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Economics Legislation Committee
21/10/2015
Estimates
TREASURY PORTFOLIO
Australian Competition and Consumer Commission

Australian Competition and Consumer Commission

[21:08]

CHAIR: I welcome officers from the Australian Competition and Consumer Commission. Would you like to say anything?

Mr Sims : No, we will leave maximum time for questions of interest to senators.

CHAIR: That is perfect, but I did not want to deny you if there was something that you compellingly wanted to share.

Senator WILLIAMS: Welcome, Mr Sims and crew. I am going to take you to the free-range eggs, sorry.

Mr Sims : I am surprised.

Senator WILLIAMS: I am full of surprises. You said on 14 November last year:

Some have expressed concern that there is no government standard that producers need to meet to be a free range producer. We see no need for any standard.

You have put out some guidelines now; is that correct?

Mr Sims : In the context of the government putting out a regulatory impact statement, they had four options. One of those was that we simply rely on our guidelines, so we thought we would put some out just to inform that debate in the context of the RIS.

Senator WILLIAMS: The court has ruled—the Pirovic case, I think it was—that most of the hens must be outside for most of the day. Is that correct?

Mr Sims : That is broadly right, yes.

Senator WILLIAMS: Okay. I want to get clarification on the word 'most'. If I have 100 hens, how many is 'most': 51, 65, 90?

Mr Sims : What we said in our guidance is that this is not about counting the hens. This is a very common sense view. Our guidance suggests that if the farmer is looking around and on most days most of the hens are outside that is going to be fine with us. We are not in the business of counting. We are not going to be applying any great strict standard. The common sense point is if the chooks are—if on most days most of those are out—this is not a question of counting. The purpose of the guidelines was to say that we actually would not be doing that. If you see a good number of hens outside on most days that will be fine by us.

Senator WILLIAMS: The point I make is the court ruling was most of the hens outside for most of the day, wasn't it?

Mr Sims : That is the way the court ruled it, yes.

Senator WILLIAMS: I am trying to get clarification of what is 'most'. I use a simple example, 100—

Mr Sims : Sure.

Senator WILLIAMS: The industry is petrified. It is simple as that. I will be meeting with the Minister for Small Business tomorrow. As far as I am concerned, we have to get standards drawn up in conjunction with the states and industry so that the lines are in the sand.

You step over the lines and I want to see ACCC pound on you. For example, if you have caged hens and you brand them as free-range that is clearly wrong. If you have barn hens and you brand them as free-range that is clearly wrong. We need clarification here because I cannot get an answer about what is 'most' and what is 'most of the day'. Let us say from six in the morning until seven in the evening the sun is up and shining. Thirteen hours is most of the day—six hours 31 minutes, seven hours or is it eight hours—how do you define 'most of the day'?

Mr Sims : If I could put it this way, there are broadly two ways to go here. If industry wants standards that they have to meet and expense they have to go to meet those standards that is perfectly fine. That is absolutely their call.

Senator WILLIAMS: Good.

Mr Sims : We are saying that you could probably meet a more simple guideline in as many ways as you want to. There is going to be no instance where the ACCC will be taking action when, in a common sense view, most hens, a good number of hens, are outside. We will not be counting. The action we have taken so far is where there were, yes, holes in the side of the barn but it was extremely difficult for the hens to get outside. In one case, they physically could not get outside. We have only taken action in extreme cases. That is all we will be doing.

Senator WILLIAMS: Have you consulted with the industry at all?

Mr Sims : We have spoken to industry on a number of occasions. I will be speaking to them again.

Senator WILLIAMS: I refer to that court case which was agreed by consent. Is it true that the specialist advice that you used during this case was a UK academic who specialised in animal welfare and whose research projects include investigation into avian empathy?

Mr Sims : We used an expert just to give the court some idea of in what circumstances birds would have at least the opportunity to get outside. If for example—

Senator WILLIAMS: Did you use this UK academic?

Mr Sims : We did use a UK academic, guess.

Senator WILLIAMS: Was that an academic who specialises is animal welfare?

Mr Sims : They were expert in whether if you have a few holes in the side of a barn the chickens have much chance of getting outside, yes.

Senator WILLIAMS: Let us talk about them being outside and let us talk about stocking rates. I believe Coles or Woolworths accept a stocking rate of one hen per square metre, which is 10,000 hens per—

Mr Sims : Are you talking outside or inside?

Senator WILLIAMS: Outside.

Mr Sims : Right.

Senator WILLIAMS: Are you familiar with that? I am not certain, but I believe that that Coles and Woolworths are looking at free-range hens they would accept at an acceptable stocking rate, if I can call it that, of one hen per square metre? Do you know anything about that?

Mr Sims : I am not much of an expert on that. We take the view that we like to see a good number of the birds outside. If the birds are not outside, talking about stocking densities outside is not terribly relevant.

