‘Look at that penalty’: after taking on Google and Facebook, Rod Sims departs ACCC with a warning
Outgoing competition regulator Rod Sims says foreign companies that do business in Australia have no excuse for ignoring the nation’s consumer protection laws, warning there will be more big fines for breaches in the future.
In an interview, he also said that due to the damage done to supply chains by the resurgence of Covid-19, the Australian Competition and Consumer Commission was once again giving companies permission to cooperate in ways that would normally be against the law.
And he said efforts to force big tech companies to negotiate commercial deals with media outlets had been extremely successful and defended his campaign to make big mergers harder.
Sims, an economist by training, will finish as chair of the ACCC after five terms in office spanning 11 years, making him the regulator’s longestserving boss.
He will be replaced by Gina CassGottlieb, a competition lawyer who has represented companies in stoushes with the ACCC.
Bigger fines
Sims has been a campaigning chair, successfully pushing for increases to fines for breaches of Australian consumer protection laws in 2018 and more recently launching a campaign to make it easier for the ACCC to block mergers – a proposal for which the treasurer, Josh Frydenberg, lacks enthusiasm.
The ACCC chair said the increased fines meant companies could no longer shrug off penalties for breaching Australian consumer law as a cost of doing business.
He contrasted an $11m fine imposed on Flight Centre under the old law (increased to $12.5m after the ACCC appealed), with the record $125m penalty against Volkswagen for deceiving customers and breaching diesel emissions standards and the $50m ordered against Telstra earlier this year for signing up more than 100 Indigenous Australians to mobile phone contracts they did not understand and could not afford.
The ACCC is currently waiting for a court to decide on the size of a penalty hotel booking website Trivago should pay after it was found to have misled consumers by promising to show them the cheapest rooms but in fact favouring operators who paid it the most.
It is seeking a $90m fine while Trivago has argued it should pay just $15m.
“When you breach the law and you get a penalty that’s low, compared to the size of the company, it sends a signal to everybody that it just doesn’t matter,” Sims said.
“So you’ve got to get everyone sitting up and saying, ‘Wow, they must have done something bad, look at that penalty.’
“So it’s hugely important and something we’ll be pushing even more in the years ahead.”
Pandemic response
Sims has also spent much of the past two years dealing with the coronavirus crisis, including by taking measures to keep supermarket shelves full by giving Coles, Woolworths and other operators authorisation to cooperate with each other in ways that would normally be against the law.
It’s work that continues thanks to the Omicron variant causing a new surge in case numbers and a global logistics crisis that has caused Christmas shortages.
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At the peak of the crisis the ACCC granted 30 authorisations in three weeks, “which was a 16-hour day massive effort by a lot of people because normally we would do 30 of those in a year,” Sims said.
“We thought those would finish about now.
“But what’s happening now is we’re also getting continuing requests for those authorisations both in health – hospitals working together or medical supplies and that sort of stuff – and in logistics, you know, we just can’t move this stuff.”
Taking on big tech
2021 was also the year Sims and the Morrison government picked a fight with big tech companies including Google and Facebook over their dominance of the media market.
In an extraordinary act of corporate petulance, Facebook banned news from its site in Australia over a code that would require them to negotiate payments to media companies.
The social media multinational reversed course after the government amended the code.
Since its introduction Google and Facebook have struck deals to pay media companies, including Guardian Australia, for their news content.
Sims said the code had been “stunningly successful” and estimated the deals have pumped “well north of $200m a year” into the Australian media industry.
He rejected criticism that the code allows big tech to avoid negotiating deals with smaller media companies.
“There are a few small players that haven’t yet got deals,” he said.
“They are very small. And while on the one hand, I think they should get deals, it’s pretty hard to rate the bargaining code a failure when the companies that employ 98% of journalists – I’m making up the number – got deals.” Merger ‘long game’
While Sims and the government worked closely on the code, his pleas for reform of merger laws have so far fallen on deaf ears. Sims said the ACCC wins 85% of its cases but when it comes to trying to block takeovers in court, the strike rate drops to zero.
“We’ve lost about eight in the last 20 years and we haven’t won one but keep in mind, we still do stop four to five mergers a year that just go away because they know they can’t take us on and win in court and we get remedies in four or five other cases where people have to divest important assets,” he said.
He wants law reform to make it easier for the ACCC to win by lowering the standard the regulator has to meet – it currently has to prove a merger would “substantially lessen competition” – and would also like to make it compulsory for would-be corporate suitors to notify him before consummating their marriage.
The lack of enthusiasm from the current government does not bother him.
“I said deliberately, while I put this out there, that this is a post-election issue because the government is consumed by – as they should be – the pandemic,” he said.
“So I think this debate is, it’s got off to a good start. It’s a long game.”