace a poor performing luminaire with the new luminaires and proposed to commence a major replacement program upon the AER’s approval of the charges. On 16 March, the AER approved Ausgrid’s proposed capital and maintenance charges for three new public lighting luminaire types.

2009–10 Transmission Network Service Provider Electricity Performance ReportOn 8 February 2012 the AER released its 2009–10 Transmission Network Service Provider (TNSP) Electricity Performance Report.

The report relates to the performance of Electricity TNSP’s in 2009–10, and covers Directlink, ElectraNet, Ausgrid, Murraylink, Powerlink, SP AusNet, Transend and TransGrid. It provides revenue, profit, expenditure and service standards information on each TNSP for the 2009–10 financial year.

In publishing the report, the AER took into account confidentiality considerations and comments from the transmission networks.

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ETSA Utilities: Pass-through application related to changes in feed-in tariff schemeIn December 2011, ETSA Utilities submitted a service standard pass through application to the AER, seeking to pass through additional administration costs associated with legislative changes to the feed-in tariff scheme for owners of photo-voltaic solar systems in South Australia. Under this scheme, retailers credit a customer’s account for the energy they generate. Retailers are then reimbursed by ETSA Utilities, who passes on the cost to all customers through its network pricing.

On 17 February 2012 the AER rejected ETSA Utilities’ service standard event pass-through application of $9,250,867 over the 2010–15 regulatory control period on the grounds that the amount did not materially increase the costs of providing direct control services.

Aurora Energy revised regulatory proposalOn 16 January 2012 Aurora Energy submitted its revised regulatory proposal for the provision of its electricity distribution services from 1 July 2012 to 30 June 2017. The revised regulatory proposal was submitted in response to the AER’s draft distribution determination released in November 2011. The AER will release its final distribution determination in April 2012. The AER’s final distribution determination will govern how prices will be determined for Aurora’s distribution services. Interested parties were invited to provide submissions on the AER’s draft distribution determination and Aurora’s revised regulatory proposal by 20 February 2012.

Powerlink revised revenue proposalOn 16 January 2012 Powerlink submitted its revised revenue proposal for the provision of its electricity transmission services from 1 July 2012 to 30 June 2017. The revised revenue proposal was submitted in response to the AER’s draft decision released in November 2011.

The AER will release its final decision and transmission determination in April 2012. The AER’s final decision and transmission determination will govern the maximum allowable revenue for the provision of Powerlink’s transmission services, with interested parties invited to provide submissions on the draft decision and Powerlink’s revised revenue proposal by 20 February 2012.

Tribunal decision on AER electricity distribution for VictoriaOn 6 January 2012 the Australian Competition Tribunal made a decision in the review of the distribution determinations for the Victorian electricity distribution businesses (CitiPower, Powercor, Jemena Electricity Networks, SP AusNet and United Energy).

All five businesses applied for a review on a number of aspects of the AER’s October 2010 distribution determinations.

The Tribunal’s final determination is expected to be made in April 2012.

Energy wholesale markets

December 2011 Wholesale Markets Quarterly Compliance ReportOn 14 February 2012 the AER published its latest Wholesal Markets Quarterly Compliance Report.

The report summarises the AER’s compliance monitoring and enforcement activities in the gas and electricity markets during the October—December 2011 period.

It provides an overview of investigation outcomes, compliance audits and targeted compliance reviews undertaken during the quarter. It also includes conclusions for the five special projects carried out in 2011 and introduces four projects to be carried out in 2012.

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Energy retail markets

Minimum disconnection amountLegislation giving effect to the new National Energy Retail Law (Retail Law) passed both houses of South Australian Parliament without amendment on 9 March 2011 and received Royal Assent on 17 March 2011. The Ministerial Council on Energy (now Standing Council on Energy Resources) agreed on 10 December 2010 that jurisdictions would work toward a common target date of 1 July 2012 for commencement of the Retail Law and National Energy Retail Rules (Retail Rules).

Under the Retail Rules (r. 116), a retailer cannot disconnect a customer for non payment where the amount owing is less than an amount approved by the AER (and the customer has agreed to repay that amount).

The AER is currently considering what amount should be approved as the minimum amount owing on a customer’s bill before disconnection for non payment.

On 10 February 2012, the AER published a consultation letter to stakeholders, seeking views on the proposed minimum disconnection amount of $300, and other relevant considerations. The AER held a stakeholder forum on 24 January 2012 in Melbourne (with video links to other capital cities and Townsville). The AER sought written submissions from stakeholders before 9 March 2012.

AER releases final Statement of Approach to the price comparator website and final amended AER Retail Pricing Information GuidelineOn 30 January 2012 the AER released the final suite of public documents relating to the development of its price comparator website. Under the Retail Law, the AER is required to develop and operate a price comparator website. The website will be operational from 1 July 2012.

The Statement of Approach details the AER’s decisions on key components of the price comparator website, including required inputs from the user, the display of available offers to the user, and ensuring the website is accessible to users. Views expressed in submissions to the draft Statement of Approach and at the accompanying stakeholder forum were considered in the finalisation of this document.

