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Economics Legislation Committee
10/02/2016
Estimates
TREASURY PORTFOLIO
Australian Competition and Consumer Commission

Australian Competition and Consumer Commission

[21:23]

CHAIR: We welcome the chairman of the Australian Competition and Consumer Commission, Mr Sims. We invite you to, should you wish, make a brief opening statement.

Mr Sims : No, senators. We are happy to—

CHAIR: Plough on.

Mr Sims : Indeed. We want to give you maximum time for questions.

CHAIR: As planned, we will go to Senator Williams.

Senator WILLIAMS: Mr Sims and group, thank you for being here. Mr Sims, I am not going near the poultry industry. I do not want to see egg on your face! In August last year you announced that Armadale in northern New South Wales would be the third marketplace to watch as far as fuel pricing goes. Over the Christmas-New Year break, there was a further outrage in Armadale when it was found that prices were up to 9c dearer than surrounding towns for unleaded petrol and between 11c and 19c dearer for diesel. The local member, Adam Marshall's, described them as rip-off merchants and price gougers. There is fear that travellers are not stopping to refuel in Armadale. If fuel is too dear, they go on to other towns, which loses business for the local businesses. How many submissions did you receive? What was the theme of those submissions when you put the spotlight on Armadale with your inquiry?

Mr Sims : I will ask Mr Cosgrave to answer that as well. Obviously, what we are doing with this regional study is asking the companies for all their price and cost information and tracking that back through the value chain so we can precisely understand what you are talking about. In terms of submissions we got—

Senator WILLIAMS: You will take it on notice?

Mr Sims : Yes, I am very happy to do that, Senator. The key part of the study—and I am sorry to drag this out—is that we are asking them, under compulsory information powers, to give us all their information so that we can fully understand what is going on.

Senator WILLIAMS: Wonderful. Where is the investigation up to? Do you know, Mr Sims or Mr Cosgrave?

Mr Sims : Michael might want to add something, but it is proceeding well. It is the third one. We have now released our Darwin results. We are shortly to release our Launceston one. We would imagine that we would have the Armadale results out before the middle of the year. These are quite time-consuming, but it is well advanced. Michael, is there more that you would like to add?

Mr Cosgrave : No. We are very much still in the information-gathering phase in relation to Armadale, but, as Mr Sims said, there is a process whereby we gather who is in the market and then there is a very deep information collection exercise in relation to their financials.

Senator WILLIAMS: It is quite amazing: you can drive 30 minutes north of Armadale to a place called Guyra—a nice little place, nowhere near the size of Armadale—and buy your diesel a lot cheaper, I am informed, than in Armadale. That is what they inform, which is quite—

Mr Sims : We do understand that, Senator. That is one of the reasons we chose it as a site. It is quite amazing.

Senator WILLIAMS: My second issue, Mr Sims, relates to the tea tree oil industry. After using a newly developed test, the industry says it has evidence that two Australian manufacturers are selling adulterated tea tree oil brands on the Australian market unchecked, and therefore the claim on the label that it is 100 per cent pure is misleading. The first complaint was made to the ACCC in 2012, but there has been no contact since then until just a couple of weeks ago. Complaints have also been made to the Therapeutic Goods Administration and state consumer bodies. Are you aware of the concerns of the Australian Tea Tree Industry Association? And when did you first receive those concerns?

Mr Sims : We are certainly aware of it. I will ask Mr Gregson to provide you the details.

Mr Gregson : Yes, you are quite right, Senator. Those matters were raised with us in 2012. My understanding is that they were not pursued at the time. We have had further approaches recently. My investigation team in Brisbane met with the persons raising those matters with us in February—I believe either earlier this week or late last week. We are now assessing those matters to determine whether there is a case of misleading conduct.

Senator WILLIAMS: Mr Gregson, has there been an active investigation since the time of the first report in 2012?

Mr Gregson : No, Senator.

Senator WILLIAMS: Why not?

Mr Gregson : My understanding is that we did not pursue those matters. We received a large number of complaints. We do not pursue all matters. We seek to let people know. I am not aware of the circumstances of the closure—

Senator WILLIAMS: So you are pursuing it now?

Mr Gregson : We are certainly making those assessments—that is right, Senator.

Senator WILLIAMS: Good. Do you have any idea when the investigation will be finalised?

Mr Gregson : No, Senator. As I said, my investigation team was given the matter in the last week and a half and we have had the first meeting. We will be assessing it. It will depend on the nature of the investigation. Generally speaking, a consumer protection matter should be able to make inroads within three months.

Mr Sims : It also depends on what we find and what testing may be needed and that sort of thing.

Senator WILLIAMS: Mr Sims, you did very well with the mislabelled honey, which was corn syrup from Turkey, I think, instead of being honey.

Mr Sims : Thank you. Yes, that was it.

Senator WILLIAMS: Those two products were found to be mislabelled. What are the penalties those companies could face if they are found to be mislabelled and not genuine?

Mr Sims : If it is found to be misleading conduct, the penalty is up to—'up to', very importantly—$1.1 million per breach. It depends on how many breaches. First of all, do we find a breach and do we put it before the court? If the court were to find breaches, it would depend on how many breaches were actually alleged. For example, was it advertised in different ways; were there many different products? But up to $1.1 million per offence is the short answer.

Senator WILLIAMS: Thank you, Chair, and thank you, Mr Sims, and your crew for your time.

Senator CANAVAN: I am going to poultry matters. I will not be long. We have been over this egg stuff plenty of times. Has the ACCC done any consumer surveys on people about what they expect free range is meant to mean? I will try not to put words in your mouth, but seemingly the ACCC's view is that people expect most chickens to go outside on most days. Have there been any consumer surveys done to look at what consumers actually expect?

Mr Sims : Mr Gregson is probably best placed to give you the answer to that.

Mr Gregson : We have not undertaken surveys. I am happy to elaborate on how we form our views.

Senator CANAVAN: If you could.

Mr Gregson : The courts do not generally require, nor do they place, generally speaking, much weight on consumer surveys in answering the question of what a reasonable person would think. That is the test under our legislation. In this matter, we have had regard to what we think is the common sense approach—the common view on free-range, meaning chickens having access and actually going outside. We have been assisted, though, by the representations that industry make in their promotional material, which clearly shows that they understand that consumers believe that chickens go outside when free-range. We have also noted a number of other surveys dating back a few years. They all ask slightly different questions and come up with slightly different answers, perhaps revealing some of the challenges with consumer surveys.

Senator CANAVAN: On notice, would you mind providing the details of those surveys—the ones you looked at a few years ago?

