ACCC to the Rescue – Interim Authorisations Granted

By Thomas Jones, Jeff Tian

04-2020

In recent weeks, the Australia Competition and Consumer Commission ("ACCC") has acted swiftly and granted 17 interim authorisations to address immediate problems being faced by industry participants and to ensure public needs and benefits are retained during the COVID-19 pandemic. 

Authorisations allow applicants to engage in conduct that might otherwise breach the competition provisions of the Competition and Consumer Act 2010 (Cth) including co-ordinated conduct such as output restrictions and market sharing. In one case, revenue sharing was also allowed.

In general, the ACCC will grant authorisation if it is satisfied that the benefit to the public outweighs any public detriment and usually conducts a public consultation process to assist it in determining whether proposed conduct will achieve the desired outcome. However, due to the urgent need to address market failures caused by the pandemic for these interim authorisations, ACCC has not conducted a public consultation as usual but instead utilized its power to grant interim authorisations for specified periods. 

The 17 Interim Authorisations

The 17 interim authorisations granted by the ACCC cover so far banks, supermarkets, medical wholesalers, airlines, gas and electricity companies, oil companies, NBN Co and other telecommunications providers, pharmaceutical companies, insurance companies, shopping centre owners and private hospitals. 

In deciding whether to grant these authorisations, two key factors have been considered. Firstly, will the proposed conduct materially alter the competitive dynamics in any market or will the markets will be able to return to substantially their current state once the COVID-19 pandemic has eased? Secondly, will the proposed bring significant public benefits given the current unprecedented circumstances?

The ACCC will generally consider the following questions in deciding whether to grant an interim authorisation:

a. Is there an urgent need for the proposed conduct?
b. Is a government entity involved?
c. Whether the proposed conduct is a temporary measure?
d. Will the parties have the autonomy to opt-in or opt-out of the commitment at any given time?
e. Whether the proposed conduct is price related?
f. Whether the ACCC has the option to review and amend the authorisation at any time?

The ACCC also considers whether the proposed conduct will achieve the desired outcome and assist the customers and businesses directly. 

Summary of the Authorisations

Here is a summary of the recent interim authorisations on sector basis:

Supermarkets: coordination between supermarket operators when working with manufacturers, suppliers and transport and logistics providers in order to ensure the supply of fair and equitable distribution of fresh food, groceries and other household items to Australian consumers (including those that are vulnerable or living in rural and remote areas). This does not extend to coordination between supermarket operators on price though[1];

Banking: coordination between Australian Securitisation Forum (ASF) and its current and future members to collaborate and implement the structured finance support fund. The ACCC also authorised the coordination between the Australian Banking Association (ABA) and banks to allow them to work together to:

(a) implement a small business relief package allowing for the deferral of principal and interest repayments for loans to small businesses (across all sectors) impacted by the COVID-19 pandemic[2]; and
(b) provide supplementary relief packages for individuals and businesses affected by COVID-19[3][4].  

Medical: cooperation between wholesalers of medicinal products in relation to the supply, inventory management, distribution, logistics and import of pharmaceutical and medicinal products required by consumers and hospitals[5][6][7][8][9][10][11];

Telecommunications: cooperation between NBN Co and five retail service providers (including Telstra, Optus, Vodafone Hutchison, TPG and Vocus) in relation to the sharing of information and discussion of strategies to assist in managing congestion and consumer demand on Australia's telecommunications networks during the COVID-19 pandemic; 

Gas, electricity and oil: cooperation between gas, energy and oil industry participants in order to ensure a secure and reliable source of energy and fuel both during the COVID-19 pandemic, and once the economic shutdown ends[12][13]; and

Insurance: coordination between insurance companies and brokers to implement a range of relief measures for small businesses being impacted by the COVID-19 pandemic, including deferred insurance premium payments and refunds for unused premiums[14][15][16].

Aviation: cooperation between airlines in order to coordinate ¬flight schedules on regional flight routes. This includes revenue sharing with a condition not raise fare prices[17].  

Conclusion

From the number and scope of interim authorisations granted, we can see the efforts made by the ACCC to maintain public benefits during this pandemic and ensure ongoing availability of goods and services for consumers. If the pandemic continues, we can expect more interim authorisations will be approved. 

The lesson for clients here is that the ACCC is receptive to requests for help, so rather than pre-emptively engaging in conduct that could breach the law, go to the ACCC and request interim authorisation. 

 

[1] Scentre Group and Shopping Council of Australia – Application for authorisation AA1000489 Interim authorisation decision 3 April 2020

[2] Australian Banking Association- Application for authorisation AA1000475 Interim authorisation decision 20 March 2020 

[3] Australian Banking Association – Application for authorization AA1000482 Interim authorisation decision 30 March 2020

[4] Australian Securitisation Forum – Application for authorisation AA1000490 Interim authorisation decision 8 April 2020

[5] Medical Technology Association of Australia – Application for authorisation AA1000479 Interim authorisation decision 17 April 2020

[6] National Pharmaceutical Services Association (NPSA) – Application for authorisation AA1000480 Interim authorisation decision 31 March 2020

[7] Medicines Australia – Application for authorisation AA1000486 Interim authorisation decision 3 April 2020

[8] State of Victoria as represented by the Department of Health and Human Services – Application for authorisation AA1000491 Interim authorisation decision 7 April 2020

[9] The State of Queensland as represented by Queensland Health Application for authorisation AA1000493 Interim authorisation decision 7 April 2020

[10] State of South Australia as represented by the Department for Health and Wellbeing – Application for authorisation AA1000498 Interim authorisation decision 17 April 2020

[11] Northern Territory of Australia as represented by the Department for Health – Application for authorisation AA1000499 Interim authorisation decision 17 April 2020

[12] Australian Energy Market Operator – Application for authorisation AA1000484 Interim authorisation decision 17 April 2020

[13] Australian Institute of Petroleum – Application for authorisation AA1000488 Interim authorisation decision 3 April 2020

[14] Suncorp Group Limited & Ors – Application for authorisation AA1000485 Interim authorisation decision 2 April 2020

[15] Private Healthcare Australia Limited – Application for authorisation AA1000487 Interim authorisation decision 8 April 2020

[16] Financial Services Council – Application for authorisation AA1000494 Interim authorisation decision 9 April 2020

[17] Regional Express – Application for authorisation AA1000478 Interim authorisation decision 26 March 2020