The amended AER Retail Pricing Information Guideline (the amended Guideline) amends the final Retail Pricing Information Guideline. It includes an additional section providing direction to energy retailers about the provision of data and information to the AER for the purposes of the price comparator website.

The accompanying Notice of final amended instrument (the Notice) outlines the amended Guideline consultation procedure and the rationale behind the development of the amendments to the Retail Pricing Information Guideline.

CommunicationsThe ACCC and AER have roles in promoting competition in network industries: communication, energy post, water and transport. The ACCC is also involved in monitoring prices of selected goods and services. The ACCC and the AER ensure that participants in the regulated industries comply with access obligations and revenue of pricing arrangement s that apply to facilities such as gas transmission pipelines, electricity transmission networks, telecommunications networks and airports.

In the March 2012 quarter, the ACCC: • accepted Telstra’s structural separation undertaking and approved the draft migration plan• continued its public consultation on the NBN Co’s special access undertaking (SAU) by publishing a second

consultation paper• declared the wholesale ADSL service• published a discussion paper initiating an inquiry into the making of a final access determination (FAD) for

the declared wholesale ADSL service

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• published a summary of the domestic transmission capacity service (DTCS) providers’ pricing data used to develop the price terms in the Draft DTCS FAD (the draft DTCS FAD was published on 9 December 2011)

• declared a layer 2 bitstream service to be called the local bitstream access service (LBAS)• published the Imputation and non price terms and conditions report for the December 2011 quarter

The ACCC accepts Telstra’s structural separation undertaking On 27 February 2012 the ACCC accepted Telstra’s structural separation undertaking and approved the draft migration plan. The ACCC also accepted a joint undertaking from NBN Co and Telstra in connection with matters raised through the consultation process.

On 6 March 2012, Telstra’s Structural Separation Undertaking and Migration Plan came into force on the signing of a declaration by the Minister of Broadband, Communication and the Digital Economy.

Consultation on the National Broadband Network The ACCC released two consultation papers in regards to the special access undertaking (SAU), on 20 December 2011 and 10 February 2012 respectively. The first consultation paper invited submissions, set out an overview of the legislative framework for the assessment of the SAU and the SAU itself, and set out the process that the ACCC intends to follow for the assessment of the SAU. The second consultation paper provided guidance on what the ACCC considered to be the key issues associated with the SAU and seeks to gain a more detailed understanding of stakeholders’ views. In making its decision whether to accept or reject the SAU, the ACCC will take into account any submissions made to both consultation papers.

Regulation of the wholesale ADSL service On 14 February 2012 the ACCC declared the wholesale ADSL service. When a service is declared, it means that the service is subject to regulation by the ACCC. This declaration inquiry was initiated due to the on-going competition concerns that have arisen from complaints by access seekers that a lack of regulated access to wholesale DSL services has impeded their ability to compete with Telstra.

On the same day it declared the service, the ACCC published a discussion paper initiating an inquiry into the making of a FAD for the wholesale ADSL service. Such a determination will establish terms and conditions of supply for the service.

Draft final access determination (FAD) for domestic transmission capacity service (DTCS)In the middle of last year, the ACCC commenced a public inquiry into making a FAD for the DTCS. On 9 December 2011, the ACCC published a Draft DTCS FAD for public consultation. On 20 January 2012, the ACCC published a summary of the DTCS service providers’ pricing data used to develop the price terms in the Draft DTCS FAD. The ACCC released the summary dataset to provide further transparency about the methodology used to develop the price terms in the Draft DTCS FAD.

Local bitstream access service declarationOn 22 February 2012 the ACCC declared a Layer 2 bitstream service to be called the local bitstream access service (LBAS). This declaration will commence when the relevant legislative provisions commence, at the latest 13 April 2012. Prior to declaring the layer 2 bitstream, the ACCC held a final consultation before the declaration came into effect as the Layer 2 bitstream service declaration cannot be varied or revoked once declared.

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ReportsOn 29 March 2012 the ACCC published the Imputation and non price terms and conditions report for the December 2011 quarter. The objective of imputation testing is to examine whether an equally efficient access seeker can compete with Telstra in retail telecommunications markets. The primary purpose of the non-price terms and conditions indictors is to assist the ACCC to determine whether, for certain key services, Telstra’s wholesale business is providing equivalent service to Telstra’s retail business and the retail business of other service providers.

Access disputes Following amendments to Part XIC of the CCA transitional provisions provide that access disputes may be notified to the ACCC until a FAD in respect of a regulated service is made. Once a FAD is made, access disputes can no longer be notified to the ACCC in relation to that service. The ACCC has made FADs in relation to the six regulated fixed line services (ULLS, WLR, LSS, PSTN OA, PSTN TA and LCS). Arbitration hearings for access disputes are private and the ACCC generally does not make any public comment on disputes.

In the March 2012 quarter, no new access disputes were notified to the ACCC.

