schaper

Report
Competition Law, Consumer Rights
and The Changing Tertiary
Marketplace: What Does It Mean For
Australian Universities?
Dr Michael Schaper, ACCC Deputy Chair
[email protected]
Universities Australia plenary meeting
Tuesday 28th October2014
Newcastle
In a deregulated domestic market,
what happens if…
• Institutions decided to jointly set common prices?
• Two universities decided to merge?
• 2 or more universities decided to rationalise language
courses and “share out” courses?
• Universities Australia or the Go8 publishes a RRP list of
degree prices?
• Particular disciplines restrict admission applications
across the country?
• A student complains that the content and delivery of a
course isn’t as they were promised?
Outline
1. The ACCC
• What we do
• Current involvement with tertiary sector
2. The Competition & Consumer Act 2010
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Cartels
Misleading and deceptive conduct
Pricing
Other potentially relevant provisions
3. Looking Forward
• Seeking exemptions
• Industry associations/representative groups
• Current relevant reviews and inquiries
1. The ACCC: What We Do
• National regulator: oversees laws on consumer protection, fair
competition, product safety, infrastructure access
• Also regulates some specific industries (energy,
telecommunications), industry codes (franchising, horticulture) and
price monitoring (airports, postage, stevedoring)
• An independent statutory agency within the Treasury portfolio
• 7 Commissioners (statutory appointments), 700 staff, offices in each
state and territory
• Dual educative and enforcement function
• Enforcement agency … does not set policy
• Does not provide private rulings: need your own independent advice
Legal Framework
• Principal legislation: Competition & Consumer Act 2010
(previously known as Trade Practices Act 1974).
Includes the Australian Consumer Law
• Laws apply across the country
• Apply to all activities “in trade or commerce” – legal
structure is usually irrelevant
• Covers both goods and services
• Activities of government often exempt
• Generally cannot impose penalties: court-based litigation
(but can issue infringement notices)
Current Involvement With Tertiary Sector
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Graduate program
Commissioned and pro-bono research
Academic involvement in ACCC Consultative Committees
Online programs for business schools
Online programs for franchising
Tertiary Education Network
Occasional decisions affecting institutions
www.ccaeducationprograms.org
Competition & Consumer Law
Tertiary Program
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Launched November 2013
For business schools, media, marketing
Each module stands alone
Assumes no prior knowledge from
lecturers or students
Can be used in a variety of teaching
environments (lecture, online delivery,
group work, etc)
Suitable for UG, PG, exec. education
Designed to be ‘slotted’ into existing units
Currently used in 7 universities (RMIT, Newcastle, UNSW, UWA,
QUT, Curtin, Monash)
Occasional Dealings With Tertiary
Sector …
• 2000: UTas refunds - GST costing methodology
• 2001: Court action against Australian Early Childhood
College
• 2002: JCU - enrolment policy for student association
• 2012: La Trobe – third line forcing notification for
international student accommodation
• 2009, current: ANU (and 9 other universities):
authorisation for common interviews for medical schools
2. Key Provisions In A Deregulated
Marketplace
• Price-fixing
• Cartel-like arrangements
• Misleading or deceptive conduct
• Pricing & selling practices
• Unfair contract terms
• Obtaining exemptions (“authorisations”)
Price-Fixing & Cartels
(section 45)
• Arise when firms agree to act together instead of competing
• Can be a contract, arrangement or understanding
• Major enforcement priority for the ACCC (highly anti-competitive,
inflate prices, minimise choice for consumers and stifle
innovation)
• Many possible forms of cartel conduct:
– price fixing
– sharing markets/dividing up markets
– rigging bids
– controlling output or limiting amounts of goods/services
available
• Exceptions for joint ventures; not intended to capture R&D
Steep penalties: For individuals - maximum 10 years jail, fines of up
to $340,000 (criminal offence), $500,000 (civil). Corporations - $10
million OR 3xtotal value of the benefits obtained OR 10% of turnover.
Alleged Egg Cartel Attempt
• Current case: ACCC alleging Australian Egg Corporation
Ltd and others attempted to induce members to enter
into an arrangement to cull hens or dispose of eggs – so
as to reduce the amount of eggs available.
“The ACCC is concerned that the alleged attempt
sought to obtain agreement by egg producers to
reduce supply, which if successful could have
impacted on egg prices paid by consumers”
ACCC Chairman Rod Sims
Tasmanian Salmon Growers
• 2002: Tasmanian Atlantic salmon industry was in financial
difficulty; supply was outstripping demand.
• Tasmanian Atlantic Salmon Growers Association decided that
if all members culled stocks by around 10%, this would meet
demand and avoid further price falls.
• It sought legal advice but did not correctly brief its lawyers.
• Growers discussed, approved and circulated proposed plan.
• ACCC investigated; the cull stopped. Due to state of the
industry, fact that legal advice had been sought, and
cooperation shown, ACCC did not pursue penalties. Instead
obtained court orders for an industry-wide legal compliance
training program and stop on future culls.
