ACCC takes a co-operative approach to interim authorisations in response to COVID-19 crisis

Summary

In response to the COVID-19 crisis, the ACCC has announced that it is "highly conscious" of the impact of COVID-19 on Australian consumers and businesses, and has made a substantial number of interim authorisations, permitting what may otherwise be cartel conduct between competitors.

Lawyer Luke Callaghan and Special Counsel Scott Traeger report on the key aspects of the ACCC's recent announcements relating to its authorisations and how this may impact your business.

Authorisation process

Ordinarily, the ACCC will aggressively pursue businesses that engage in cartel conduct. Indeed, in his annual CEDA speech, ACCC Chairman Rod Sims reiterated that one of the ACCC's enduring priorities in 2020 was combating cartel conduct.(1)

The Competition and Consumer Act (CCA) permits competitors to apply to the ACCC for authorisation of potential cartel conduct. The ACCC may authorise such conduct if it is satisfied that:

1. the conduct would result, or be likely to result, in a benefit to the public; and
2. the benefit would outweigh the detriment to the public that would result, or be likely to result, from the conduct.(2)

The ACCC may grant an interim authorisation allowing the parties to engage in the proposed conduct while the ACCC considers the substantive application.

The case law suggests that a broad interpretation is given to what constitutes a "public benefit", being "anything of value to the community generally, any contribution to the aims pursued by society including as one of its principal elements…the achievement of the economic goals of efficiency and progress".(3)

In effect, the authorisation process acknowledges that efficiencies and beneficial outcomes for consumers can at times be achieved by competitors co-ordinating their efforts. A lodgement fee of $7,500 is payable to apply for authorisation.

Interim authorisations post COVID-19

The ACCC has issued 22 authorisations from 20 March 2020 to the date of this article, in a wide variety of industries including:

• authorising supermarkets to co-operate on grocery supply;
• authorising banks to co-operate on loan relief packages for consumers and small businesses;
• public and private hospitals have been authorised to co-ordinate the expected demand from COVID-19 patients;
• authorising shopping centre owners and managers to discuss and implement rent relief measures for small to medium shopping centre tenants; and
• NBN Co and telecommunication providers have been authorised to manage demand surge, wholesale services and capacity challenges.

Often, the interim authorisations are granted subject to certain restrictions. For example, on 22 April 2020, the Australian Retailers Association, and its current and future members, were permitted to collectively bargain with landlords about rent relief. However, individual tenants were not permitted to exchange information about the amount of rent or any rent incentives that were previously granted.(4)

The ACCC has said that "these matters will be progressed very quickly", and that the ACCC would factor the impact of COVID-19 into "its consideration of competition matters in the short term to assist businesses to remain viable in the long term".(5)

Where interim authorisation is granted, the ACCC will closely monitor the relevant market and make a final decision following further investigation and feedback from stakeholders.

A warning to businesses

The authorisation process does not exempt conduct that has already occurred. In other words, it is essential to approach the ACCC to seek authorisation before engaging in the particular conduct which is contemplated. The ACCC cannot excuse conduct retrospectively by way of authorisation.

It is also important to note that cartel conduct need not be intentional to be unlawful. Indeed, many unwitting cartelists may embark on a course of conduct reasonably believing that it is not just in the best interests of their business, but also of benefit to their members or customers. It is often only when such parties receive legal advice, or contact from a regulator, that they realise the contract, arrangement or understanding they have entered into, or attempted to enter into, is unlawful.

It is therefore essential that, if you intend to discuss prices, customers or supplier terms with your competitors, you should seek legal advice before doing so to ensure you are not at risk of inadvertently contravening the CCA. In these rapidly changing times, companies that are agile and able to adapt are the most likely to survive and thrive.

If you would like advice on the legality of a proposed strategy, or to discuss the possibility of lodging an authorisation application, please do not hesitate to contact us.

1. Speech
2. CCA s 90(7)
3. Re 7-Eleven Stores Pty Ltd (1994) ATPR 41-357
4. Document
5. Media release

Our team is actively monitoring and considering the implications of legal and regulatory developments in response to the COVID-19 pandemic. You can find our COVID-19 collection here.