‘Look at the Penalty’: After Tackling Google and Facebook, Rod Sims Leaves ACCC with a Warning | Australian Competition and Consumer Commission (ACCC)

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Outgoing competition regulator Rod Sims says foreign companies operating in Australia have no excuse to ignore national consumer protection laws, warning that there will be more fines for violations 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 Consumers Commission has again given companies permission to cooperate in ways that would normally be against the law. .

And he said his efforts to force big tech companies to negotiate trade deals with the media were hugely successful and he defended his campaign to make big mergers more difficult.

Sims, an economist by training, will wind up as president of the ACCC after five terms for 11 years, making him the longest serving head of the regulator.

He will be replaced by Gina Cass-Gottlieb, a specialist competition attorney who has represented companies in close collaboration with the ACCC.

Higher fines

Sims was a campaign chairman, successfully pushing for increases in fines for violations of Australian consumer protection laws in 2018 and most recently launching a campaign to make it easier for the CCC to block mergers – a proposal for which the treasurer, Josh Frydenberg, lacks enthusiasm.

The chairman of the ACCC said the increase in fines means that companies can no longer ignore the penalties for violating Australia’s consumer law as a cost to doing business.

He countered a $ 11 million fine imposed on Flight Center under the old law (increased to $ 12.5 million after the ACCC appeal), with a record $ 125 million fine against Volkswagen for cheating. customers and violating diesel emissions standards and the $ 50 million ordered against Telstra earlier this year for signing more than 100 indigenous Australians to mobile phone contracts they didn’t understand and couldn’t afford.

The ACCC is currently waiting for a court to decide on the size of a fine that the hotel booking website Trivago should pay after it was discovered that it has deceived consumers by promising to show them the cheapest rooms but in fact favoring customers. operators who paid the most for it.

He’s looking for a $ 90 million fine while Trivago has argued he should only pay $ 15 million.

“When you violate the law and receive a low penalty, relative to the size of the company, it sends a signal to everyone that it doesn’t matter,” Sims said.

“So you have to get everyone to sit down and say, ‘Wow, they must have done something bad, look at that penalty.’

“So it is extremely important and something that we will push even more in the years to come.”

Pandemic response

Sims has also spent much of the past two years dealing with the coronavirus crisis, including taking steps to keep supermarket shelves full by giving Coles, Woolworths and others permission to collaborate with each other in ways that would normally be against the law. .

It is a work that continues thanks to the Omicron variant that causes a new surge in the number of cases and a global logistical crisis that has caused Christmas shortages.

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At the height of the crisis, the ACCC granted 30 permits in three weeks, “which was a huge 16-hour-a-day effort by many people because we would normally do 30 in a year,” Sims said.

“We thought it would be over about now.

“But what’s happening now is we’re also getting constant requests for those clearances both in healthcare – hospitals that work together or medical supplies and that sort of thing – and in logistics, you know, we can’t move this stuff.”

Tackling great technology

2021 was also the year Sims and the Morrison government squabbled 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 for a code that would require them to negotiate payments to media companies.

The social media multinational took a turn after the government changed the code.

Since its introduction, Google and Facebook have entered into deals to pay media companies, including Guardian Australia, for their news content.

Sims said the code was “extraordinarily successful” and estimated the deals pumped “well north of $ 200 million a year” into the Australian media industry.

He rejected criticism that the code allows big techs to avoid negotiating deals with smaller media companies.

“There are some small players who don’t have deals yet,” he said.

“They are very small. And while on the one hand, I think they should get deals, it’s pretty hard to classify the bargaining code as a failure when companies that employ 98% of reporters – I’m doing the number – have deals. “

“Long game” merger

While Sims and the government have worked closely on the code, his calls for reform of merger laws so far have fallen on deaf ears. Sims said the ACCC wins 85% of its cases, but when it comes to trying to block acquisitions in court, the strike rate drops to zero.

“We’ve lost about eight in the last 20 years and haven’t won one, but keep in mind we still stop four to five mergers a year going away because they know they can’t face us and win in court and we get remedies in four more. or five cases where people have to hand over important assets, “he said.

He wants the reform of the law to make it easier for the ACCC to win by lowering the standard that the regulator has to meet – he currently has to demonstrate that a merger “would substantially reduce competition” – and would also like to make it mandatory for would-be suitors to warn him before they do. consummate their marriage.

The current government’s lack of enthusiasm doesn’t bother him.

“I said deliberately, while putting it around, that this is a post-election problem because the government is consumed – as it should be – by the pandemic,” he said.

“So I think this debate has started well. It’s a long game. “

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