The following table summarises developments in relation to access disputes during the March 2012 quarter.

Table 5.1: Developments in relation to access disputes—January to March 2012Total

Active disputes at 1 January 2012 13Decisions subject to appeal to the Federal Court 0New arbitrations commenced 0Final determinations issued 0Disputes withdrawn 0Published determinations 0

Active disputes at 31 March 2012 13

Transport and general prices oversight

AirportsAir transportation is essential in Australia because of the distances between capital cities and the lack of practical alternatives for travelling overseas. Airports are monopolies and control access to the key infrastructure necessary for air transportation and for users of the airports to access terminals.

Due to concerns that the airports could use their position to earn monopoly profits to the detriment of Australians, the Australian Government directed the ACCC to monitor the supply of aeronautical and car parking services by Australia’s five major airports—Adelaide, Brisbane, Melbourne (Tullamarine), Perth and Sydney (Kingsford Smith) airports.

Aeronautical services are those services provided by airports to airlines, passengers and border agencies (such as Customs) that are necessary for air transportation. They include, for example, terminal facilities such as baggage processing systems and some check-in services and aircraft facilities such as runways and aircraft parking. Airport users require access to the terminals and do so by, for example, private vehicles, taxis, hire cars, buses, rental vehicles and bikes. Further, users accessing airports in private vehicles may be dropped-off or picked-up, or may park on a short-term or long-term basis. The airports provide on-airport car parking directly to consumers and landside access services to users of these alternatives to on-airport car parking.

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Airport Monitoring Report 2010–11On 30 March 2012, the ACCC released its annual Airport Monitoring Report for the 2010–11 financial year. This year’s report presented the monitoring results in relation to the airports’ supply of aeronautical and car parking services as well as outlining some options for the economic regulation of airports.

Aeronautical servicesPassenger throughput is a useful measure of the demand for aeronautical services at the airports as passenger demand for air transportation is likely to be the primary driver of the airports’ capacity needs. Because airports typically charge on per passenger basis for the use of aeronautical services, the ACCC uses aeronautical revenue per passenger as an indicator of the airports’ average prices, and operating margin per passenger and return on aeronautical assets as an indicator of the airports’ profitability. Further, ratings of the airports’ quality of service by airlines, passengers, border agencies and objective indicators are used as a measure of the quality of aeronautical services provided. Such measures include, for example, the availability and standard of check-in facilities used by airlines to service passengers as well as surveys of passengers’ experiences in passing through security screening points.

Around 103.7 million passengers passed through the five airports in 2010–11, an increase of around 5.8 per cent from the previous year. Sydney Airport had the highest passenger throughput (36.3 million passengers), while Perth Airport had the greatest growth in passenger throughput (9.4 per cent).

A combination of increased passenger numbers and, with the exception of Adelaide Airport, increased average prices contributed to an increase in total revenue from aeronautical services in 2010–11. Sydney Airport had the highest total aeronautical revenue ($524.8 million), while Perth Airport had the greatest growth in total aeronautical revenue (17.2 per cent).

With the exception of Melbourne Airport, average prices increased by more than unit costs, resulting in an increase in aeronautical operating margins per passenger. Melbourne Airport’s unit costs increased by more than average prices due to increased investment in aeronautical services. As a result of this investment, Melbourne Airport’s return on aeronautical assets also decreased in 2010–11. For the other airports, returns on aeronautical assets were higher than the previous year.

In relation to the airports’ returns on aeronautical assets, the ACCC has observed that the volatility of the airports’ returns, which is an indicator of risk, has been significantly lower than that of airlines despite the global financial crisis and a number of natural disasters in recent years. In previous reports, the ACCC observed that the airports’ risk and returns on aeronautical assets are partially insulated by airlines. This year’s observations provide further support for the observations made in the ACCC’s previous reports.

Overall quality of service ratings, which encompasses the views of airlines, passengers, border agencies as well as quantitative measures of the size and availability of facilities, show that Brisbane Airport was the only airport to achieve a rating of ‘good’ (that is, a rating of 4.0 or above, but less than 5.0) in 2010–11. Overall ratings for Adelaide, Perth and Sydney airports improved within the ‘satisfactory’ range (that is, a rating of 3.0 or above, but less than 4.0). Melbourne Airport was the only airport to have a decrease in its overall rating in 2010–11, although it remained rated as ‘satisfactory’. The decline in Melbourne Airport’s overall rating was primarily driven by lower ratings given by airlines and border agencies.

However, overall quality of service ratings are not necessarily a direct indication of the quality of service provided solely by the airports. This is because passengers’ perceptions of their experiences at the airports are influenced not only by the services provided by the airports, but also by the services provided by airlines and border agencies. In contrast, the airlines are the direct users of the services solely provided by the airports. Therefore, airline quality of service ratings can provide a direct indication of the quality of service provided by the airports.

