Competition watchdog bares sharpened teeth
Armed with new powers, ACCC boss Rod Sims is finding his stride as he takes on industry heavyweights, writes Ruth Williams.
Ask Rod Sims what has frustrated him in his two years as Australia's competition tsar and he demurs. "I don't actually do frustration as an individual. I'm about as glass half-full as you'll come across."
But Sims - economist by trade, regulator by choice and a passionate free-marketeer by persuasion - admits there have been challenges.
This week alone, he drew criticism both for being too interventionist and "all talk, no action" after a speech he gave on the vexed issue of supermarket fuel discount dockets, which the Australian Competition and Consumer Commission is investigating.
"I accept that every time I put my head above the parapet, which is what I did on Monday, that it's going to get shot at in various ways," Sims says.
There's the constant scrutiny over the ACCC's other high-profile investigation on the big supermarkets - their treatment of suppliers - which has been slowed down by the reluctance of the suppliers themselves to volunteer information.
The ACCC has since used its powers to force the handover of evidence.
As for the debate about the regulation of access to Australia's crucial grain ports - "bottleneck infrastructure" held in near-monopolies - well, that is one issue where this pro-market regulator will admit to some frustration.
"I want to argue pro-market, less regulation, I'm all for that. But you do the cause a disservice by saying, 'I don't want to regulate bottleneck infrastructure'.
"People then just see you as an unworldly ideologue."
And Sims is anything but unworldly. He has worked as a development economist in Papua New Guinea and - before starting at the ACCC - led InfraCo Asia, which develops energy, transport and water projects in low-income countries.
And while he's no ideologue either, it's true that he views himself as an advocate not only of the organisation he heads, but of the virtues of the free market itself.
"I'm both trying to improve the way the market economy works, but also improve the faith Australians generally have in that market economy," he says.
"Because you don't want cynicism out there ... you want people feeling engaged and feeling that if things aren't as they should, we are there to address them."
Sims, who marked his two-year anniversary at the ACCC on Thursday, has worked at the highest levels of government - serving for two years as economic adviser to Bob Hawke - and at the pointy-end of the corporate world, as a consultant specialising in mergers and acquisitions at Port Jackson Partners.
He has experience as a regulator too, as head of the NSW Independent Pricing and Regulatory Tribunal.
By 2011, when he was approached by former treasurer Wayne Swan about joining the ACCC, he had pulled together a "lovely" portfolio of about eight roles, including the gig at InfraCo and one as expert adviser to the prime minister's multi-party climate change committee.
The ACCC job was so attractive that he was "happy to give all that up", he says, adding that he enjoys the variety involved in running an organisation whose activities span multibillion-dollar mergers, utility regulation and consumer protection issues - such as the safety of children's clothing.
But, two years into the role, it seems possible the ACCC's pursuit of Coles and Woolworths will dictate whether Sims' tenure is considered a success.
After all, if you're trying to convince people that the ACCC has teeth, few scalps would be as telling as the retailers most households transact with every week - especially after you have signalled concerns about their conduct in such a public fashion.
Sims himself baulks at this suggestion, while "accepting" the public interest around the investigations. "I understand that people are watching," he says.
But as he points out, the ACCC has about 100 detailed investigations on hand. It has recently secured some significant wins around consumer protection issues: last month, the Federal Court forced Hewlett-Packard to pay $3 million for distributing misleading product warranty claims to consumers and retailers.
And last year, Apple agreed to pay a $2.25 million fine and court costs of $300,000 for running misleading advertisements about its iPads.
But the regulator recently lost a long-running court battle with Google over allegations it had engaged in misleading or deceptive conduct over sponsored links provided in web searches. The ACCC had won in the Federal Court, but the decision was overturned by the High Court.
Yet none of these have garnered as much attention as the two keenly-awaited investigations focusing on the market power wielded by Coles and Woolworths, which strenuously maintain they have done nothing wrong.
The ACCC's inquiry into shopper dockets, launched last year, continues, with interviews taking place this week and findings expected by the end of the year.
"We wouldn't be this far in advanced stage of an investigation if we didn't think we had a way forward on this," Sims says.
"We've gathered a lot of information, we are still talking to people."
And the investigation into the supermarkets' treatment of suppliers - including alleged threats to remove products from the shelves if claims for extra payments or penalties are not paid - is also progressing, with the ACCC recently suggesting that information it has received "appears to give some credibility to allegations".
This leads to what Sims says is his biggest challenge - convincing people that the ACCC is doing its job, and explaining what that job actually is. For instance, he is bemused that some interpreted his comments this week as complaining that he wasn't able to ban shopper dockets.
"We don't have the power to ban, and nor should we, I don't want the power to ban shopper dockets," he says.