Senator WILLIAMS: When it comes to defining free-range, I think this is one of the controversial issues that we have to work through with the industry, the small business minister and the cabinet to get a stocking rate that is acceptable.

Mr Sims : But you take my point that if the birds are not going outside the outdoor stocking rate does not make a lot of sense.

Senator WILLIAMS: No, but birds will not go outside if it is hot, for example.

Mr Sims : Absolutely.

Senator WILLIAMS: They may have a small brain but they know the difference between 40 degrees and 20 degrees.

Mr Sims : Absolutely; we accept that, Senator.

Senator WILLIAMS: There were 1,200 respondents who completed the online New South Wales farmers' survey. Fifty-three per cent believe 'free-range' means not in a cage or it means being unconfined. It is an interesting survey. Are you familiar with it?

Mr Sims : Yes, I am.

Senator WILLIAMS: What did you think of it?

Mr Sims : I thought it was a useful thing. I guess the interesting question is: if you have a barn and you have quite a big barn and you have one little hole at the corner—therefore, technically the birds have access—would a reasonable person think that is free-range?

Senator WILLIAMS: I will continue to work with the minister—I am meeting with her tomorrow—and the industry. I believe we need to draw up standards, even though you to not. We should have those standards set in concrete and then, when people breach those standards, I would expect you to do your job and pounce on them.

Senator CANAVAN: I just want to clarify something. You have well explained the principle of the test you apply, that most chickens should go outside most days. However, when Senator Williams asked how you would apply that, you said you would not be counting; instead, you would be looking at whether chickens can go outside and you have retained someone from overseas to judge whether they have the 'opportunity', I think is the word you used, to go outside.

Why is it, in the way you are going to apply the standard, you are looking at whether the chickens 'can' go outside, in terms of the size and the holes and those things, but the standard itself you keep referring to is whether they 'do' go outside? Why would we not have the standard of the 'can' side—the 'Do they have the opportunity to?' side? Why are you setting a bar where they have to go outside and setting a standard where it would be very hard for you to test? As you admit, you are not going to count chickens. Why have this test?

Mr Sims : I will make two comments. The hurdle bar, we believe, we are applying is an extremely low one. We have only taken action where we believe, in essence, the birds very rarely went outside. In our view, people would not regard that as free-range. What I was saying was we are not going to be taking any statistical approach. If you have a barn of some size and you have a couple of small holes inside, they have access but would they ever go outside? That is the question the expert was called on to answer. We are trying to work out whether the chickens are, essentially, barn reared chickens, in the sense that it is awfully difficult—

Senator WILLIAMS: How big is the hole? Is it big enough for the chicken to get out? If it is not, of course it is not going to go outside.

Mr Sims : If you had a big barn with one hole where a chook could get outside, they would have to queue up in a very orderly way for any of them to get out in a way that would be considered free-range.

Senator CANAVAN: That is my point.

Mr Sims : Some of the barns we are talking about are 'barn laid' and they have had holes put in the side.

Senator CANAVAN: I completely accept that would be inappropriate—

Mr Sims : That is really all we are talking about.

Senator CANAVAN: It is just the implementation of it. If that can be clarified for the industry, a lot of these concerns and uncertainties would be removed.

Mr Sims : Sure. We have had some good discussions with industry and we are happy to have more. If industry wants to pursue a standard that is fine but, I really think, the hurdle we are applying is a very low regulatory hurdle for them.

Senator CANAVAN: I will leave it there.

Senator DASTYARI: This has come up in this inquiry before; there is a huge amount of public interest. Not being from the industry, this surprised me. It seems that the approach you have chosen is a reasonable test. We have to go back to first principles because, sometimes, they get lost. The first principle issue, here, is consumers having a right to know that when they are purchasing products that say 'free-range' there is some basis for that. Is that correct?

Mr Sims : That is correct.

Senator DASTYARI: It sounds like the test you have applied is saying you are not going to take a heavy-handed regulatory approach.

Mr Sims : Correct.

Senator DASTYARI: You are going to be fairly reasonable, and so your interpretation of 'most of the chickens, most of the time', is a fairly reasonable one—in that, if I have a barn-style environment or business and it is open and accessible, I do not have to live in fear that if 51 per cent of them are not out 51 per cent of the time—

Mr Sims : Correct.

Senator DASTYARI: that I am going to be in trouble. It is about cracking down on the fringe players. Actually that pun was not intended

Mr Sims : It is very hard to avoid that.

Senator DASTYARI: It sounds like what you are telling our committee is that the interpretative decision that the ACCC has made is that you are only going to be cracking down on the more extreme elements.

Mr Sims : That is exactly right. We have found cases, and I will try to abstract from the court cases, where, quite literally, the chickens would have to queue up in a very orderly way to have any number of them—much less anywhere near most of them— outside at all. And the outside environment was not one you would want to go to anyway. That is contrasted with a packet of eggs that has chickens luxuriating in green grass.