Airline quality of service ratings were ‘satisfactory’ for all the airports in 2010–11, with the exception of Perth Airport, which received a rating of ‘poor’ (that is, a rating of 2.0 or above, but less than 3.0) for the second consecutive period. Melbourne Airport had a sharp decline in airline quality of service ratings, but still remained

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within the ‘satisfactory’ range. Airline quality of service ratings for Sydney Airport increased from ‘poor’ in previous periods to ‘satisfactory’ in 2010–11.

Airport car parking and landside access servicesRevenue from on-airport car parking increased for all the airports in 2010–11. Melbourne Airport had the highest car parking revenue ($114.6 million), while Perth Airport had the greatest growth in car parking revenue (23.5 per cent).

For Adelaide and Sydney airports, the increase in car parking revenue was wholly attributable to an increase in demand as none of their prices changed in 2010–11. For Brisbane, Melbourne and Perth airports, the increase in car parking revenue was attributable to both demand and price increases.

As a result of revenue increasing by a greater rate than operating expenses, operating margins from on-airport car parking increased for all the airports except Brisbane Airport in 2010–11. The decrease in Brisbane Airport’s operating margin was driven by cost increases attributable to substantial investment in new car parking facilities.

The ACCC also reports on the charges imposed by the airports on alternatives to on-airport car parking and the amount of revenue that the airports receive from those landside access charges. This is because the airports could, by imposing excessive charges or restrictive terms and conditions for landside access, impede competition from alternatives to on-airport car parking. This can have the effect of shifting demand from those alternatives to on-airport car parking and, at the same time, enable the airports to charge higher prices for on-airport car parking to increase revenues.

Revenue from landside access increased at all of the airports in 2010–11. For Brisbane Airport, the increase was due to a combination of increased demand and increased landside access charges. For the other airports, the increase was due wholly to increased demand as landside access charges were unchanged in 2010–11.

Options for airport regulationAirports are monopolies and have market power. This was confirmed by the Productivity Commission in its recent inquiry into the economic regulation of airports. An unconstrained airport can use its position to earn monopoly profits to the detriment of Australians. Further, an unconstrained airport may lack the necessary incentives to meet the needs of its users and provide access to its services and facilities on reasonable terms and conditions. This can have an impact on competition in downstream markets, which can have flow on effects through the economy more broadly. For these reasons, effective regulation of airports is appropriate.

The airports are currently subject to monitoring. However, monitoring does not directly restrict the airports from increasing prices and/or lowering service standards to earn monopoly profits. Further, monitoring is limited in its scope to enable a detailed assessment of the airports’ performance to be undertaken and it cannot conclusively establish whether an airport has earned monopoly profits. For these reasons, monitoring is not effective in addressing the policy concern that an unconstrained airport presents and is not a substitute for effective regulation.

Even allowing for the limitations of monitoring, the ACCC has observed outcomes that would be expected of unconstrained monopolies. In particular, prices have increased while, in some instances, quality of services have remained constant or have even fallen below satisfactory over a sustained period of time. Additionally, the ACCC has observed that the airports’ returns are less volatile than those observed in related markets, such as airlines.

There are, however, regulatory tools available that can deal with the policy concern that airports present. In its submission to the Productivity Commission’s recent inquiry, the ACCC specifically noted that there are ‘fit-for-purpose’ regulatory tools available under Part IIIA of the Competition and Consumer Act 2010. Part IIIA provides for third parties to negotiate access to monopoly infrastructure such as airports and is able to effectively constrain the potential for monopoly pricing by airports.

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Bulk wheat export—access to port terminal services During 2011 the ACCC accepted undertakings under Part IIIA of the CCA regulating access to services for the export of bulk wheat at port terminals operated by GrainCorp at seven port terminals on the east coast, Australian Bulk Alliance at the Port of Melbourne, Viterra at six ports in South Australia and Cooperative Bulk Handling (CBH) at four ports in Western Australia.

The access arrangements provide for:• obligations on port operators not to discriminate or hinder access in the provision of port services• clear and transparent port loading protocols for managing demand for port terminal services• obligations on port operators to negotiate in good faith with eligible wheat exporters for access to port

terminal services• the ability of wheat exporters to seek mediation or arbitration on terms of access in the event of a dispute.

The ACCC has a role in access arrangements for wheat exporters as part of the deregulation of the wheat industry. Access undertakings are intended to ensure that third party exporters are able to access the port terminals operated by vertically integrated port terminal operators, ensuring competition in this significant export market.

Since accepting the undertakings, the ACCC has been monitoring each of the port operators to ensure compliance with the respective undertakings. This includes examining the access agreements between port terminal operators and the associated accredited wheat exporters to ensure that access arrangements to port terminal services do not discriminate and monitoring the reporting outputs of each of the port terminal operators. In addition, the ACCC is currently assessing Viterra’s proposed auction system which it is required to introduce as part of its Part IIIA undertaking.

Legislative amendments were introduced into Parliament in March 2011 to further deregulate the wheat export market. These amendments would see the requirement for access arrangements end on 30 September 2014, conditional on a voluntary industry code of conduct being in place.

