Ready to take a risk in courtroom battles

Competition tsar Rod Sims is willing to take on the tough lawsuits, writes Lucy Battersby.

Competition tsar Rod Sims is willing to take on the tough lawsuits, writes Lucy Battersby.

The head of the competition watchdog, Rod Sims, believes Australians will have more faith in the market economy if he does his job properly. After his first full year in the job, Sims is already planning more court cases next year and tackling issues that leave consumers out of pocket and unhappy, or places where the market economy has broken down.

For example, the question of whether Coles and Woolworths are abusing their buying power is still alive within the competition watchdog, thanks to tip-offs from dozens of companies.

Early this year the Food and Grocery Council of Australia accused the pair of squeezing profits out of farmers and food producers.

"Those allegations were really just one sentence . .. and we looked at those and said 'if some of those are true, that could well be a breach of the act', the unconscionable conduct provisions," Sims says.

However, the ACCC could not act because it did not have any evidence of unconscionable conduct, just one-liners from the council. So Sims made several public pleas promising confidentiality in exchange for detailed information.

In an interview with Fairfax Media, Sims revealed the ACCC had received information from about 50 companies about the supermarkets' behaviour.

"We are now looking at that evidence that we have gathered and I think we are finding some sort of credibility and consistency behind the complaints, so our interest is certainly not declining. We are hoping to complete that investigation in 2013," Sims says.

The ACCC is stronger than it has ever been, thanks to consumer laws introduced in January last year.

But it was not until this year that the ACCC was seen taking any action because the new laws apply only to behaviour that occurs after January 2011.

In the past year the new laws have netted more than $10.7 million in penalties, including fines of more than $1 million against seven companies, whereas previously it could apply only for an injunction to stop the behaviour.

The companies include Apple, Optus, TPG, Energy Watch and Harvey Norman.

"When a company has penalties awarded against it by the Federal Court, the chief executive takes notice, the board takes notice and I think you get a lot more focus on compliance," Sims says.

"In each case [the penalty] has had an effect. Apple's [general counsel] came out to see us from America, we have met with half the board and the chief executive of Optus, and we have met with senior people at Harvey Norman."

The ACCC will continue a campaign against pushy and deceptive door-to-door selling next year but will also start taking legal action against companies that force unfair contract terms onto consumers. It will also tackle areas online where it sees a lot of complaints or consumer detriment, such as group-buying sites and fake online reviews. Sims revealed that throughout this year staff at the ACCC have been collecting hundreds of contracts offered across several sectors, including car rental, energy, telecommunications and banking. Staff were hunting for contracts with unfair terms that cause a significance imbalance to a consumer's power, have unreasonable terms, or are detrimental. The ACCC has already spoken to several companies that were putting out unfair contracts and some have changed their terms, Sims says.

"We will take people to court over what we judge to be unfair contract terms. And that will focus on the telecommunications industry, it will focus on the electricity industry, it will probably focus on car rental," he says. "We are not going to take everybody to court ... but we will take enough so that people know we are serious and they better fix it up."

Large companies are his preferred target because "that is where the detriment can be largest and that is where you can send the best messages".

Many consumers and small businesses still have not twigged to the changes in consumer law, such as no longer needing a valid warranty to replace faulty goods.

The ACCC recently released a smartphone app that explains the new rules and gives consumers a place to store photos of receipts for proof of purchase on their phone. The app has been downloaded 5500 times since it was released on November 29.

However, even Sims runs into problems, like when he tried to return a faulty fountain pen.

"The store owner said to me that I had no rights without the warranty, which of course I know not to be right. I thought for a minute, because I was very tempted to say 'that is against the law, what you have just said', but I didn't because the [pen] was actually [still] on warranty, so I just went along with it."

Was he tempted to mention he is the man often referred to as Australia's "competition tsar"? "I deliberately did not do that. That would be a bad look."

Sims has another four years in the job and appears to be enjoying the work. Asked what internal changes he wants to make, he says the commission has skilled and very professional people, but it can be too conservative.

"We have got pretty much a 100 per cent success record in the court cases we take on. I think that is - I know it sounds silly, but - a bit too high. We should be taking on more cases where we see detriment, and the legal advice is [reasonable] but there is a chance we will lose. If the detriment is bad enough, we should still take it on," Sims says.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Join the Conversation...

There are comments posted so far.

If you'd like to join this conversation, please login or sign up here

Related Articles