Senator DASTYARI: So if someone were operating in good faith they would have nothing to worry about?

Mr Sims : In our view, absolutely.

Senator WILLIAMS: Mr Sims, I have read some articles where you appear to endorse Uber. Is that a fair statement for me to make?

Mr Sims : Media articles interpret what you say.

Senator WILLIAMS: I am in politics!

Mr Sims : We have said that these innovations, whether they be Airbnb or Uber, do provide new sources of competition and that is a good thing. There is a question about the standards that Uber should be meeting. We have mentioned those. That is very much a matter for the states, but the concept of new disruptive technologies that have the ability to disrupt quite concentrated industries—that, in broad terms, we do welcome. The question of what the appropriate regulation would be and whether they are on even terms in regulation is very much one for the states. So we have kept our comments at quite a high level.

Senator WILLIAMS: Under the recent headline, 'Uber wins Australia regulator praise on taxi competition' it was written:

Australia’s main competition regulator welcomed the technology used by ride-hailing companies such as Uber Technologies Inc., lauding the choice the services give consumers.

Another headline reads, 'Watchdog warns state government not to protect taxi industry and embrace ride-share services'. I want to make this point: in New South Wales Uber is illegal. Here is a Transport for NSW statement regarding the ride sharing apps:

… if a NSW driver is taking paying members of the public as passengers, the driver and the vehicle must operate in accordance with the Passenger Transport Act … Under the Act, such services must be provided in a licensed taxi or hire car, by an appropriately accredited driver, authorised by Roads and Maritime Services (RMS).

Clearly, Uber is illegal against the law in New South Wales. My concern is that you seem to be endorsing it.

Mr Sims : I remember that interview very well. I said the things that you have quoted. I also said that they must comply with the law and you have to have laws that apply equally to everybody. That did not get written up.

Senator WILLIAMS: Is the ACCC aware that Uber is currently defending law suits in the USA that allege misleading representations in relation to safety claims? The case is being brought by the district attorney for Los Angeles and San Francisco in misclassification of employees and unsatisfactory consumer protection. Are you aware of that case?

Mr Sims : Not the detail of it. I am aware that they are facing prosecution, but I am not much aware of any of the details.

CHAIR: There are a number of jurisdictions which are—

Senator WILLIAMS: That will be one to watch. It might set some precedent, even though America does not run our law—although in legal things we often worry. Is the ACCC aware of reports that Uber is deliberately and intentionally impeding state government officers undertaking their enforcement activities against its services, or, more particularly, those delivered by its partner, UberX drivers?

Mr Sims : We are vaguely aware. We largely leave these questions to the state regulators. We very rarely intervene where there is another regulator which has power to deal with it. The state taxi regulators have quite a lot of power, so we largely leave the issue to them. The comments that we have made are very high level, and I have discovered that on this topic you do not have to say much to get in the newspapers, so I probably will not say very much in future.

Senator WILLIAMS: Have you responded to the taxi industry's complaint of 9 September about Uber breaching section 37(2) of the Competition and Consumer Act?

Mr Sims : I am not aware of that one.

Senator WILLIAMS: The taxi industry complained on 9 September. I believe they lodged a complaint with you on 9 September about Uber's breaching of section 37(2).

Mr Sims : We will look into it, but we are not aware.

Senator WILLIAMS: If you take it on notice, that would be good. Thank you for your good work on the fuel industry at Armadale and the other place—those three sites you are looking at. It is good to keep them honest, and I appreciate a lot of the good work you do.

Mr Sims : Thanks, Senator. Our first report will be coming out in the next few weeks.

Senator WILLIAMS: We will sort out the chook industry with the minister tomorrow.

Senator DASTYARI: I want to touch on a couple of issues relating to Australian banking. Specifically, I note that in the last round of estimates we spoke about the current investigation being undertaken about the bank bill swap rate. The advice, as I recall, that you gave to the committee was that that was primarily an investigation being undertaken by ASIC, but you were providing some advice or some strategic assistance. Is that a fair summation?

Mr Sims : We are working together on quite a number of these matters. There are potential breaches of our laws and there are potential breaches of what are broadly defined as market manipulation laws. They are all quite complex cases because, with the sort of action that is being taken, where you have people exchanging information in chat rooms, you have to assess what actually amounts to a contract arrangement or even understanding. The courts have set that at a high hurdle. There is the idea that we can look at them under the cartel provisions—essentially price-fixing. We have to get a range of evidence that meets that threshold. I am diverting a bit. That is one of a number of investigations. We are working with ASIC to see whether it is better for ASIC to take it or we take it, but I have to say that they are all very complex matters.

Senator DASTYARI: That one is still ongoing?

Mr Sims : It is. We have a number that are going on and there are one or two that may be taking precedence over that one.