RailThe ACCC currently has a regulatory role under Part IIIA of the CCA in relation to two access undertakings submitted to it by the Australian Rail Track Corporation (ARTC). The Hunter Valley Access Undertaking was accepted by the ACCC on 29 June 2011, and the Interstate Rail Network Access Undertaking was accepted by the ACCC on 30 July 2008. The Hunter Valley network is predominantly used to transport export coal from the region’s mines to the Port of Newcastle, but it is also used for non-coal and domestic coal freight and passenger services. The Interstate Network is used by both freight services and regional passenger services.

The arrangements under both access undertakings provide for:• the negotiation of long term access contracts between users of the rail network and ARTC, and• processes for new investment in the rail network, in consultation with stakeholders.

During the January–March 2012 quarter the ACCC continued to carry out functions conferred to it under each undertaking. These included:

Hunter Valley Access Undertaking

The ACCC is currently assessing a variation application submitted by ARTC to determine, and provide pricing incentives to adopt, the efficient train configuration for the Hunter Valley coal chain. This will be a further step toward maximising throughput on the coal supply chain, and forms part of the long-term solution to reducing capacity constraints in the Hunter Valley. The ACCC is reviewing industry submissions made in response to its December 2011 consultation paper and intends to release a Position Paper shortly.

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Interstate Rail Network Access Undertaking

The ACCC is assessing an application submitted by ARTC on 6 January 2012 to vary the Interstate Rail Network Access Undertaking. The variation relates to ARTC’s proposed capital expenditure forecasts for the period 1 July 2012 to 30 June 2018. If ARTC’s actual capital expenditure for this period is deemed prudent, it will be able to be rolled into the regulatory asset base which is used in determining access prices. The ACCC expects to release a Final Decision on the variation soon.

WaterUnder the Water Act 2007, the ACCC has monitoring, enforcement and policy development responsibilities relating to water markets, water trading and water delivery services in the Murray–Darling Basin (MDB). The ACCC also conducts compliance activities to assist stakeholders to understand the rules it is responsible for enforcing.

Monitoring and Water Pricing

Water Monitoring Report 2010–11

The ACCC’s Water Monitoring Report 2010–11 is an annual public report to the Minister for Sustainability, Environment, Water, Population and Communities on regulated water charges, transformation arrangements and compliance with the water charge rules and water market rules in the MDB.

The report was developed from information provided by irrigation infrastructure operators (IIOs) and bulk water operators in the MDB and relevant State government agencies through a formal Request for Information in July 2011.

The report covers the 2010–11 financial year. Key findings include:• In 2010–11, the ACCC has estimated that the average increase in charges levied by IIOs was approximately

5 per cent • Irrigators in the MDB appear to be anticipating an increase in on-farm production and future revenue,

lessening the need to exit irrigation• Temporary trade increased 48% from the previous year (2301 GL to 3417 GL) and permanent trade in the

MDB declined by 45% from the previous year (1818 GL to 999 GL), and• ACCC monitoring shows that water operators are largely complying with the rules.

The ACCC’s 2010–11 Water Monitoring Report is expected to be released publicly in April 2012.

Review of Network Service Plans

Under the Water Charge (Infrastructure) Rules 2010, several irrigation infrastructure operators have a legislative requirement to develop a Network Service Plan (NSP) for customers. A NSP must include details on the levels of the services an operator places to deliver over a five year period, the costs it expects to incur and the charges it expects to levy.

The requirement to develop a NSP applies to Murray Irrigation, Murrumbidgee Irrigation, Coleambally Irrigation, Central Irrigation Trust and SunWater.

The ACCC is required to arrange and pay for all NSP’s to be reviewed by a qualified engineer. The regulated operator must provide the findings of the review to all its customers. The objective of the NSP is to improve transparency for customers of larger irrigation infrastructure operators of the efficiency and prudency of the network investments plans and related costs under a NSP through an independent assessment of these matters.

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The ACCC has appointed consultants to undertake the reviews of NSPs. The consultants commenced their first review of Central Irrigation Trust’s NSP in February 2012.

The ACCC expects to receive Murray Irrigation’s NSP in April 2012 and the NSPs of Murrumbidgee Irrigation, Coleambally Irrigation and SunWater in mid 2012.

Accreditation of Essential Services Commission of Victoria

Under the Water Act 2007 (Cwlth), the ACCC can accredit state regulators to apply rules made under the act. In February 2012, the ACCC accredited arrangements in Victoria that allow the Essential Services Commission of Victoria (ESC) to regulate, under Commonwealth rules, the prices of bulk water and irrigation infrastructure services provided by Goulburn-Murray Water and Lower Murray Water. Unless revoked by the ACCC the period of accreditation for the ESC is ten years.

Under the accredited arrangements, the ESC will be subject to the same rules and pricing principles as the ACCC and any other government agency responsible for price regulation of irrigation and bulk water suppliers in the MDB. The ACCC and the ESC are also developing a Memorandum of Understanding covering operational arrangements between the two agencies regarding their respective regulatory roles in the MDB.