Mr Gregson : Certainly.

Senator CANAVAN: Sorry, Mr Sims, did you want to add something?

Mr Sims : Obviously, a lot of times companies advertise their chooks as being outside, so they are very much giving the impression to consumers from the packaging that the chooks are outside.

Senator CANAVAN: Although, of course, the test that you seem to be applying is 'most chickens on most days', which may not be quite the same as having some chickens pitch it outside. I recognise that this is the case law and provisions and that jurisprudence. My understanding is that the government or COAG is undertaking some kind of process now to try to develop a standard.

Mr Sims : Yes. The consumer affairs minister—

Senator CANAVAN: Yes. Do you have any input into that?

Mr Sims : Yes, we have input. The policy advising department is the Treasury, but they ask us for views, like I am sure they ask many people for views.

Senator CANAVAN: But you are not aware of any consumer surveys being conducted for that process?

Mr Gregson : Two of the recent surveys coalesce around that process. One of the latest Choice surveys and certainly the one from New South Wales farmers are both of that vintage.

Senator CANAVAN: They go to the issue of what consumers expect a free-range farm to have or what chickens do on a free-range farm?

Mr Gregson : There are elements that are relevant to that question.

Mr Sims : One of them is over here and one of them is over there, I would expect.

Senator CANAVAN: I can imagine which one is either way. Maybe that was captured by the previous question on notice, but could you make sure you provide details of those on notice? Turning quickly to unfair contract terms, that legislation has gone through the parliament. Has that taken effect yet? Are firms liable for the small business elements of the unfair contracts—so the coverage to small business on to consumers?

Mr Sims : Yes, there is a few. I will pass to the expert.

Mr Ridgway : The legislation extending the existing consumer unfair contract terms to small business are standard form contracts received-sent on 12 November last year. There is a 12-month transition period before the law comes into effect. It will apply from 12 November this year.

Senator CANAVAN: Will you take complaints in that interim period in regard to those issues?

Mr Ridgway : We are actively engaged with a number of industry sectors and with small business industry associations to identify contracts and clauses within contract terms that are of particular concern, and we are looking to provide guidance on issues that we believe large businesses might want to turn their attention to and address in this period.

Senator CANAVAN: In that transitional period?

Mr Ridgway : That is correct.

Senator CANAVAN: So you have some specific examples that you are looking at right now?

Mr Ridgway : Yes, we are focused on a particular number of sectors that have been brought to our attention in our engagement with businesses to date.

Mr Sims : When the business to consumer law came in we engaged with a range of industries and encouraged them to change their practices. Some did, and we took some of those that did not to court. But we did have a long period of letting them know.

Senator CANAVAN: Sorry—you took some to court under the business to consumer extension?

Mr Sims : Business to consumer, yes.

Senator CANAVAN: I thought you said there was a transitional period, though.

Mr Sims : Sorry. When the business to consumer came in there was a transition period—

Senator CANAVAN: Oh—business to consumer, not business to business? Sorry, I am getting confused.

Mr Sims : where we simply educated people. We talked to them about their contacts and said, 'You might change this or you might change that.'

Senator CANAVAN: So you are going through the same process with the business to business provisions, which are in a transitional period. Presumably some element of this goes to an education campaign or notification; you are not just waiting for complaints.

Mr Ridgway : Yes.

Mr Sims : Exactly. We are very proactive.

Senator CANAVAN: Which industries are you focusing on that for that educative process?

Mr Ridgway : The sectors we are looking at in particular include the advertising services, telecommunication services, franchising, commercial leases and independent contracting.

Senator CANAVAN: Do you think the laws are going to have a large impact on how large businesses contract with smaller businesses in those sectors?

Mr Sims : We think it will have a large impact. One has to understand that, even though you have the limits of 300,000 and 20 employees that, where large businesses have standard form contracts—which is what these are—and they cover a subset of businesses, you only need a small number to fit under the definition for that to then have a knock-on effect to the ones that perhaps did not fall under it. So we think it will have a big effect, yes.

Senator McALLISTER: We were speaking earlier with Treasury about the Sugar Industry (Real Choice in Marketing) Amendment Bill 2015 in Queensland. I understand that that bill has been referred to you, or at least that the Queensland government has written to you about that bill.

Mr Sims : Yes.

Senator McALLISTER: Can you summarise the matter for us—what contention is made about the legislation and when you received the correspondence from the Queensland government?

Mr Sims : The way it works—and I will ask others to fill in if needed—is that there is a provision in our act that allows governments to pass laws and to have those laws exempt from our act. That is what was done by the Queensland parliament here. Under the Competition Principles Agreement—roughly defined—which was passed some time ago in the 1990s, the procedure is that when they do that they formally write to the ACCC to let us know, but that is the beginning and end of our role. I know it sounds like that means that they are approaching us for some sort of approval, but it is just a recording process. Because they have exempted it, there is nothing we can do. As I understand it, the Queensland government has written to the Treasurer, bringing the matter to his attention, and so it then becomes a policy issue for the Treasurer as to whether he wants to go to the parliament. I think there is some ability for the parliament to override the Queensland exemption, as I understand it.

Mr Bezzi : The overriding regulations have to be introduced into the parliament at least four months after notice was given to the ACCC. In a sense, the most important thing the letter from the Queensland minister to the ACCC did was begin the time frame from which the Commonwealth can override the Queensland legislation, if it chooses to do so.

Senator McALLISTER: Can I just clarify? In your statement just then, you said 'at least four months' from the legislation.

Mr Sims : Within.

Senator McALLISTER: But did you mean 'within'?

Mr Bezzi : Sorry, within. Yes.

Mr Sims : Within. Yes. The only role we have is to be the recipient of the letter that starts the clock ticking.

Senator McALLISTER: Right. So there is a specific regulation-making power, which would enable the Commonwealth government to introduce legislation in response to the notification from Queensland. Am I correct in understanding that, Mr Bezzi?

Mr Bezzi : My briefing note actually says, 'at least four months after notice was given'—

Mr Sims : That may not be 'within'.

Mr Bezzi : so that might be something we need to come back to you on.

Senator McALLISTER: Okay.

Mr Sims : It is very much a policy issue for the Treasurer. Sorry, but we will get back to you with the full information.

Senator McALLISTER: If it were possible to come back this evening on the question of 'at least' or 'within', I think that would assist the conversation rather than waiting for the question on notice period to expire.

Mr Sims : Sure.

Senator McALLISTER: In any case, whatever the time period, there is a regulation-making power that would allow a regulation to be introduced that would override the legislation?

Mr Sims : That is my broad understanding.