Senator DASTYARI: With the number going on—without going into the specifics of what your investigations are, because I know that for obvious reasons you are not allowed to talk about it—how many are going on regarding Australian banks?

Mr Sims : They are at various stages. It is fair to say that we have two reasonably advanced ones involving Australian banks and I would have to say a couple of others are at a much earlier, lower level stage.

Senator DASTYARI: I would imagine that an organisation as yours would have a very strict triage process because of the sheer number of complaints you get.

Mr Sims : That is right.

Senator DASTYARI: How many complaints do you get? You would have this figure in your head.

Mr Sims : We get 180,000 complaints a year. We are trying to deal with a number of areas. I do not want to mention free-range eggs again, but we have credence claims, consumer matters, a couple of criminal cartel matters and a lot of fuel matters. It is about how many cases you take in each area. We were looking at vocational education and training and how many cases we take on that. So we have to make judgements on which ones are the best ones to advance.

Senator DASTYARI: So you have two advanced—I will use the word 'major', but that is probably the wrong word—on banking—

Mr Sims : Yes, that is right.

Senator DASTYARI: and half a dozen at a lower level?

Mr Sims : I do not think there are that many. A couple are dormant. There are really only a couple of others.

Senator DASTYARI: And they are all competition matters—correct?

Mr Sims : That is right, but, as I say, if we get somewhere with those two it is not clear that we would take others, just because we would have made whatever point needs to be made.

Senator DASTYARI: Westpac increased its variable interest rate earlier this month, which I am sure you are aware of. There has been some discrepancy in terms of public commentary as to the reason that was provided for the rate rise. The bank came to one of our committees, slightly outside the terms of reference, and made comment about the 20-basis-point rate rise. The Treasurer made reference to the fact they believe that there was a 10- to 15-basis-point rise for the reason that was provided, and that is based on evidence that APRA had given to a parliamentary inquiry. APRA will be here tomorrow. We will have the opportunity to ask APRA again whether they believe that 10 to 15 basis points is reasonable. For something like that, what level does it need to get to before someone like you looks at it?

Mr Sims : It does not get anywhere at all. It is mainly an ASIC issue. They deal with consumer issues. Sometimes the boundaries are a bit vague, but that one I think would fall fairly squarely into ASIC's territory.

Senator XENOPHON: For instance, if a lending institution says, 'We have increased the rate by 0.4 per cent'—not picking a real life example—'and it is directly as a result of prudential requirements,' and that is clearly not the case, if it proved not to be the case, does that give you scope for intervention where you say, 'You need to correct your advertising or correct your statements'?

Mr Sims : No, it is an ASIC issue. In a sense, misleading and deceptive conduct in all areas is ours, except in financial services and banks, which is ASIC. It is absolutely their—

Senator CANAVAN: Could I just jump in and word it slightly differently. If a petrol station decided to increase their prices by 1c per litre and blame some government regulation, and it were subsequently found that that particular cost was nowhere near that 1c per litre, would that be a potential investigatory issue for you under misleading conduct provisions?

Mr Sims : Yes. Whether we prioritise that is another matter, but if they said their prices are increasing for reasons particularly to do with government, which gives it a certain credibility, and that is not true then, yes, that would be misleading and deceptive.

Senator CANAVAN: Misleading and deceptive conduct provisions which guide ASIC are similar to or almost the same as the guide, aren't they?

Ms Melinda McDonald : Yes.

Mr Sims : Ms McDonald is the real expert here.

Senator DASTYARI: From a policy perspective, we have had the same issue when we have been looking at credit cards and the notion that the financial services component is carved out to ASIC, where you do everything else. Going back to the one on the Wallis, what is the policy rationale behind that?

Mr Sims : I will have a go at it and then I will turn to my colleagues on my left or my right.

Senator DASTYARI: I know that is longstanding and has been a bipartisan issue. It just strikes me as a bit—for the sake of housing things in the one place—

Mr Sims : The problem the other way is that ASIC approve all sorts of complex financial products. Their approval of that, and their getting to know that, gives them knowledge about those products, so if people are making comments about those complex products they are already there. That is the underlying logic. Does anyone have a better answer?

Mr Ridgway : I think that you might call it, in lay terms, a carve-out from the broader Australian Consumer Law. The carve-out relates to those financial products and services, including financial and insurance services, and it relates to ASIC's deeper knowledge of the kinds of risks and representations associated with those risks and the products.

Senator DASTYARI: Part of the financial services that you do look at is the banks' price signalling. Correct?

Mr Sims : Yes. The price signalling laws actually only apply to banks, and that is absolutely our law.

Senator DASTYARI: Is that the only part of financial services that falls under—

Mr Sims : No. The financial services carve-out is for consumer matters. There is no carve-out on competition. If two banks decided to merge, that would be us. If they were a cartel, as we were talking about, it is just a consumer carve-out.