The ESC will make its first determination as an accredited regulator for Goulburn-Murray Water and Lower Murray Water in 2013. The ESC’s first determination for these businesses as an accredited regulator will apply from 1 July 2013 to 30 June 2016.

Compliance and enforcement

Targeted Water Purchasing in the Southern Murray-Darling Basin and the Water Market Rules 2009

The Australian Government recently released an Expression of Interest for Targeted water purchasing in the Southern Murray-Darling Basin (EOI) as part of its ‘Water for the Future—Restoring the Balance in the Murray-Darling Basin’ water recovery program. The EOI required irrigators to provide a letter from their Irrigation Infrastructure Operator (IIO) stating that the sale of water to the government was consistent with the IIO’s plans for reconfiguration or modernisation of its network.

In response, some IIOs expressed concerns about the interaction of the EOI requirements and the Water Market Rules 2009.

The Department of Sustainability, Water, Environment, Population and Communities asked the ACCC to consider the concerns raised by the IIOs. The ACCC formed the view that the requirement was unlikely to result in IIOs breaching the Water Market Rules. To assist, the ACCC prepared guidance material on the EOI requirements and the interaction with the Water Market Rules, which was circulated to concerned stakeholders.

Policy developments and consultation

Consultation for the Murray-Darling Basin Plan

On 28 November 2011 the Murray-Darling Basin Authority (MDBA) released its draft Murray-Darling Basin Plan for public comment. A 20–week statutory consultation period followed this release. The consultation period will end on April 16 2012. During this period, the ACCC has continued to provide assistance and advice to the MDBA regarding the water trading rules which form Chapter 11 of the draft Basin Plan. The ACCC attended public consultations on Chapter 11 of the draft Basin Plan in Berri, Canberra, Mildura and Dubbo.

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Gas

Regulatory Information Notices to Victorian Gas Transmission and Distribution Businesses

Under the National Gas Law (NGL) and the National Gas Rules (NGR), the AER is required to review the Victorian gas transmission and distribution access arrangements (GAAR) for the period 1 January 2013 to 31 December 2017. The GAAR relates to the access arrangements for the Victorian Transmission System owned and maintained by APA GasNet and the four covered distribution networks of three gas distribution businesses—Multinet, Envestra and SP AusNet. The access arrangements establish the basis for the terms and conditions, including price, of access for users and prospective users.

On 13 March 2012 the AER issued final Regulatory Information Notices (RINs) under Division 4 of Part 1 of Chapter 2 of the NGL on the Victorian gas transmission and distribution businesses. The RINs require the businesses to provide, prepare and maintain information in the manner and form specified in the RIN. The information in the RINs will be used by the AER is deciding whether to approve the access arrangement proposals.

The access arrangement proposals, including responses to the RINs, were submitted by the businesses to the AER on 30 March 2012 and 2 April 2012.

Fuel

Price monitoringThe ACCC closely follows developments in the petroleum industry and monitors the retail prices of petrol, diesel and automotive liquefied petroleum gas (LPG) in all capital cities and around 150 regional locations.

Price movements in the March 2012 quarter

PetrolThe ACCC monitors movements in domestic retail petrol prices against movements in international benchmark prices. In the case of regular unleaded petrol (RULP), movements in seven-day rolling average retail RULP prices in the five largest cities (Sydney, Melbourne, Brisbane, Adelaide and Perth) are compared with movements in seven-day rolling average prices for Singapore Mogas 95 Unleaded (lagged by 10 days) in Australian cents per litre (cpl).

Chart 1 shows movements in these prices over the period 1 January to 31 March 2012. Retail RULP prices are shown on the left hand side of the chart and Singapore Mogas 95 Unleaded prices are shown on the right hand side.

A comparison of movements in these two prices is indicative rather than an exact science and factors other than international benchmark prices can influence retail petrol prices in the short run. This caveat also applies to the comparisons of movements between retail diesel and automotive LPG prices and their respective international benchmarks.

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Chart 1: Movements in retail RULP prices and international benchmark prices—1 January to 31 March 2012

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Singapore Mogas 95 Unleaded(7-day rolling average price, lagged by 10 days), RHS

Five largest cities (7-day rolling average retail price), LHS

Note: the cyclical movements in the seven-day rolling average retail price series arise because petrol price cycles in 2012 have been longer than seven days. Traditionally the ACCC has used a seven-day rolling average to smooth out the effects of the petrol price cycle.

As illustrated in the chart, both retail RULP prices and Singapore Mogas 95 Unleaded prices increased in the March 2012 quarter. 7-day rolling average retail RULP prices in the five largest cities increased from 139.8 cpl at the beginning of January 2012 to a high of 150.9 cpl in late March. Prices subsequently decreased slightly to be at 149.7 cpl at the end of March 2012—an overall increase of 9.9 cpl during the quarter.

The increase in Singapore Mogas 95 Unleaded prices over the March quarter were influenced by improved US economic sentiment, global supply constraints and tensions in the Middle East.