Mr Bezzi : Yes, that is right. There is a power to override the Queensland legislation, if the Commonwealth parliament chooses to do so—sorry, I should put it more accurately—if a regulation is made by the Commonwealth government which the Commonwealth parliament does not disallow.

Senator McALLISTER: Is there a role for the ACCC in that regulation-making power—

Mr Bezzi : No.

Senator McALLISTER: or would that be a matter for Treasury and their markets group?

Mr Sims : It is a matter for Treasury. There is provision written into the Competition Principles Agreement that the Treasurer could seek advice from the National Competition Council, so, despite the fact that they wrote to us and all the press reporting of that, we really have no role. Our role is that of regulator, if there is something there to regulate, but the policy issue as to whether the exemption stands or not is not one for us.

Senator McALLISTER: In terms of the regulation-making power that we were referring to just a moment ago with Mr Bezzi, it may be that you would be consulted as the regulator as to the nature of any regulation, but you would not be the principal adviser on the development of that intervention?

Mr Sims : That is right. Our role is very much a procedural one, I am afraid.

Senator McALLISTER: That is all I have on that question.

Mr Sims : I am sorry we did not know more about it.

Senator BUSHBY: Thank you for assisting us tonight. I have a couple of questions about motor vehicle servicing. Early last year, you came to an arrangement with Kia regarding capped price servicing. I think they agreed to make some changes. There was no penalty imposed, but it raised the issue of consumer interests in capped price servicing quite squarely. As part of that process at the time, you indicated you were going to review other capped price service offers. What has happened with that review of other capped price service offers since the Kia announcement?

Mr Gregson : Yes, you are quite right that we did indicate, following the arrangements with Kia. We did review. We did approach a number of manufacturers, and my understanding is that a number of adjustments were made. I am happy to assist with more details of that and further indicate if there are any residual matters that we are still looking at.

Senator BUSHBY: Okay. Are there any residual matters?

Mr Gregson : That is the point I would have to clarify.

Senator BUSHBY: You will take that on notice—that is what you are saying?

Mr Gregson : My understanding is that there are no residual matters, but I will confirm that.

Senator BUSHBY: I am aware that there have been further capped-price-servicing offers since February last year, some of which, on the face of it, look like they could well be introducing the same sorts of concerns as those that you were dealing with with Kia. Whether they have been dealt with I am not sure, so, if you can take that on notice, that would be good.

The second issue, also related to motor vehicle servicing, is to do with the proprietary software of motor makers. Is that something that you have looked at in terms of the anticompetitive impact of highly computerised motor vehicles, as they are now, only being able to be diagnosed and serviced by those who have access to the software to do so and that not being available outside the dealership network?

Mr Sims : We have, and we still are, I think.

Mr Ridgway : Yes, the ACCC has considered approaches and concerns raised in relation to access to diagnostic technology, for example, and in some cases specification information in relation to motor vehicles. We have recently—just today—been advised that further information will be made available. We will be reviewing that closely to determine whether competition or Consumer Law issues flow from the circumstances brought to our attention.

Senator BUSHBY: So you are not yet at a point where you have made any determination or decision that any consumer law might be in breach?

Mr Ridgway : That is correct.

Senator BUSHBY: But you are close to that?

Mr Ridgway : We are about to commence to review material that we literally—to correct the record—received this afternoon.

Senator BUSHBY: What options would be open to you if you determine that there are Consumer Law issues involved in this matter?

Mr Ridgway : My colleague Mr Gregson might comment from an enforcement perspective, but the usual mechanisms available to us as a regulator are from a spectrum of compliance through to prosecution, depending on the nature of the harm and the substance of the conduct.

Senator BUSHBY: Presumably, you would probably start with trying to come to an arrangement with the dealer networks or the motor vehicle manufacturers to convince them to open up access to that diagnostic software—as a starting point, I would have thought?

Mr Sims : I think, given the nature of this sort of thing, that is probably right. It is an evolving thing, and I think that is probably right. But it could also have competition implications, more so than consumer implications. It could be some form of exclusive dealing. So it is a complicated issue.

Senator BUSHBY: So potentially breaches of law—

Mr Sims : Yes.

Senator BUSHBY: but ultimately the reason I am asking the questions is that I am interested in consumers being able to have a competitive market in which to seek to have their cars serviced.

Mr Sims : Exactly, yes. I think we could take a number of steps. If we thought it was inappropriate, even if it was uncertain whether it breached the act, we might still approach them to get them to change, so I think all options are open. But, given the nature of it, certainly a conciliatory approach to try to get change would be our first step.

Senator BUSHBY: Thank you.

Senator KETTER: Mr Sims, my first question is on the Informed Sources case involving the five major petrol retailers. You made an agreement with the company to make its price information available to the public. Can you tell us when that information will start to flow to the public?

Mr Sims : The understanding is that the information will be made available from May this year. We reached the agreement just before Christmas. It was the normal mediation in a court case, and that was the agreement reached.

Senator KETTER: How will that information come out?

Mr Sims : The important part of the agreement is that not only are the company that currently control the data under an obligation to provide information to consumers but—in a sense the more important part—they have to provide the raw data that they get from the companies at the same time as they get it. The information that goes from Informed Sources back to the companies at the same time has to go back to potential app developers and others who are allowed to get access to the information on reasonable terms. So both Informed Sources and others who can get hold of the raw data will, we would expect, be out there providing apps that, for example, might tell you on a continuing basis, when you are driving along the road, what the lowest price of petrol is.

Senator KETTER: What resources have you allocated to monitor compliance with this agreement?

Mr Sims : We have a petrol team that does the Armidale study for Senator Williams and a range of other things, so we are planning that, once May comes around, it will be actively working with various parties to see that it works out as intended. There are always hiccups with these things because you reach a written agreement and sometimes some people think that it means this and some people that it means that, so we will have people actively monitoring that. I should also say that we are working with the AAA, the Automobile Association of Australia, and the various motoring organisations because of course they are very interested in getting hold of the data.

Senator KETTER: I will just follow up on some of those questions from Senator Williams about what you are doing to monitor petrol prices. We have seen media reports of record spreads in petrol prices compared with the costs of the retailers. Are you going to provide additional resources to do market investigation? What is the intention there?

Mr Sims : We have a team of people. We have been monitoring petrol for a very long time under a direction from the federal government and successive federal governments. At the moment those people are devoted to doing two things, largely. One is producing a quarterly report which talks about the state of the petrol market. Very likely, next week we will bring out our quarterly report for the December quarter 2015. Separately, they do these regional studies, one each on Darwin, Launceston and Armidale. That keeps them very occupied, so we are going to have to create a bit of room for this data analysis work in the middle of the year.