Senator CANAVAN: Bitcoin matters would be—the issues that have arisen for digital currencies—

Mr Sims : That is an allegation under the competition provision, so that is us.

Senator DASTYARI: Have you, or when was the last time you, conducted through your triage system any kind of a look at the issue of price signalling with the banks? And what constitutes price signalling?

Mr Sims : We have not had to do anything under that. I will happily stand corrected, but I think that the reason for that is that you have a law which just applies to the banks. When it came in the banks were all over it; they came to see us and they did compliance. Because it just applies to them and the spotlight was on it, they have been behaving very well in accordance with that law, so not much has come up. That is the honest answer. Because it just applied to them, they took it very seriously, they watched their comments very carefully, and I am not aware—subject to anyone correcting me—that we have had to look at anything.

Senator DASTYARI: I have one more question on this front: can you explain to me how you would interpret what constitutes price signalling?

Mr Sims : Well, it comes under two provisions. One is the private exchange of information where, particularly if competitors were to meet privately and exchange pricing information, that would be caught under the per se provision. You just have to prove they did it; you do not have to prove it had an anticompetitive effect. And then there are public statements which are held to be signalling, where you have to prove that they had the purpose or effect of substantially lessening competition.

Senator DASTYARI: Sorry, is it a purpose or an effect test? Is there an intention component?

Mr Sims : It is one or the other, as with section 45. So it is purpose or effect; if we prove either one we are fine.

Senator DASTYARI: To use an example—and I do not want to go into the hypothetical space and put you in a difficult position—what would be a black-and-white case of price signalling? Would it be me saying that in two weeks' time I intend to increase my rate by this much?

Mr Sims : Black and white, when you are talking about substantial lessening of competition, is difficult. The black-and-white one is the per se one, where they are getting together in private and—

Senator DASTYARI: That is a given, and that is illegal.

Mr Sims : I am happy for any further comments from my colleagues, but I think if banks were to stand up and say: 'We believe the circumstances are such that'—actually, I am struggling a bit; can anyone else think of a good example? No.

Senator DASTYARI: So there is no example you can give me on price signalling?

Ms Melinda McDonald : I might be able to assist, Senator. Perhaps if the banks were to make a public statement that predicted how they might react to a movement by another competitor in a market—say, if a competitor were to move their price up or down they may behave in a certain way. Indicating how they might behave may be an indication.

Senator DASTYARI: But, Ms McDonald, on that basis wouldn't it be price signalling? I am sure you have your rationale as to why it is not, but when the banks turn around and say, 'If you do these capital requirements we will be doing this to our rates'—and they have said this—then one of them says it and does it, and then says, 'This is why we did it, and everyone else should,' how is that, from your basis, not price signalling? Why is the Westpac increase not a price-signalling matter if there was the pre-indication that they were going to? They were all going to; it was not a secret. They were lobbying government; they were in this building.

Mr Sims : Because it is a public statement we have to show that it substantially lessens competition, and that is why we are struggling a bit.

Senator DASTYARI: But then nothing would ever constitute 'lessening' competition? There are still four banks—that does not lessen the competition. You are still going to have four big banks in the sector. I do not understand—what would ever constitute that?

Mr Sims : That is a good question, and we are struggling a bit.

Ms Melinda McDonald : I apologise, Senator. I was only trying to offer—

Senator DASTYARI: No, no—

Ms Melinda McDonald : an example of the type of behaviour that might lead to a circumstance where we may commence an investigation into conduct that might—

Senator DASTYARI: Okay. You may want to take this on notice, Mr Sims. I have a policy question, and I note that there are two components to it. With the law as it currently stands, if there are secret meetings and secret phone calls—when someone says to someone else, 'Hey, next Tuesday we're going to increase, you should increase too'—it is pretty obvious that is collusion; you do not have to be a rocket scientist. The broader policy question is about public signalling. Are there guidelines on what is and what is not public signalling? Is there a document somewhere?

Mr Sims : Yes, we do have guidelines. I am pretty sure we do, don't we? We put them out at the time—yes, we have guidelines, Senator.

Senator DASTYARI: I am sure it is on the public record, so we can come back to this another time. If you are able to provide on notice what guidelines or what documents you may have? I probably could find them on your website.

Mr Sims : We will do that, and we will give you the example. I am sorry we are not able to; it is just not something that has been top of mind.

Senator WHISH-WILSON: The other banks said they were going to issue equity rather than raise interest rates. Westpac was the only one that actually said they were going to raise interest rates—just a point of differentiation.

CHAIR: It is muddy water; they have all come out.

Senator McKENZIE: Mine is a very local issue but similar to what Senator Dastyari was talking about. Currently you are doing an investigation into the Barnawartha boycott?

Mr Sims : Yes, indeed we are.