DieselThe ACCC monitors the movement of retail diesel prices against the spot price of Singapore Gasoil with 10 parts per million (ppm) sulphur content. Chart 2 shows daily average retail diesel prices on the left hand side of the chart and seven-day rolling average Singapore Gasoil 10 ppm prices (lagged by 11 days) on the right hand side.

Daily average retail diesel prices in the five largest cities increased by 1.9 cpl over the March 2012 quarter—from 150.4 cpl at the beginning of January to 152.3 cpl at the end of March. Singapore Gasoil 10 ppm prices increased over the quarter due to strong demand in the Asian region.

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Chart 2: Movements in retail diesel prices and international benchmark prices—1 January to 31 March 2012

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Singapore Gas Oil 10ppm(7-day rolling average price, lagged by 11 days), RHS

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Automotive LPG

The ACCC monitors the movement of retail automotive LPG prices against the average price of Saudi Aramco contract prices for propane and butane, which are issued on the first day of the month (see Chart 3).

Average retail automotive LPG prices in the five largest cities (on a seven-day rolling average basis) increased by 25 cpl over the March 2012 quarter—from 61.9 cpl to 86.9 cpl. The increases in the Saudi Aramco contract prices over the quarter were primarily driven by weather related heating demand during the northern winter, as well as geopolitical tensions in the Middle East.

Chart 3: Movements in retail automotive LPG prices and international benchmark prices—1 January to 31 March 2012

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Monthly Saudi CP benchmark

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6. International activities

The ACCC’s international activities support its work by promoting international enforcement assistance and best practice regulation, and by developing and maintaining effective networks and links with international counterpart agencies.

International foraThe ACCC participates in a variety of international fora throughout the year. For example, the ACCC is an active member of the International Competition Network (ICN) and is represented on its steering group and a number of working groups, including those relating to mergers and cartels. The ACCC is also an active member of the International Consumer Protection Enforcement Network. The two networks hold calls, meetings, workshops and conferences through the year which ACCC staff attend as required.

The ACCC is also the Chair of an Organisation for Economic Co-operation and Development (OECD) Product Safety Working Party, which is focusing on improving information sharing across national borders, and participates in an International Consumer Product Safety Caucus working group examining product tracking and traceability.

Significantly, the ACCC progressed work through the OECD on the development of a global recalls database. A pilot is expected by mid 2012.

The ACCC is also working with the United States, Canada and Europe to align international safety requirements for targeted products. In the first instance, the project is focussed on infant slings, chair-top booster seats and corded internal window coverings.

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Table 6.1 ACCC international conference attendance – March quarter 2012

Event Date Location

Participated at the Competition Commission of India/OECD workshop on National Competition Policy and presented on the topic of ‘Competition advocacy – an Australian perspective’

18–21 January New Delhi, India

Participated in the 1st ASEAN-Australia-New Zealand Free Trade Area ASEAN Experts Group on Competition Capacity Building Workshop in Chiang Mai, Thailand

1–2 February Chiang Mai, Thailand

Participated in the Ninth Biannual IBA/ABA International Cartel Workshop as panellists in three sessions.

1–3 February Vancouver, Canada

Attended the OECD competition committee meetings 13–15 February Paris, France

Attended the OECD Global Forum on Competition 16–17 February Paris, France

Participated in the ICPEN annual conference and Best Practices Workshop

27 Feb–2 March San Jose, Costa Rica

Attended the International Consumer Product Health and Safety Organisation 2012 Annual Meeting

28–29 February Orlando, Florida

Presented the keynote address at the inaugural Global Competition Review Law Leaders Asia Pacific 2012 Conference

2–3 March Singapore

Presented at the OECD-Korea Policy Centre training program on ‘Rewarding Cooperation in Cartel Investigations’

14–16 March Seoul, Korea

Participated in regular calls held by the ICN’s Steering Group, Working Group Chairs, Cartel Working Group and Merger Working Group, the ICPEN’s Advisory Group and the International Mass Marketing Fraud Working Group

Weekly Teleconference

Presented at the Ministry of Domestic Trade, Co-operatives and Consumerism Seminar on ‘Competition Law and Consumer Welfare’.

2–5 November Kuala Lumpur, Malaysia

Participated in the 8th ‘SME’s in the Global Economy’ Conference. 8–11 November Nong Khai, Thailand

Participated in regular calls held by the ICN’s Steering Group, Working Group Chairs, Cartel Working Group and Merger Working Group, the ICPEN’s Advisory Group and the International Mass Marketing Fraud Working Group.

Weekly Teleconference

Information requestsThe ACCC continues to actively share information regularly with its international counterparts. During the March 2012 quarter, the ACCC received and/or sought information from counterpart agencies in Canada, the European Union, Finland, Germany, Ireland, Korea, Netherlands, New Zealand, the United States and the United Kingdom.

Information shared between the ACCC and its counterpart agencies relates to all aspects of the ACCC’s work including market inquiries, best-practice processes for investigations, product safety standards, fuel trends, regulatory issues (in particular telecommunications), outreach, awareness and compliance, cross-border cartels, mergers and scams/fraud, and general information about the ACCC’s role and functions and Australia’s competition, regulatory and consumer protection laws and policies. The ACCC has also exchanged information to assist with enforcement investigations and provided technical assistance to a number of developing agencies and economies.

