Ross Greenwood speaks to ACCC boss, Rod Sims, who has a warning for businesses who do the wrong thing after announcing the competition watchdogs main priorities for the year, which include criminal cartel investigations, whitegoods, subscription traps and retail electricity.
Ross Greenwood: Something else today, got on his feet at the committee for economic development of Australia to see the speech, that was the chairman of the ACCC, Rod Sims. He basically laid out his priorities for enforcement and also compliance for 2019. He basically has, well, five key priorities, competition enforcement, consumer law enforcement, key product safety, the current market studies that they doing, and current advocacy focus. He is on the line right now. Many thanks for your time, Rod Sims.
Interview with: Rod Sims, CEO, ACCC
Rod Sims: Good day, Ross.
Ross Greenwood: I want to take you to a few bits and pieces here that you have as priorities. You indicate that there could be on an average year, between two and three criminal cartel investigations. You expect at least three significant cartel investigations to be referred to the Commonwealth Director of Public Prosecutions for decision on whether to prosecute. Do companies not get it that you are undertaking these investigations on a regular basis, do their behavior in warranting, at least even in the investigation, suggests that they just don’t get the idea that they can’t behave in this way?
Rod Sims: Look, I think so, Ross. I share your amazement, I guess, but yes, we’re still getting a lot of immunity applications. We’re still looking at sectors where we suspect there’s cartel activity going on. I think, Ross, if we can take two or three criminal prosecutions a year, often against high profile companies, the message will get through in a few years. Hopefully, we can ease off once the message gets through, Ross, but it’s not through yet.
Ross Greenwood: Do you think that the penalties being increased from $1,100,000 now to the greater of $10, 000,000 or three times the benefit from the conduct and where it can be calculated 10% of annual sales turnover of these large companies, do you think that that might start to grab the attention of the directors and or the management of these businesses?
Rod Sims: Yes, I do, Ross, if we can convince the court- we’ve got to convince the courts that, let’s say you’ve got a $10,000,000,000,000 revenue company, and we’ve got a few of those in Australia, as you know, some much more than that, but a number that have got that, that could be a penalty that would go from the current 1,100,000 up to 1,000,000,000,000. It’s a massive, massive change for large companies. Our job is, if we find appropriate cases, to convince the court that Parliament really was serious this time, and we really need some large penalties, and I’m hopeful we’ll get penalties that will start affecting share prices, Ross. I think that’s the real way to get company attention.
Ross Greenwood: Some of the areas that you’ve talked about in regards to existing consumer enforcement priorities, you’ve talked about situations today about say, for example, white goods and household appliances. You say you almost get more complaints about this area than any other area apart from automotive- from cars, basically. Why is it that there has not been a priority on this area in the past?
Rod Sims: Well, that’s the frustrating thing, Ross, there has been. We have taken some of the big electrical retailers to court and it just hasn’t been enough, goes back to perhaps the earlier point, Ross. The biggest consumer guarantee problems we face when consumers buy cars or they buy electrical or white goods, they don’t work and they can’t get the refund or replacement that they deserve. These are really traumatic times for customers because they’ve spent a lot of money, money they don’t have on these things. To find them then not working, not have their consumer guarantees on it, it’s a problem. We’ve hit it before, hasn’t got the message across, we’ll hit it again, Ross.
Ross Greenwood: Okay. Is it pretty basic to say that wherever you see significant price spikes, say, for example, a classic case would be electricity, it obviously means if the prices continue to rise so much there is either a structural problem in that area or there is a problem of competition. Is that the type of thing that will alert you to potential problems for investigations or indeed for investigations whether the behavior of the participants has been in a competitive and robustly competitive manner?
Rod Sims: It is, Ross. When we see prices surging like that we look to see what are the entry barriers? Why can’t competition work? You’re right, we look at is there anti-competitive conduct that we need to be taking to court or are there things we can recommend the government to lower the entry barriers.
Ross Greenwood: The other thing, also, of that, and I did note, you did make mention in your speech today of Professor Maureen Brunt, who passed away on January the 30th. One of the great champions of competition and consumer law in Australia, but her attitude always was, well, what is going on here, then? That’s the secret of an efficient regulator. Is it not, like an efficient police officer, to simply say, I’m going to have a look at this. Something doesn’t look quite right. It’s the investigation that sometimes is the key.
Rod Sims: That’s right, Ross. We’re trying to just take a higher level look at these things rather than get bogged down in market definition and things of that elk, which, of course, you’ve got to look at to some degree, but we’re trying to simplify these cases. One problem we’ve got, we need to ourselves simplify them, and we need to convince the court to take a simple look at these things, rather than complicating them with convoluted market definition, with convoluted alternative scenarios, if this happened, what about that happening. Sometimes this is a big picture and I think we’ve got to try and take the courts back to the big picture.
Ross Greenwood: Okay. Do you believe, now that you’ve not only got stronger penalties, and we mentioned that earlier, do you believe you’ve got the resources to undertake all of the inquiries and all of the investigations that you need to as the chairman of the ACCC?
Rod Sims: We’ve got the resources for the inquiries, the government’s been very good as they’ve given us inquiries, they’ve given us enough resources to do that. The electricity, the gas, the digital platform, we’ve got the resources for those. What’s happened though, Ross, is we did get some extra money in the December from the government, that is very helpful to make sure we can deliver three criminal cartel cases this year, to make sure we can take to some Section 46 and concerted practices cases this year, but overall, our resourcing has been going down progressively in our base business a long time, and the economy has been growing in complexity, Ross.
I think, clearly, we do need resources. If the community wants us to do more, we need more resources. Or indeed just to keep up with community expectations, Ross, we certainly need more resources.
Ross Greenwood: Okay. With this speech, today, talking about your priorities for 2019, Compliance and Enforcement, if you have a message for business people, if you have big, small companies, doesn’t really matter, or individuals working within companies, what would that be?
Rod Sims: It would be that we are watching. If you breach the law, we will come after you, particularly, if you’re a large company, and particularly, if you do it in a way that harms companies. We’ll be taking the maximum penalty we can possibly get. The only deterrence, Ross, is knowing you might get caught and knowing you might have a penalty large enough to affect your share price.
Ross Greenwood: Tell you what, always be good to have you on the program. Rod Sims is the chairman of the ACCC. Rod, you have a great evening.
Rod Sims: Thanks, Ross.
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