Senator McKENZIE: That was a situation that occurred when 10 buyers at the north-eastern livestock exchange failed to appear—all with various levels of excuse publicly.

Mr Sims : Correct.

Senator McKENZIE: And that had a significant impact on those farmers that brought cattle to sell that day.

Mr Sims : Yes.

Senator McKENZIE: You are now eight months into that investigation. There are a few local concerns that we seem to be dragging our feet. Can you provide the committee with an update of where you are at. It may be that even a potential report date would be really helpful.

Mr Fleming : You are correct: we started that investigation in February this year. We have conducted a number of steps in that investigation and there are some steps that are imminent. We will continue that and—

Senator McKENZIE: Can you flesh out what the steps are.

Mr Sims : I will start and then go back to Richard. What generally happens is we write to the relevant people. We await their response. Sometimes we will issue them with compulsory information notices. You then have to wait for those responses. It takes time. They will often say, 'To get those documents takes a bit of time.' It is a lot of to and fro but—

Senator McKENZIE: Has anyone been issued with compulsory information notices?

Mr Fleming : Yes.

Senator McKENZIE: How many?

Mr Fleming : In the order of around 10.

Senator McKENZIE: Ten out of 10—that is a gold star. How many have actually responded to the ACCC with the appropriate documentation?

Mr Sims : There is a limit to how much we can go into the details, but—

Senator McKENZIE: I realise that. I am not going to the detail of—

Mr Sims : Sure. When we issue the notices they always respond. Some of them have and some of them are still coming. Is that a fair summary?

Mr Fleming : Yes.

Mr Sims : We are taking it very seriously. I do understand that people say, 'Why do these things take so long?' Partly it is that the people involved are doing other things because we run a number of investigations at once. Partly it is just the time it takes to prepare those notices, because you have to get them legally right, and the time you give the parties to respond. You get the information back and then you invariably need more information. It is a complex case because, of course, they are going to have a range of reasons why they did not show up, and at the end of the day we need evidence to put before a judge who is going to sit there with a blank sheet of paper and say, 'Convince me.' So these things do take time.

Senator McKENZIE: Are you confident that the evidence that you are seeing come through will provide the future judge in this issue with appropriate documentation to make a positive finding against?

Mr Sims : We are not at the stage where we can yet say whether it indeed will get to court or not. We are not at that stage.

Senator McKENZIE: Right—not even at the stage of saying something shady went on here? Ten out of 10.

Mr Sims : That is asking them for information.

Senator McKENZIE: But 10 buyers not to rock up to a saleyard on a day is a very unique situation.

Mr Sims : It certainly has captured our interest and we totally understand—

CHAIR: It has been going on for years.

Mr Sims : That has been said too, but this is a particular case—

Senator McKENZIE: Hence the Senate inquiry, Senator Edwards, but this is a particular case.

Mr Sims : where there was alleged reason as to why that was quite public. It is certainly one we are taking extremely seriously, but we are not yet at a stage to know whether it will get to court. Given it has had such public profile, we certainly will make a statement at the appropriate stage, one way or the other—that is, we will either institute proceedings or explain why we are not.

Senator McKENZIE: For the sake of the north-east cattle producers, do you think that there will be some certainty one way or the other by Christmas?

Mr Sims : I do not think there will be. I think it will take a little longer than that, I am afraid.

Senator McKENZIE: That is incredibly disappointing.

Mr Sims : I am sorry, Senator.

Senator RHIANNON: The Minister for Agriculture announced that a new role of agriculture commissioner will be created within the ACCC. Could you let us know where the process of setting up that ACCC agricultural unit is up to and the process for appointing the commissioner.

Mr Sims : The unit is established—Gabrielle Ford is the acting head of that unit, with an impeccable dairy background! We are going to staff it with a good proportion of external people who have agricultural experience as well as a good proportion of people who are internal ACCC but with agriculture connections, because that way one and one will make three and we will have the best unit. That is established and we have the ads out to get the external people in. As far as the commissioner is concerned, it is still with the Treasurer and I guess the cabinet to determine that appointment. I know that it is well advanced.

Senator RHIANNON: So we will be advertising within a month for the commissioner, you expect?

Mr Sims : No, it is not an advertisement.

Senator RHIANNON: It is an appointment.

Mr Sims : Step one of the appointment of the commissioner is that the government writes out to the states for nominations—they have done that; those nominations have come back—and now it is up to the cabinet to meet to decide who to appoint. As I understand it there have been discussions around that but it has not yet gone to cabinet.

Senator RHIANNON: And how many staff, overall?

Ms Ford : We are funded for 14 staff.

Senator RHIANNON: And the enforcement and engagement unit?

Mr Sims : That is the 14 staff.

Senator RHIANNON: What can this unit and the commissioner do on the ground? Will you be checking supermarkets for price gouging? Can you give us an idea of the sort of things you'll be doing? Checking on small shops, butchers?