Senator KETTER: As you are probably aware, there is a bill before parliament in respect of banning excessive surcharges for credit cards.

Mr Sims : Yes.

Senator KETTER: Have you given some consideration as to how you are going to enforce compliance with that ban?

Mr Sims : I am sure we have. I will ask Mr Gregson to give you a more precise answer.

Mr Gregson : Senator, the legislation will provide, as you know, for a restraint on surcharging. That will be assisted by standards put out by the Reserve Bank of Australia. We are currently developing educational material to go to both industry and consumers. We are also assisted with the capacity to test whether indeed the surcharging made by retailers or merchants is consistent, so we will have the capacity to test those. We will be having a mixture, I would have thought, of both proactive monitoring and checking, and being responsive. The standards provided by the Reserve Bank of Australia, while they will vary from retailer to retailer depending on their circumstances, will be within a reasonable range such that we will be quite capable of identifying those that are more problematic through both consumer complaints and what we see in the marketplace. We currently have a team that is working up an implementation plan for when the RBA makes those standards.

Senator KETTER: This is a whole new field of endeavour for the ACCC. Do you have the resources available to take on this compliance function?

Mr Sims : We have not been allocated additional resources. We will have to do it within the resources we have. I guess that means we will do more of this and do less of other things, so we will have to reallocate within the organisation.

Senator KETTER: In terms of litigation, I am interested in the resources you have available to take on conduct by big businesses which adversely impacts on small businesses. What resources do you have currently for that?

Mr Sims : My colleagues on my right will correct me, but I think in round terms we probably have 80 consumer enforcement and 80 competition enforcement staff, with various support and backup, and they are the staff we have to deal with consumer and competition cases right around the country with every provision of the act. That is not a lot of people to do what we are trying to do, but we do prioritise issues to do with small business. We prioritise it in a competition sense, where small business is on the receiving end of anticompetitive conduct that would breach the act, and we also, importantly, keep an eye out for misleading and deceptive conduct when big business is engaging with small business.

A good example of that was the par baked bread issue with Coles. That was partly a consumer issue because people did not know that the bread had already been frozen, but it was partly a competition issue with small business because of course the small bread shops bake fresh each day. So that was an example of small business. Of course, we also used the unconscionable conduct provisions—I am sorry to come up with two Coles example; I did not mean to do that—

Senator XENOPHON: You can mention Woolworths if you want.

Mr Sims : thank you, Senator, very helpful!—where there was a case that found unconscionable conduct. So, again, we really do, as best we can, prioritise small business issues.

Senator KETTER: I am going to turn to your NBN wholesale market indicators report, your discussion paper. I am just interested in how many submissions you received to that industry consultation paper.

Mr Cosgrave : I will take that on notice.

Senator KETTER: The consultation paper talks about the fact that, following the consultation process, you are going to consult with nbn co and Telstra on proposed directions to disclose.

Mr Cosgrave : Correct.

Senator KETTER: You had indicated that you were going to issue directions to disclose in the final quarter of 2015. I am interested in whether those directions to disclose were issued.

Mr Cosgrave : The answer is that they have not yet been disclosed. There are some ongoing discussions, but we are hopeful that that will soon be able to occur. The intent is basically to mirror the sorts of indicators of wholesale behaviour that occur in the legacy CAPA world. That they are replicated in the nbn world is something that we are moving towards as swiftly as we can.

Senator KETTER: My final question is more a plea than a question. It relates to the recent land-banking inquiry. You are familiar with some of the land-banking schemes that we have been hearing about.

Mr Sims : Yes.

Senator KETTER: There is a concern that there are hundreds of people out there who do not know that they are in a scheme which could see their investment in jeopardy. My question is: is there any action available to the ACCC to safeguard the funds that people have already invested in these property schemes from being lost or dissipated?

Mr Sims : Mr Gregson is the expert on this.

Mr Gregson : We were asked a number of questions by that committee. We thought to respond in a comprehensive way that explained the different jurisdictions for the Australian Securities and Investments Commission and the ACCC. Where in certain circumstances it is within our area of remit and where we have not otherwise assisted ASIC to take any action, we could look at misleading and deceptive conduct. That provides for us to take action, and within action you could seek third-party redress.

Senator KETTER: How do people get access to this?

Mr Gregson : The Australian Consumer Law provisions, which would be the vehicle that we would use if we had jurisdiction, require us to take action against companies for either misleading and deceptive conduct or unconscionable conduct, as the chairman referred to. Until you have established that indeed this is against those provisions, there is no sort of immediate recourse other than contractual issues or private action. But I should note that ASIC has been taking a lead in many of these areas, as I know the committee has been advised—that is, the financial inquiry committee. They have taken some action for non-misleading and deceptive conduct provisions, either under the ASIC Act or the Corporations Act in relation to issues of insolvency et cetera.

Senator KETTER: Are you able to intervene or put a stop to the marketing of property schemes that appear to be unsuitable for retail consumers?

Mr Gregson : Investment schemes are a matter for ASIC. Where there is a matter that is not within their jurisdiction that again is misleading and deceptive, we can take action to prevent conduct, but I should assert here that the majority of the matters that have come up are matters that ASIC are actually dealing with.

Mr Sims : The Consumer Law is divided up between ourselves and ASIC. We work very closely together to make sure there are no gaps, but that sort of thing is mainly ASIC.

Senator KETTER: Finally, would you like to make any comment in relation to the conduct of property spruikers? We have heard about Mr Jamie McIntyre of 21st Century Group and Mr Rowan Burn of Market First. Are there any comments you would like to make or concerns that you have got about the conduct of these operators?

Mr Sims : We have certainly had concerns.

Mr Gregson : Indeed. Those operators, as you know, are the ones that have been referred to in the Senate inquiry. Indeed, some were witnesses, as you are familiar with. Their conduct is very much related to those land banking issues, many of which ASIC are dealing with, so we will not have specific comments on those. We have, though, as you would realise from our response to questions, also participated with state fair trading agencies in relation to property spruiking more generally, and we have taken our own action with respect to certain schemes such as We Buy Houses. They are not land banking but they involve property spruiking. Obviously where there is misleading conduct affecting consumers, we will look to take action.

Mr Sims : And we have taken action on a number of occasions.

Senator XENOPHON: Further to Senator Ketter's line of questioning in terms of land banking, do you consider that there is a flaw, or room for improvement, with the Consumer Law? Often the way that these land spruikers operate is to say, 'You buy into this land bank, and in 20 or 30 years time, or in some indeterminate period in the future, you are going to make a lot of money.' So it is something that will not crystallise until some very distant period in the future. Is that one of the difficulties? Is that why they seem to have got away with what they have got away with to date?