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Bilateral/multilateral meetings and visitsIn addition to information requests, the ACCC hosts visits by counterpart agencies which provide an opportunity to share information, experiences and expertise. In addition to hosting meetings in Australia, the ACCC also holds meetings with counterpart agencies at international events.

During the March 2012 quarter, the ACCC met with representatives from a number of agencies and organisations, including:• On 20 January 2012 the ACCC met with representatives of the Competition Commission of India to discuss

a number of issues including instruments/best practices which the ACCC uses for enforcing competition policy and law in Australia and access regulation

• On 31 January and 1 February 2012 the ACCC with a representative of the ASEAN Secretariat to discuss future capacity building activities in relation to consumer protection

• On 26 February 2012 the ACCC met with representatives of the United States Federal Trade Commission, United Kingdom Office of Fair Trading, Canada Competition Bureau and New Zealand Commerce Commission to discuss establishing a strategic group of exchange of information between agencies on topics of interest and commonality in relation to consumer protection matters

• On 28 February 2012 the ACCC met with representatives of the Papua New Guinea Independent Consumer & Competition Commission to discuss the possibility of PNG receiving training assistance from the ACCC

• On 28 February 2012 the ACCC met with representatives of the United States Federal Trade Commission and United Nations Conference on Trade and Development to discuss the new International Consumer Protection Enforcement Network training manuals project proposal

• On 1 March 2012 the ACCC met with representatives of the Netherlands Consumer Authority to discuss the ACCC’s organisational structure, particularly the division of competition and consumer protection work

• On 1 March 2012the ACCC met with representatives of the Japan Consumer Affairs Agency to discuss the proposed text on consumer protection within the Japan-Australia Free Trade Agreement

• On 2 March 2012 the ACCC met with representatives of the Korean Consumer Agency and US FTC to discuss incorporating ASEAN technical assistance on consumer protection with the Asian Consumer Policy Forum hosted by Korea

• On 2 March 2012 the ACCC commenced a three month staff secondment with the US Consumer Product Safety Commission

• On 9 March 2012 the ACCC met with the Swedish Energy Agency to discuss issues related to technology research needs versus market development needs for the development of electricity systems

• On 13 March 2012 the ACCC met with a representative of the New Zealand Commerce Commission to discuss issues related to unfair contract terms

• From 22–23 March 2012 the ACCC hosted a delegation from the Competition Commission of Singapore to discuss issues related to mergers and adjudication, enforcement, cartels, outreach and advocacy

• On 30 March 2012 the ACCC met with representatives from the Ministry of Finance of Vietnam to discuss price management and consumer protection mechanisms.

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Free trade agreementsThe ACCC continues to actively participate in free trade agreement (FTA) negotiation rounds contributing to work on competition and consumer protection issues. The ACCC’s participation in these negotiations reflects its goals of promoting competition and consumer protection in the region and ensuring that Australia’s FTAs:• are compatible with Australia’s competition and consumer protection law and regulations• are practical in implementation• contain mechanisms to build cooperative arrangements between the relevant enforcement authorities.

This quarter the ACCC participated in negotiations, or assisted in the preparation of material for negotiations, of competition chapters in FTAs including the Malaysia-Australia FTA, Japan Australia FTA and the Trans-Pacific Partnership Agreement.

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AppendixSpeechesDuring the March quarter the ACCC delivered 21 addresses including:

National Consumer Fraud Week 201219 March 2012Mr Rod Sims, ChairmanNational Consumer Fraud Week

Consumer Rights 50 Years on15 March 2012Mr Rod Sims, ChairmanKeynote address, ACCC Forum

Children and young people as vulnerable consumers – the ACCC’s role9 March 2012Sarah Court, CommissionerAustralian Council on Children and the Media conference

Global Competition Review2 March 2012Mr Rod Sims, ChairmanKeynote address, Law Leaders Asia-Pacific 2012 Conference

Infrastructure: why, when and how to regulate23 February 2012Mr Rod Sims, ChairmanSMART Facility, University of Wollongong

Enduring Perspectives and 2012 Objectives20 February 2012Mr Rod Sims, ChairmanAustralia-Israel Chamber of Commerce, Melbourne

Achieving truth in advertising: the regulator’s hope for the future16 February 2012Sarah Court, CommissionerAustralian Association of National Advertisers, Sydney

Australian Consumer Law – Reflections on the First Anniversary of the ACL9 February 2012Mr Rod Sims, ChairmanThe Law Society of New South Wales, Corporate Lawyers’ Committee: General Counsel Group

Building More Effective Links Between Academic Researchers and Regulators29 January 2012Dr Michael Schaper, Deputy ChairPresentation to the Small Enterprises Assoc. of Australia and New Zealand at the SME Policy Forum, University of Notre Dame, Fremantle

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