“The law of unforeseen consequences might have led to four NSW
universities coming to an informal agreement with their state health
minister not to increase enrolments of international medicine students.
“…NSW universities have, since 2012, agreed to keep international
enrolments at their current levels.
“But a NSW Health spokesman denied the existence of any
agreement, adding that international medical enrolments had
continued to increase, as had domestic enrolments.”
What Is Misleading Or Deceptive
Conduct?
Essentially, it is leading a consumer into error. Can include activities or
behaviour such as:
 Lying
 Leading customers to a wrong conclusion
 Creating a false impression
 Leaving out (or hiding) important information
 Making false or inaccurate claims (including employment
opportunities)
Reduce the risk of misleading consumers:
 Sell goods and services only on their merits
 Be honest about what you say and do
 Look at the overall impression of your advertisement – what will a
typical customer think or believe?
Penalties of up to $220,000 (individuals), $1.1 million (corporations)
ACCC v Taxsmart
• Alleged false, misleading or deceptive job ads for
graduate accountant positions to attain a tax agent
licence and subsequently operate a Taxsmart franchise.
• ACCC alleged graduates were induced to pay upfront
sums on the unfulfilled promise they would receive
experience to obtain registration and operate a Taxsmart
franchise.
• In May 2014, court orders were made by consent.
Taxsmart was ordered to repay fees to five former
franchisees and provide enforceable undertakings.
“Greg Craven, Vice-Chancellor of Australian Catholic University, is an
outspoken critic of the tertiary admissions racket.
“…Direct offers, he argues, are completely lacking in
transparency…the former constitutional lawyer even reckons such
behaviour is in contravention of the Trade Practices Act [sic].
“…It’s a fundamental issue of transparency and consumer
protection.”
Component Price Advertising
Prices displayed by a business must be clear, accurate
and not misleading to consumers. You should always
display the total price of a product or service.
Organisations must not promote or state a price that is
only part of the cost, unless you also prominently
advertise the single (total) price.
The single price means the minimum total cost that is
able to be quantified (or calculated) at the time of making
the claim or statement.
A Problematic Example
Unfair Contract Terms
(ACL s.23)
• Protects consumers from unfair terms in circumstances where they
have little or no opportunity to negotiate with the business
• Standard form consumer contracts cannot contain terms that:
– cause a significant imbalance in consumer’s rights (compared to the
business);
– are not reasonably necessary to protect the business’s interests;
and
– cause any detriment to the consumer
• ACCC has previously examined airline tickets, gym memberships,
etc
Remedy:
Unfair term is void (treated as though it never existed). Contract will continue to bind the
affected parties to the extent that the contract is capable of operating without the unfair
terms.
Other Potentially Relevant Provisions
Mergers & acquisitions (s.50):
ACCC can seek court orders to prohibit acquisitions that result in
a substantial lessening of competition in the market.
Misuse of market power (s.46):
Organisations with substantial market power cannot take
advantage of this power for the purpose of eliminating or
damaging competitors, or preventing new entrants into a market.
Exclusive dealing (s.47):
Restrictions on another party’s freedom to deal. Usually only
illegal if they substantially lessen competition.
Crucial issues: what is a market? is a student a consumer?
Exemptions
• Businesses that wish to engage in certain anti-competitive
conduct can seek an exemption from the ACCC
(‘authorisation’ or ‘notification’)
• Can be sought for conduct that may breach many of the
competition provisions, including:
– Cartels
– Collective bargaining (see next slide)
– Exclusive dealing
– Imposing minimum resale prices
• Exemption provides protection from legal action under the Act
• Public process – external stakeholders consulted
• Granted when the public benefit outweighs the public
detriment, including from any lessening of competition.
Collective Bargaining
• As the Act generally requires businesses to act independently
of their competitors, the following conduct may breach the
law:
– Collective bargaining: several competitors negotiate with
a supplier or customer over common terms, conditions and
prices
– Collective boycott: several competitors jointly agree not
to acquire from/supply to a business unless it accepts the
terms and conditions they offer
• But in some circumstances, allowing these arrangements may
be in the public interest
• The Act allows ACCC to grant legal protection (“authorisation”
or “notification”) in certain situations.
Role of Industry Associations
Industry and professional associations must
ensure their membership criteria, voluntary
codes and advice to members comply with the
Competition and Consumer Act.
 Benchmarking and information sharing OK:
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but only provide industry pricing
information as a recommendation/guide
Ensure prices you recommend are
developed on the basis of costing or other
calculations by an outside party
Ensure members must independently
determine their own prices and negotiate
their own contracts
Ensure membership rules/sanctions are
transparent and applied equally
Check that industry codes/rules are not
overly restrictive and do not have the effect
of limiting competition.
More Information
Helpline
1300 302 021
Website
www.accc.gov.au
Twitter
@ACCCgovau
Tertiary Program
www.ccaeducationprograms.org

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