Mackay Chapman October 2023 ACCC Update

In this month’s ACCC update:

• The ACCC has initiated legal action in the Federal Court of Australia against Qantas Airways alleging that it engaged in false, misleading, or deceptive conduct; 
• The ACCC has released its second interim report from the Childcare inquiry; 
• The ACCC has opposed the proposed acquisition of a majority interest in Horizon Roads by Transurban Group; and 
• The National Anti-Scam Centre has issued a warning regarding scammers targeting Chinese students living in Australia. 

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‍ACCC takes court action alleging Qantas advertised flights it had already cancelled

The ACCC has initiated legal action against Qantas Airways in the Federal Court of Australia alleging it engaged in false, misleading, or deceptive conduct. Qantas is accused of advertising tickets for over 8,000 flights that had already been cancelled but were not removed from sale.

According to the ACCC, Qantas continued to sell tickets for these flights on its website for an average of more than two weeks and, in some cases, up to 47 days after the flight cancellations. Furthermore, for over 10,000 flights scheduled to depart in May to July 2022, Qantas allegedly failed to notify existing ticket holders about the cancellations for an average of about 18 days, and in some cases, up to 48 days. The airline also purportedly did not update its "Manage Booking" web page for ticket holders to reflect the cancellations.

The ACCC claims that this conduct affected a substantial proportion of flights cancelled by Qantas during the specified period, with approximately 70% of cancelled flights falling into at least one of these categories: Qantas continued to sell tickets for the flights, delayed informing existing ticket holders of the cancellation, or both.

The ACCC Chair, Gina Cass-Gottlieb, stated that the alleged actions left customers with less time to make alternative arrangements and may have led to them paying higher prices to fly at a particular time, unaware that the flight had already been cancelled.

The ACCC's investigation revealed that Qantas cancelled nearly 25% of its flights from May to July 2022, affecting about 15,000 out of 66,000 domestic and international flights in its published schedule. The legal proceedings pertain to more than 10,000 of these cancelled flights.

The ACCC seeks various orders, including penalties, injunctions, declarations, and costs as part of its action against Qantas.

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‍Review of childcare policy to better meet the needs of families

The ACCC has released its second interim report from the Childcare inquiry, highlighting the failure of market forces to meet community expectations and government objectives for childcare services and policy in Australia. The report identifies that current policy settings are not delivering on accessibility and affordability for all children and families, particularly those in lower-income households and very remote locations.

Key findings from the report include:

• ‍Market Dynamics: Market forces encourage more childcare supply in socio-economically advantaged areas and major cities, where parents generally have greater ability and willingness to pay. Remote communities and areas with a higher proportion of lower-income households are underserved.
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• ‍Activity Test: The activity test and eligibility for subsidised hours of care significantly influence the demand for childcare, particularly for low-income households. Low-income households using unsubsidized hours face a higher proportion of out-of-pocket costs.
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• ‍Costs and Profitability: The cost of providing childcare services has been increasing, with labour accounting for a significant portion of costs. Despite rising costs, the sector is generally profitable. Large not-for-profit providers invest savings into their workforce to improve service quality.
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• ‍Support for Underserved Communities: The report recommends maintaining and expanding supply-side options, such as direct subsidies, for Aboriginal Community Controlled Organisations providing childcare services for First Nations children. It also supports a market stewardship role for the government in areas with an undersupply of childcare services.
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• ‍Educators: Staff shortages and educator attrition impact the supply of childcare services, profitability, long-term viability, and service quality. Attracting and retaining early childhood educators is crucial, and regulatory frameworks should consider factors such as wages, conditions, and training demands.
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• ‍OECD Comparisons: Childcare in Australia is less affordable compared to most other OECD countries, despite a higher government contribution to childcare fees. Many countries are moving toward supply-side subsidies and direct price controls.

The ACCC invites submissions from interested parties on the draft findings and recommendations. It is also seeking feedback from families from culturally and linguistically diverse communities on their experiences with childcare services. Submissions can be made through the ACCC website.

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‍ACCC opposes Transurban's EastLink acquisition proposal

The ACCC has opposed the proposed acquisition of a majority interest in Horizon Roads by Transurban Group, citing concerns that the transaction would likely substantially lessen competition for future toll road concessions in Victoria. 

Transurban, Australia's largest toll road operator, currently operates CityLink and is constructing the West Gate Tunnel toll road in Melbourne. Horizon Roads operates the EastLink toll road and is the only other private toll road operator in Australia.

The ACCC's decision is based on concerns that the acquisition would entrench Transurban's position in Victoria and deter potential rivals from competing for future toll road concessions. The ACCC also highlighted Transurban's scale and advantages in traffic modelling as factors contributing to its decision. 

The ACCC considered the ability of the Victorian Government to level the playing field for future toll road concessions but found that effective competition was less likely in the presence of material incumbency advantages held by Transurban.

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‍National Anti-Scam Centre warns of spike in scams threatening Chinese students

The National Anti-Scam Centre has issued a warning regarding scammers targeting Chinese students living in Australia. 

Scammers are posing as Chinese police and using alarming tactics to threaten and intimidate students, resulting in reports of such scams more than doubling in August. The scammers often make phone calls pretending to be from phone companies or financial institutions, claiming that the student's phone or identity is linked to serious financial crimes. Victims are then transferred to another scammer pretending to be Chinese police, who threaten extradition or deportation unless a payment is made. 

The scammers use technology to create fake documentation, including arrest warrants, and may engage in video calls and other tactics to maintain constant surveillance over the victims. The scams have led to significant financial losses and psychological distress among Chinese students. 

Authorities are warning students to be vigilant and report any suspicious calls or messages. Students are urged not to engage with the scammers and to seek assistance from local police, their universities, or local community support services if they encounter such threats.

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‍ACCC authorises Brookfield and MidOcean’s acquisition of Origin

The ACCC has granted authorisation for the proposed acquisition of Origin Energy by a consortium led by the Brookfield Global Transition Fund and MidOcean. 

This acquisition involves two interdependent transactions, with Brookfield taking ownership of Origin's energy markets business, including electricity generation and retail businesses, and MidOcean acquiring Origin's upstream gas interests. 

The ACCC determined that while the acquisition could raise competition concerns related to vertical integration, the potential public benefits related to the acceleration of renewable energy generation outweighed these concerns. 

The Brookfield Global Transition Fund is focused on renewable energy, and the ACCC believes that the acquisition could lead to a more rapid reduction in greenhouse gas emissions. However, the ACCC acknowledges that there may be constraints on the electricity transmission network that could impact the rollout of renewable energy generation. The ACCC will release the full reasons for its determination following confidentiality checks.

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The contents of this article do not constitute legal advice and it is not intended to be a substitute for legal advice and should not be relied upon as such.  It is designed and intended as general information in summary form, current at the time of publication, for general informational purposes only.  You should seek legal advice or other professional advice in relation to any particular legal matters you or your organisation may have.