Mr Gregson : The speculative nature of those either investments or other promotions is clearly an issue that the inquiry is looking into. You would have also been provided with information about the various property acts in the states and territories that may be a vehicle to address those, or at least consideration about how far they go to address them. All I can say is that the speculative nature, the many years ahead, mean that representations need to be made very carefully to avoid misleading consumers. We look forward to the inquiry's findings on some of that, with all the information you have received.

Senator XENOPHON: But it is quite ingenious to say, 'In 15 or 20 years time you're going to make a fortune, because we're going to buy this land and no doubt there'll be a development.' It is on so many hypotheticals in such a long period of time.

Mr Gregson : Sure, and ultimately if it is a non-financial service matter or a matter that ASIC is not looking at, we would look to see whether those claims were made on reasonable basis or whether they were otherwise misleading.

Mr Sims : But your point, Senator, is that sometimes they are so vague they are hard to—

Senator XENOPHON: That is right. But, as vague as it is, some people put a lot of money into them.

Mr Sims : We understand.

Senator XENOPHON: Can I just go to an issue that was referred to in a Senate inquiry—I think, on divestiture laws—some time ago, where one of the witnesses, representing independent grocers or independent retailers, made reference to the whole issue of 'waterbedding'. I think this was around the same time as the discounted bread or superdiscounted bread—and it would apply, I suppose, to discounted milk and other commodities. In short, the person made reference to 'waterbedding', in the sense that, if you are a big enough buyer of goods, not only do you get a volume discount but it is almost as though you get it so cheaply that, in order for the supplier to provide it to the volume buyer at that price, it pushes the price up—the 'waterbed' effect—for the smaller guys, the smaller retailers or the smaller people down the supply chain. I do not necessarily want a direct answer now, but is that something that the ACCC has looked at? I would imagine that there are obviously some legitimate benefits to be obtained from buying goods in bulk. There is a direct, reasonable, commensurate discount which is causally related to the volume that you are purchasing. How do you distinguish between that and a discount that appears to be a function, or almost an abuse, of market power which means that the smaller retailers get squeezed out of the marketplace because some suppliers say, 'We can't afford say no to these people at the price that they want'? It is not a very eloquent question.

Mr Sims : No, I understand, Senator. It gets back to what we often find, and that can just be the use of market power. If you are a big player, you do get things cheaper. If you go into those large shopping centres, the Coles and Woolworths and the big supermarkets have the cheapest rent, and, by definition, to make the project work, the other players pay more rent. It is not against the law.

Senator XENOPHON: This goes beyond that, though. This is not about retail tenancies—

Mr Sims : Sure. I understand, but it is the same point. If you are making biscuits and you have to really sell to a major outlet, then, if they have a stronger bargaining position, they can get a price from you, and you may have to charge others more. But, on its face, if those are the only facts, there is nothing that would breach the Act.

Senator XENOPHON: At the moment, there is no remedy that obviously apparently exists in terms of that waterbedding type of thing?

Mr Sims : Unless any of my colleagues might be able to add to that, I do not think so.

Senator XENOPHON: I am happy for you to take that on notice. Because of time constraints, I want to go to the issue of Informed Sources.

Mr Sims : Yes, I thought you would.

Senator XENOPHON: Mr Sims, we have had some robust discussions.

Mr Sims : Yes, we have had some very pleasant discussion.

Senator XENOPHON: We have had pleasantly robust, or robustly pleasant, discussions in respect of that. When I asked you a year or two ago about what would be wrong with an app that consumers could access so they could get information at the same time as the petrol retailers, you seemed to have some reservations in respect of that. It that a fair summary of your position?

Mr Sims : Yes, that is very fair.

Senator XENOPHON: Has your position shifted somewhat since that time?

Mr Sims : It has shifted, Senator, in the sense that we have always had, and continue to have, concerns that the Informed Sources system does allow the petrol companies to see prices effectively real time every 15 minutes, and it makes it much easier for them to push prices up particularly quickly because they can immediately see what the response is of their competitors, and we often find that it is a company that is a subscriber to Informed Sources leading the price up and a company that is not a subscriber that eventually starts the discount phase of the cycle. We have had, and continue to have, concerns about that. You asked me about that sort of appropriate. Our concern was that the Informed Sources had that very negative effect and that having an app out there would not outweigh that effect. As the court case has gone on for quite some time, as you know, Coles has agreed to withdraw from the Informed Sources action. That sort of changed the dynamic a bit.

Senator XENOPHON: So they withdrew?

Mr Sims : We reached agreement with Coles whereby they would cease the use of Informed Sources and we would cease taking action against them in the court case.

Senator XENOPHON: I have a letter from Informed Sources, addressed to Mr J Dimasi of the ACCC, of 28 February 2011. I am happy to get a copy and have it tabled and forwarded to you by the committee. I think the gist of the letter says: how can we work with the ACCC to provide you with more information; how can we go back to our clients to develop an improved information flow?

Mr Sims : We have had numerous discussions with Informed Sources on this, particularly in the context of the court case.

Senator XENOPHON: You can understand they are aggrieved. They would have spent a seven-figure sum defending themselves in the scheme of things.

Mr Sims : Yes, but they have never offered what we have got now.

Senator XENOPHON: They offered it back in 2011—

Mr Sims : No, it was nothing like what we have now, Senator, sorry.

Senator XENOPHON: Did you engage with Informed Sources after 28 February 2011?

Ms Sims : Yes, on number a of occasions, in the interests of settling the court case, and no proposal from them—

Senator XENOPHON: No, but before the court case—before you actually took actions against its core business—

Ms Sims : That was before my time. But certainly during the context—

Senator XENOPHON: Then I put that on notice. What correspondence/communication was there between Informed Sources and the ACCC from 28th of February 2011 and onwards? On the face of it Informed Sources appears to have been willing to exchange information and improve that flow of information. In fact, from my discussions with Mr Cadd, the managing director of Informed Sources, I think that their best-case scenario was to be able to provide a service so that motorists could get real-time information, so every motorist could get as real-time information as large petrol retailer.

Ms Sims : I can say quite clearly that in all the discussions we have had in the context of the court case, and we are happy to take on notice going before that, there were offers from Informed Sources to provide more information, but not a patch on what we finally got agreed in December.

Senator XENOPHON: Can you get any notes, memoranda and correspondence between Informed Sources—

Ms Sims : We will see what we can provide.