Mr Sims : It is very much agriculture. There are three things we will be doing. One is engaging with the agriculture sector. We have started doing that but obviously it will work much more effectively when the Agriculture Commissioner is on board, just to get a common understanding and also to help the agriculture sector understand the relevant parts of the act that benefit them like collective bargaining, various codes. Secondly, we will do a range of market studies to look at particular supply chains to see whether they are working well or badly and whether there is any anticompetitive behaviour and whether that is a breach of the act or not, but just to give more transparency to how supply chains work, and thirdly we will do our normal enforcement compliance work now. I think the original idea was that we would be out in the regions more. As Senator Edwards said, that sort of behaviour at Barnawartha saleyards has been going on for some time. This would give us the ability to be out there in the regions and gather that evidence and perhaps see that for ourselves in a way that we have not had the resources to do in the past.

Senator RHIANNON: I am very interested in the issue of compliance and the underground work. Considering the hour and there are others to come in I will go to my final question. I noticed that Wellard—possibly the leading live export company—is calling for tougher penalties and for offending exporters to have their export licence suspended. Is that the type of case the ACCC would deal with? Would you be looking at those sorts of things as well? Effectively there is a company here that is saying the marketplace is failing us. That is the criticism they have been making.

Senator XENOPHON: It is a lack of compliance.

Senator RHIANNON: Would that be the sort of thing you would look at?

Mr Sims : We would be dealing with breaches of our act rather than compliance with 'other', and that is a compliance with some other provision, presumably.

Senator RHIANNON: So there would not be any crossover?

Mr Sims : We try to avoid crossover. Where there are other regulations and other bodies to enforce them we do usually leave it to them. Sometimes we are involved in investigations where there are ourselves as well as another body, but that does not quite sound like it would fit enough within our act.

Senator XENOPHON: In respect of the grocery code, I refer to comments attributed to you in The Sydney Morning Herald today, and I will remind you of the comments made by Mike Moore, a former New Zealand Prime Minister who complained that the trouble with journalists is that they report what people say, not what they mean. Today's Sydney Morning Herald quotes you as saying that the initial implementation of the grocery industry code of conduct has been 'disappointing'. Did you say that?

Mr Sims : Yes, I did.

Senator XENOPHON: Okay, that is good. It is a good start. I understand the ACCC is:

… vetting the large retailers' grocery supply agreements to make sure they were compliant with the voluntary code of conduct, after initial feedback from suppliers indicated Woolworths and Aldi were not negotiating in good faith.

Is that quote a fair characterisation?

Mr Sims : Yes it is. There were two concerns: one was sending out agreements that looked as if they were take-it-or-leave-it—in one case potentially deeming that you were deemed to have accepted the contract if you kept trading, and we judged that that did not look like good faith. The other problem was that the code says that if you are going to be extracting payments from suppliers, then you are to make that clear up-front. In our view that was not happening, so we expressed that disappointment. While it was controversial that we did, we were urged by suppliers to do so because they felt that suppliers out there needed to get the message that they did have some rights here.

Senator XENOPHON: Can you take on notice how many complaints the ACCC has received from suppliers following the initial implementation of the voluntary code? Or have you got those figures handy?

Mr Sims : We certainly compiled them at some stage.

Senator XENOPHON: If you could take that on notice, it would be very useful.

Mr Sims : There was a number of representative groups as well; people representing a number of suppliers, and that was included.

Senator XENOPHON: But the enforcement powers of the voluntary code are fairly limited, aren't they?

Mr Sims : No, the enforcement powers are exactly the same as if the code were mandatory. The code provisions are there.

Mr Ridgway : It is a prescribed voluntary code. Being under that regime enables all of the remedies available under the CCA to be applied to those who subject themselves to the code.

Senator XENOPHON: Sure, but if there is a complaint pending and the grocery chain opts out of the code at that point, is that it? Is that the end of it?

Mr Sims : They could still get caught for the time. If the offending conduct occurred when they were under the code, they would still get caught, even if they had opted out.

Mr Ridgway : That is right.

Senator CANAVAN: Can I clarify that, in terms of penalties under the CCA, my understanding was that the grocery code did not avail itself of the pecuniary penalties that are now available for codes of conduct in good faith. I believe these amendments were made to the Competition and Consumer Act while the grocery code was being developed, but my understanding is that there are no actual pecuniary penalties available—

Mr Sims : That is right. There are no penalties for—

Senator CANAVAN: just breach-type penalties. Is that is what is there?

Mr Sims : That is right. There are no penalties for a breach of the code. If we find a breach of the consumer law while we are looking at that, then there would be penalties.

Senator XENOPHON: Going to the issue of the Infinity cable recall. My understanding is that there are 40,000 homes with this very defective cable and that, given the degradation of the cable, by about 2016 we are looking at 40,000 homes and many—

Mr Sims : Some have had the cable taken out.

