Over the past weeks, there have been a number of interim authorisations granted to groups of competing businesses for varying purposes, including to co-ordinate the supply, distribution and logistics of products and share strategies for managing issues unique to the current COVID-19 crisis.
Usually, co-operation between competitors on supply arrangements, which firms they do business with, the products they offer and on what terms and conditions risk breaching the competition laws set out in the Competition and Consumer Act 2010 (Cth) (Act). Businesses generally need to act independently of their competitors in this regard. To account for situations where such conduct is in the public interest, the Act also allows protection from legal action to be granted by the Australian Competition and Consumer Commission (ACCC) to parties to engage in anti-competitive conduct, including collective bargaining.
It is important to stress that price fixing behaviour (where competitors discuss or agree upon what price they should charge to consumers or suppliers for example) is not authorised under any of the co-operation arrangements and the authorisation apply in only in the interim.
We set out some of these recent authorisations below.
1. Major telcos authorised to co-ordinate with NBN on strategies to combat congestion and provide hardship relief for small businesses – 1 April 2020
The public interest in keeping our telecommunications networks operating effectively has never been more imperative. In this case, the ‘request’ to the businesses to cooperate came from the Minister for Communications, Cyber Safety and the Arts. The ACCC then authorised NBN Co and Australia’s five biggest retail service providers – Telstra, Optus, Vodafone Hutchison, TPG and Vocus – to form a working group to share information, coordinate strategies to manage congestion and take other steps to address significant demand changes caused by the COVID-19 pandemic.
The ACCC will be an observer on the special working group, and, as a condition of the authorisation, NBN Co must quickly inform the ACCC and non-member service providers about any material decisions made by the working group that may affect them.
2. Medicine wholesalers to co-ordinate the supply of pharmaceuticals needed by consumers and hospitals – 31 March 2020
In this case there is a clear public interest in allowing businesses to work together to help make vital medicines accessible to everyone. Wholesalers represented by the National Pharmaceutical Services Association can co-ordinate the supply, inventory management, distribution, logistics, and import of pharmaceuticals needed by consumers and hospitals.
Such authorisation would be important when the usual distribution and supply chains are interrupted and demand is exceeding the available supply.
3. Banks to co-ordinate on relief packages – 20 March & 30 March 2020
The ACCC has granted two authorisations for banks, represented by the Australian Banking Authority (ABA), to co-ordinate on providing relief packages for individuals and businesses affected by COVID-19. The ABA has to provide details of the programs and arrangements to the ACCC before implementation, and in some cases seek ACCC approval.
Some of these initiatives have included arrangements where banks agree to defer interest payments for loans by commercial property landlords on the condition they do not terminate leases or evict tenants.
4. Medical technology companies work together to supply medical equipment – 25 March 2020
In another decision that is clearly in the public interest, interim authorisation was granted to the Medical Technology Association of Australia (MTAA) to allow its members and other groups, such as suppliers or distributors of medical equipment, to share information between each other, co-ordinate orders and supply requests, prioritise requests, and jointly tender to supply COVID-19 medical equipment, including testing kits, protective equipment and ventilators.
5. Supermarkets authorised to coordinate grocery supply – 24 March 2020
We will all remember that, unfortunately, the escalation of the spread of infection in Australia prompted a surge of demand for groceries and some panic buying. The great toilet paper drought resulted.
Being essential services in such times, the ACCC has allowed supermarkets, including Coles, Woolworths, Aldi and Metcash, to coordinate with each other when working with manufacturers, suppliers, and transport and logistics providers.
The ACCC noted (and the same can be said for all of the authorisations above), that it moved very quickly to consider the application because of the urgency of the situation.
This authorisation applies to Coles, Woolworths, Aldi and Metcash. It will also apply to any other grocery retailer wishing to participate. Grocery retailers, suppliers, manufacturers and transport groups can choose to opt out of any arrangements.
If your organisation is looking to co-ordinate with competitors on issues similar to the above, you should consider whether a Notification or Authorisation is appropriate to avoid breaching any competition laws. There is likely to be strong public interest in doing so if the issues your industry is facing due to the pandemic are affecting consumers, and co-operation would mitigate these issues. The ACCC may grant an authorisation if it is satisfied that the public benefit from the conduct outweighs any public detriment.
Likewise, if you are a competitor of the organisations named in the authorisations and are concerned that your business will suffer detriment as a result of the authorisation granted, you should look to protect your interests by considering what action can be taken. In the case of the NBN and the five big telcos authorised to co-operate on various strategies, a condition of the authorisation is that they share learnings with the smaller players in the telecommunications market.
Author: Emily Booth
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.