Senator XENOPHON: In the context of this, do you acknowledge that it has been a significant burden on Informed Sources as a small business? It is a $1 million legal bill, or whatever their legal bill is, compared to $1 million for Coles or Woolworths, who are big enough and ugly enough to look after themselves. They can absorb those sorts of costs, but not a small business like Informed Sources.

Ms Sims : I am very conscious of the cost impact on motorists who are paying more for petrol, potentially as a result of Informed Sources.

Senator XENOPHON: So you are suggesting Informed Sources are responsible for that?

Ms Sims : I am suggesting that the reason we took the court case was because we believe that the Informed Sources service facilitates anticompetitive behaviour in the petrol market, yes.

Senator XENOPHON: That is a position that has not been tested in court and will not be tested now—will it?

Ms Sims : We settled the case. That is right. But that was the essence of our allegation.

Senator XENOPHON: That was your allegation, but you cannot assert now that that is what actually occurred.

Ms Sims : No, I cannot. But you are asking me in some sense, 'Am I concerned about Informed Sources?' And I am saying that on the other side there was an enormous bill for consumers under our allegations.

Senator XENOPHON: And I could tell you from the correspondence I have seen that Informed Sources was very keen to increase the flow of information to consumers to reduce that information asymmetry.

Ms Sims : Consumers at the moment were getting 'this'. They were willing to do 'this'. What we have now agreed is on the ceiling. And to put it—

Mr Bezzi : And there was practical reason for that. The clients of Informed Sources were not happy for the information to be published more broadly—

Senator XENOPHON: And I can only tell you what Informed Sources—

Mr Bezzi : and one of the advantages of the settlement is that those clients, the fuel retailers, have permitted the publication in real-time, or at least on equivalent terms to the publication that goes to them. That is the critical issue.

Ms Sims : And of the raw data. Informed Sources never offered the raw data.

Senator XENOPHON: Could we have an exchange, through the committee? And we might have further discussion after Senate estimates.

Ms Sims : Yes. We are very happy with that.

Senator XENOPHON: This is my final question, that I will have to put on notice. It will not be a 'final' final question, just a 'final' question.

CHAIR: That is a bit of a trademark!

Ms Sims : We may be able to give a quick answer if we can.

Senator XENOPHON: Not necessarily, and maybe you will want to take this on notice. I regularly hear from businesses, large and small, who believe they have been the subject of an abuse of market power by another corporation, a larger corporation up the chain. And even if they may have considerable resources, their lawyers tell them the cost of going to court could be in the many hundreds of thousands or millions of dollars, so there is a very live issue of access to justice and something that the ACCC is painfully aware of when you bring a case and it does not succeed. Could you on notice provide me with what thoughts, considerations, submissions and plans the ACCC may have to improve that access to justice? We may have laws that may be robust, but their enforcement is not because of the issue of costs.

Ms Sims : You are right, we will take that on notice. That is a big issue and a very important issue too.

Senator McKIM: I would like to raise a couple of matters with you. Firstly, you have responded to a question on notice around the Food and Grocery Code of Conduct saying that the ACCC has written to retailers about the manner in which they purport to be giving effect to the code. Would there be any problem with providing a copy of that letter for the committee? I am happy for you to take that on notice if you do not have a copy here.

Mr Gregson : We do not generally provide copies of correspondence in the course of our activities unless they are otherwise public.

Senator McKIM: On what basis?

Mr Gregson : On the basis that they are, in some respects, done in a private context. We do not generally make our correspondence with complainants or traders public.

Senator McKIM: Well this is a letter that the ACCC has written. So the ACCC released a media release—

Mr Gregson : Correct.

Senator McKIM: on 24 September last year saying that the ACCC was concerned over the implementation of the Food and Grocery Code of Conduct. You have explained to the committee that you have written to retailers about the manner in which they purport to be giving effect to the code. I may have misunderstood; I took that to be a generic letter. Is that actually a letter that relates to specific actions by specific retailers?

Mr Gregson : Indeed it is. It goes into terms and conditions—

Senator McKIM: Thank you, I understand that. I do understand your reluctance in that case. Can you talk in general terms about some of the concerns that the ACCC has? And—I guess as a supplementary—you have said in the response to the question on notice that you are currently considering whether, in your view, matters have been appropriately addressed by the retailers. Are you able to offer any update on that? In terms of something as rudimentary as a time frame by which you might arrive at a decision, have matters been satisfactorily addressed by those retailers?

Mr Sims : I will have a quick go at that and then Scott can add. We had two main concerns. By the way, we have an answer for Senator McAllister about my highly paid research assistants.

Senator McALLISTER: Oh, very good.

Senator McKIM: I am happy for you to reply to that.

Mr Sims : No. So there were two issues. One was: were they putting the agreements to suppliers in a way that could appear as if they were 'take it or leave it'? The second one was: were they spelling out the circumstances, as appropriately they should, in terms of the circumstances under which extra payments could be demanded from the suppliers? We had those concerns; we made them public. As I understand it right now, but Mr Gregson may be able to add, those concerns have been addressed, but we are still monitoring the progress of the code. So we were unhappy. We are now comfortable and we are continuing to monitor—is that right?

Mr Gregson : That is right. The only thing I would add is that, having concluded that engagement with the relevant retailers, we issued a further media release that spelt out the nature of our comfort.

Senator McKIM: What date was that media release issued?

Mr Gregson : We are talking December. I have a copy here I can give you.

Senator McKIM: No, that is okay. It will be on your website, presumably.

Mr Gregson : It will.

Senator McKIM: No, that is fine. So just to be clear, the specific concerns that you had with specific retailers have been addressed to your satisfaction?

Mr Sims : Yes, they have.

Senator McKIM: And you are continuing with your general compliance monitoring of the code?

Mr Sims : Absolutely.

Senator McKIM: All right, thanks. Did you want to go to Senator McAllister's question?

Mr Gregson : We could respond.

Senator McKIM: I am happy if you would like to do that.

Mr Bezzi : I should say, firstly, that this really is, as Mr Sims said, Treasury's area, so anything I say is subject to any correction that they want to make. I have gone and had a look at the relevant provision of the Competition Code Agreement, which is clause 2(2), and essentially, as I understand it, the effect of it is that within four months of receiving the notice the Treasurer can table regulations which override the state law. So that is within the four months. After the four months he can still do it, but they have to be accompanied by a report from the National Competition Council, which addressed certain issues that are set out in the Competition Code Agreement.

Senator McALLISTER: Thank you very much. I appreciate your providing that and acknowledge your qualifications around this being a Treasury responsibility and not yours. It is most intriguing, isn't it?