"I don't think anybody wants an ACCC, if they stop and think about it, that has the power to ban this or ban that. That's power beyond what any organisation like ours should have ... we're about protecting the competitive process, we're not about protecting individual competitors, and we need to collect evidence before we go to court."
Going to court, however, is something Sims is pushing the ACCC to do more, and he is willing to wear some losses as part of the less conservative approach.
Current cases include the Coles bread claims, which centre on whether bread partially baked and frozen off site, then "finished" in-store, can be dubbed "Freshly Baked In-Store" and "Baked Today". A focus on cracking down on so-called credence claims has also made it clamp down on "free to roam" claims for chickens.
The ACCC is flexing its newly-bestowed powers to impose fines for breaches of consumer laws - powers that Sims' immediate predecessor Graeme Samuel pushed for years but enjoyed only in the final months of his tenure.
"In terms of people having faith that a market economy works for them, they see companies that they know of getting these penalties for not complying with the Australian consumer law and that helps," Sims says. "But most importantly it helps with wider deterrence."
A focus on big companies - "because that's where we think the major detriment is" - has made the ACCC take on the likes of Apple, Google and Hewlett-Packard, as well as Dulux, EnergyAustralia and AGL. Nine companies have paid penalties of $1 million or more for breaches of consumer laws.
"I do think that the larger penalties, and we've had nine so far on the consumer side, does get the attention of boards and executives," Sims says. "My feeling is that companies are now taking their compliance with the Australian consumer law a lot more seriously than they were and I think that's terrific."
Sims is also keen for the regulator to secure criminal convictions over cartel behaviour, of which he suspects there is still an "uncomfortably large" amount going on in Australia.
The ACCC's famed immunity policy - which grants immunity from prosecution to the first member of a cartel who blows the whistle - leads to at least one immunity application every month. Most result in investigations, Sims says.
"We've got a large number on foot, it just shows that there is a lot of cartel activity still going on, I think, in Australia," Sims says. "I think, unfortunately, we are going to have to take a criminal case to really get the message out there. That's what the criminal sanctions were there for. Regrettably I think that's what's going to have to happen, and we do have some criminal investigations on foot."
Sims also confirms that the ACCC is continuing to investigate an alleged conversation between casino magnate James Packer and John O'Neill, the chairman of Crown rival Echo Entertainment, on Packer's boat at Sydney Harbour in March this year.
According to O'Neill's account of the meeting, Packer is alleged to have pledged to keep his Crown casino empire out of Brisbane if the executives of Echo Entertainment, owner of the Star, agreed to let him into the Sydney market. Packer has denied the claims through his advisor, Mark Arbib, who said last month this version of events was "false and untrue". Arbib was also present at the meeting.
"We've acknowledged that when people make those sort of claims, we would look at them," Sims says. "We are."
It's not just that the ACCC must do its job - it must be seen to be doing it, too.
The dust may be settling on his shopper docket speech on Monday, but Sims knows it wont be long before he must stick his head above the parapet again.
And this doesn't particularly bother - or frustrate - him.
"When the press is running wild with discussions [for example] on shopper dockets [or] supplier issues with the supermarkets, we need to communicate what we're doing, because if we don't, the accusation is we're doing nothing," he says.
"And that affects the reputation of the ACCC, and more importantly, although that's fairly important, it then affects people's faith in the market economy ... if we don't talk it feeds that cynicism.
"The idea that a regulator should be seen and not heard, which is what a number of people would like us to be, is not right."
■ Investigating the shopper docket scheme offered by the major supermarket chains including petrol discounts.
■ Legal action against Coles around claims some bread was freshly baked in-store when it was partially baked and frozen off site.
■ Apple given a $2.3 million fine for billing its iPad as “wi-fi + 4G” when at the time the device did not work on an Australian 4G network.
■ Legal action taken against Energy Australia over false claims in door-todoor selling practices.
■ Legal action taken against duck meat producer Luv-a-Duck over claims its ducks were “range reared and grain fed”.
■ Steggles owner Baiada was found to have deceived customers by labelling chickens “free to roam”.
■ Develops blueprint to define pricing and access terms for companies using national broadband network.
■ Raises concerns over proposed Telstra acquisition of Adam Internet.
Top complaints to ACC by industry
1. Online retailing
2. Fixed telecommunications
3. Other store-based retailing
4. Electricity retailing
5. Motor vehicles (faults)
6. Department stores
7. Car retailing
8. Air transport
9. Other electrical and electronic
10. Supermarket and grocery stores
Top scam categories reported to the ACCC
1. Advanced fee/up-front payment
2. Lottery and sweepstakes
3. Phishing and identity theft (incl. banking
& online account)
4. Online auction and shopping
5. Computer hacking (incl. viruses)
6. Unexpected prizes
9. False billing
10. Mobile phone (ringtones, competitions)