Mr Sims : It is intriguing.

Mr Bezzi : It is quite a difficult provision to interpret, because are a couple of double negatives in there, which makes it very confusing.

Mr Sims : I heard your discussion with Mr Dolman. Our to and fro was really trying to get to the bottom of what actually happens. That was what our discussions with Treasury were about—who does what and how does the provision work. What Marcus has just said accords with where, I am sure, we got to.

Mr Bezzi : It does not get used very often.

Mr Sims : As you can tell.

Mr Gregson : Senator McKim, the date of the media release is 8 December.

Senator McKIM: Mr Sims, do you share the concerns of one of your predecessors, Mr Samuel, who was reported as saying that an amendment to section 46 of the act, as recommended by Professor Harper, could leave consumers worse off?

Mr Sims : No, I have a very different view. I think consumers would benefit in important ways from the Harper section 46 recommendations. In economics, people have a wide range of views.

Senator McKIM: It is a bit like law and politics, dare I suggest it.

Mr Sims : Yes

Senator McKIM: I appreciate that. Different views are an important part of the public conversation. Before I came today, I was reflecting about the conversation we had last time. There was something I neglected to ask you so I am going to ask it this time: regarding the specific amendments to section 46 recommended by the Harper review, are you comfortable with them specifically, or do you or the ACCC have a different view about the detail of the amendments?

Mr Sims : We are comfortable, with one exception—the Harper panel recommended a core provision—46(1), as it happens—that says, in essence, that those with a substantial market power should not engage in conduct for the purpose or effect of substantially lessening competition. That is the essence of the Harper recommendation, and that is what we completely support. There is another provision, 46(2), which seeks to provide guidance about how the court might interpret those provisions. That is the corporate conditions; are they the—

Mr Bezzi : We describe them as mandatory conditions for the court to consider.

Mr Sims : We judge that those are unhelpful and potentially unworkable.

Senator McKIM: Are they unnecessary, or just framed in a way that is unhelpful?

Mr Sims : We think they are unnecessary and that they could cause confusion in the courts.

Senator McKIM: Have you proposed, publicly, a different set of mandatory considerations?

Mr Sims : Our view is that there should be none.

Senator McKIM: Okay, and not having mandatory considerations would not, in your view, weaken the effect of the substantive provision?

Mr Sims : That is right. My own personal read of how things evolved—and this is a personal view that, I must emphasise, is not based on conversations with Ian Harper—is that those mandatory conditions in 46(2) were put in because, you know, 'We've heard a few concerns so we might put that in to see if they can ameliorate those concerns.' For us, it is the core recommendation and we think it is unnecessary and unworkable.

Senator McKIM: Could you inform the committee exactly what the concern is. You said in general terms that, in your view at least, it was potentially unhelpful. What is the specific concern? If the court did consider those mandatory considerations, what would the risks be, in your view?

Mr Sims : Regarding the term 'substantial lessening of competition'—and Mr Bezzi can add to this; he is more expert—the essence of the issue is that 'not engaging in agreements that have the purpose or effect of substantially lessening competition' is in section 45; 'not engaging in exclusive dealing which has the purpose or effect of substantially lessening competition' is in section 47. So, qualifying it in one place when it is not qualified in other places is going to turn the court inside out. The will say, 'Gosh, what did they mean about this?' Who knows where it is going to go. It just complicates the law.

Mr Bezzi : We came so far as to say—and I think we may be about to say this, subject to the chairman clearing a submission that we are proposing to put—

Senator McKIM: I was going to go to that in a minute.

Mr Sims : Yes, we will be putting in a submission in the next day or two.

Mr Bezzi : We propose to say that adding those mandatory factors would make the provision unworkable.

Senator McKIM: Okay.

Mr Bezzi : And we would have the same sorts of problems that we currently have with the take-advantage element—

Mr Sims : Which is the key problem.

Mr Bezzi : that really does make it almost a useless provision.

Senator McKIM: Thank you. That is very helpful, and you have saved me raising the issue of whether you are going to put it in a submission. You have just said that you will. Will you be making that submission public?

Mr Sims : I do not know. Do we make it public or does the Treasury make it public?

Mr Bezzi : I think it might be a matter for Treasury.

CHAIR: I am sure it is a matter for Treasury. You are really now straying into—

Senator McKIM: With respect, Chair, the ACCC is an independent statutory authority.

CHAIR: Let me speak. Stop. You come in here and talk over the top of me. With all due respect, this is the regulator, and you are touching on policy issues now with section 46, and they are not really here to talk about that.

Senator McKIM: Well—

CHAIR: Do not argue with me.

Senator McKIM: I am not arguing with you, Chair.

CHAIR: Just put your questions, Senator McKim. It is too late in the night. I do not have a sense of humour. Pose your questions.

Senator McKIM: You do not intend to make your submission public, Mr Sims?

Mr Sims : We write submissions to all sorts of things, and normally it is up to the party at the receiving end to decide what to do with the submissions.

Mr Bezzi : I think Treasury's practice through the process has been to make all the submissions that it has received public. Whether it chooses to do that—

Senator McKIM: I know it is not a matter for you. What Treasury decides to do with this submission is not a matter for you. In my view, what you decide to do with your submission is a matter for you. But you have said that you do not intend to make it public, and I can appreciate that.

CHAIR: It is a matter for Treasury. That is what you have heard the chairman say.

Senator McKIM: That is what I have heard you say.

CHAIR: No, he said it.

Senator CANAVAN: Can I just clarify? You are not asking Treasury to make any part of your submission confidential. You are quite happy for them to make it public.

Mr Sims : We are assuming that they will make all the submissions public.

Senator McKIM: I am assuming they will too.

CHAIR: I am sure they will. Any further questions?

Senator McKIM: No, thank you, Chair.

CHAIR: Mr Gregson, could I just have a moment? I just want to go back to the issue raised by Senator Canavan of these chickens. I do not want this to be an issue that we labour too much. In relation to this whole ruling, what happens to chickens if they do not go outside?

Mr Gregson : I am not sure I understand the question.

CHAIR: Regarding free range eggs, what happens if the chickens do not go outside. The chickens are free to go outside—

Mr Sims : Do you mind if I take the question?

CHAIR: Yes, sure.

Mr Sims : The issue is the behaviour we have always been concerned about where you have got caged chickens and you have got barn raised chickens. You have also got people who have raised chickens that are in settings where they come and go and usually are outside during the day and come in during the night. What we have been concerned about is if you take a barn and—if I can be slightly crude about it—you bang a hole in the side and you say, 'Well, of course the chickens can go outside,' but they would have to queue up for some hours and in a very orderly process to do so. We would argue if all you have done is had a barn and bunged a hole in the side that is not going to constitute 'free range' in the mind of a consumer. That is what we have been concerned about.

CHAIR: How big does the hole have to be to fix the problem?

Mr Sims : What we have said is that we are going to take a common-sense approach to this. We have always said we are only after people who are at the extreme ends of this debate. If you know that a good number of your chickens are going outside each day then you can rest easy. We are not going to be counting them; we are just going to say, 'This is common sense.' Have you got a set-up at all? You can set your barns up so that the chickens are able to and do go outside, or you can set them up so that it is very unlikely that they will.

CHAIR: Say there is a really big hole and it is quite inviting, yet they still do not go outside. How do you assess that?

Mr Sims : In all seriousness, if you look at a barn and, compared to the barn, there is plenty of access for the chickens to get outside and they choose not to—going back to my delightful conversation with Senator Canavan a while ago—we would not have a problem with that. The cases we have taken have been where, in one case, they could not get out of the barn and, in other cases, the size of the holes relative to the barn were such that no reasonable person would expect they would get out of the barn and if you drove past rarely did you see chickens outside.

CHAIR: How do you enforce something like that? A reasonable person would say, 'I've banged a hole'—the size of the desk in front of you now—'in the side of the barn and 50 chooks could walk past it.'

Mr Sims : The onus is on us to have to establish that this is not free range, but we take the view that we are trying to deal with the extremes here. As we have always said, we will not be counting and we do not expect the farmers to count; we are just taking extreme cases where people are claiming free range, including packaging that has the chook luxuriating in open grass when in fact the set-up of the shed would make it extraordinarily unlikely that many chooks would ever go outside.

Mr Gregson : The evidence we put in our matters is from expert advice but also our own experience. The testimony from producers is that indicia such as flock size, indoor stocking density, barn architecture and issues to do with training are not that difficult to lead to circumstances with chickens going outside. Indeed, that is what producers present on their packaging—that their chickens go outside. When you talk to producers they tell us their chickens go outside. There does not seem to be anyone saying that their chickens do not go outside. That is all the ACCC has said in the matters.

There has been an articulation of 'most chickens on most days', which I think has been raised here before. That was for the purposes of a court matter. We believe it is a useful concept to have in mind, but the guidelines that we have put out in the context of the regulatory impact statement that Treasury are working on, as the chairman has mentioned, make it very clear that we take a pragmatic, sensible approach. We have indicated that we do not expect producers to count hen. We indicate that general observations that a reasonable number of chicken are outside will do the job. We have tried to make that very clear to producers. We are further working through this policy framework to see if we can make sure that that gets injected into that debate. It is simply not our experience or advice that chickens are somehow exercising free will to stay inside. It is the factors associated with architecture, flock size and density that mean they do or do not.

Senator CANAVAN: That does seem somewhat of a watering down of the position you put a few months ago—that is, that most chickens have to go outside most days. You have not chickened out on this issue, have you? It does seem a change to me.

Mr Sims : I am sure that I have said every time that we are after the extremes here. We have said endlessly that we do not expect farmers to count and we are not going to count.

Senator CANAVAN: That was not quite my question. I do not want to labour this point, but previously I thought you stated quite emphatically that most chickens have to go outside most days; whereas I thought Mr Gregson was indicating that that is not the hard and fast rule and that there will be a level of flexibility about—

Mr Gregson : My indication was in terms of that concept of what we expect in terms of measurement or demonstration. We have been quite clear in the court about what our position is on what we think is the appropriate framework to consider free range and what degree of outside exposure chickens have. But, from a practical point of view, we have made it very clear—it is in black and white on our website—that we do not expect farmers to counting hens, and we provide a number of ways in which they might make observations to determine the point.

CHAIR: I want to go an issue which I have raised at every estimates, which is the issue of pharmacies. I believe you had a result. Was it a prosecution, or a fine or—what is the word?—against ePharmacy for the methodology they used? Are you able to talk about that now?

Mr Gregson : Certainly. We issued, and the relevant recipient paid, an infringement notice. That is not an admission of liability; it is a way in which they can resolve it where we believe there has been a contravention.

CHAIR: There were some matters that fell outside the jurisdiction of the ACCC there. Were those matters referred to the state regulatory authority?

Mr Gregson : There were about eight to 10 matters raised with us over a period of time by the same parties. Some of those would have raised jurisdictional questions, yes. To be very simple: we cannot deal with unincorporated bodies unless they are engaging in trade and commerce beyond the state boundaries, involving telecommunications et cetera.

However, there were sufficient matters there that we could raise issues about, so we were able to make adjustments in behaviour even for those who may ultimately have fallen outside our jurisdiction. So we did not feel the need to refer those matters to any state fair-trading agency. We have, and did have, some engagement with fair-trading agencies, though, on some of those issues.

CHAIR: Okay, I accept that. The findings were against private-label products. Was there a reason why you did not go after the same practices for branded products?

Mr Gregson : There was. First of all, those jurisdictional issues meant that we looked for matters on the internet that clearly fell within our jurisdiction. The comparisons being made were with respect to recommended retail prices. We did not think that was a representation that should be made when they were the only seller and determiner of those recommended retail prices. That is why we looked at those private-brand labels.

CHAIR: Okay. And finally: I will just talk about that—on the online sales. If the same two price-advertising practices—and there is this whole issue of 'savings of RRP', recommended retail price—were also found to occur in store, would you come to the same conclusion against the practice?

Mr Gregson : If they were in the same circumstances. Some of the matters we were asked to look at were not actually in relation to those private labels; they were actually in relation to brand items. The representation with respect to recommended retail price was made clear. We then turned our minds as to whether that is a reasonable comparison. In this case, there were other traders selling at recommended retail price—based on the very limited experience that we have seen. We did not take issue, therefore, with the comparison with recommended retail price. That is not a green light, but it is an indication that we took it into account in deciding not to pursue those matters.

CHAIR: I will leave this, but the infringement was for $32,400. Why was it not $3,240 or $132,400? What is the methodology?

Mr Gregson : The amounts for an infringement notice are set out in the legislation. We need to make a determination about the conduct and the amount. So that was not one infringement notice—there were multiples there, but that was the amount.

CHAIR: Okay—thank you very much. I do not think there is anything else. So once again we thank you, Mr Sims, and all of your very caring officers for coming here and waiting so patiently while we ran terribly over time. I thank you for your attendance, and we will see you in May.

Mr Sims : Thank you very much, senators.

CHAIR: I now call APRA, if they are still out there.