Senator XENOPHON: In very brief figures, how is the Infinity cable recall going? I know we will be traversing these issues with the particular inquiry in terms of defective building products but, given the community concern about what is happening, I thought it was important to get this out.

Mr Sims : Absolutely. And we are very concerned. Certainly a distinct minority.

Mr Ridgway : The latest records we have from the recalling suppliers is that approximately 40 per cent of the cable is now either identified and scheduled for remediation or has been remediated, which leaves a substantial 60 per cent still outstanding. That is a great concern for us. We have seen—

Senator XENOPHON: So 24,000 homes still have this defective cable?

Mr Sims : Probably more, but there are at least that many planned to be remediated. But yes, that is right.

Senator XENOPHON: There has been a risk assessment done, and there is a high risk of electrocution and fire with these cables.

Mr Sims : Yes.

Senator XENOPHON: That is quite frightening, really.

Mr Sims : Absolutely.

Senator XENOPHON: These are issues that Travis Wacey from the CFMEU has raised with me—and good on him for raising that. I want to know what resources you have in terms of people on the ground to be dealing with this, because it is a huge task. Are there sufficient resources? Do you need to get states involved? I am really worried that we could be seeing deaths in relation to this.

Mr Sims : So are we.

Mr Ridgway : The state electrical safety regulators were onto this issue some 10 months before the ACCC was invited to assist. We are now coordinating a task force of electrical safety, building safety and consumer law regulators across the country—not just the ACCC. There are a number. We have all agreed what the problem is and what we think the solutions are. We are also engaged with the industry suppliers concerned and they are to various degrees assisting us, and that conversation is a live one.

Senator XENOPHON: That is perhaps not good terminology to use—'a live one'.

Mr Ridgway : Sorry.

Senator XENOPHON: Would you mind terribly giving us a further update on notice? I am very worried about this.

Mr Sims : Yes, we will—absolutely.

Senator XENOPHON: I think it needs urgent action amongst state governments and the Commonwealth minister to take that up. I understand that 47 per cent of the 40,000 homes affected are in the good state of New South Wales, your home state.

Mr Sims : It is a terrible thing. The problem in all of these recalls is, once they are out there, it is hard to get them back again. It just takes time.

Senator XENOPHON: One of the issues we will cover in the inquiry is, to channel Senator Heffernan, how the hell we got this crap in the country in the first place.

Mr Sims : A very good question.

Senator McKIM: Can you confirm that you are in receipt of a letter from the leader of the Tasmanian Greens, Cassy O'Connor, relating to the Tasmanian government's monopoly deed with Federal hotels, dated 18 September this year?

Mr Sims : Yes.

Senator McKIM: Are you looking into that matter?

Mr Sims : I think our initial reaction was that that is something not necessarily done in trade or commerce, but I am not sure.

Mr Fleming : The threshold for application of the act to the activities of states and territories is whether they are carrying on a business. One of the specific exemptions under the act is licensing. So that would be our initial response, although we are happy to consider any material that would suggest otherwise.

Mr Sims : We will look into it. That is the problem. We find this quite a lot with these sorts of matters.

Senator McKIM: All right, but wouldn't Federal hotels be caught by the act, or does that exemption apply not only to governments but to corporations?

Mr Fleming : My understanding is that the act applies to the conduct of the states and it is the activity of licensing. If that is exempted from the act, then the act would not apply to the hotels unless they were doing something else that would raise concerns under the act.

Mr Sims : But it is a very high profile request, so we will have a look at it to confirm what was being said, because we take these things seriously.

Senator McKIM: I appreciate that. Allan Fels has been quoted by the ABC as saying this about the existing deed:

This tender has been for something like 18 years I believe, and that is ridiculously long for someone to be granted a monopoly.

Would you agree with that statement?

Mr Sims : I do not know a lot about it, but at a high level it sounds a reasonable statement.

Senator McKIM: He says: 'It certainly looks uncompetitive.' Would you agree with that statement?

Mr Sims : I would also agree with that at a high level, but again with the qualification that I do not know the facts. Just because something is high level in that way does not necessarily mean it breaches our act.

Senator McKIM: Is that a flaw in the act, in your opinion, Mr Sims? What you have here in Tasmania is not a lessening of competition but an abolition of competition right across all of gambling in the state. David Walsh from MONA has indicated he wants to start a very small boutique casino down there, but he cannot do it without a variance to the deed. It has eliminated competition in gambling in Tasmania, but what you are saying to me is that on first glance it does not appear that the act is written in such a way that would allow you to take action.

Mr Sims : We believe it is a deficiency. The Harper review—

Senator McKIM: It is?

Mr Sims : There is a deficiency. The Harper review has recommended that that particular provision, rather than relating to 'carrying on a business', should turn more on whether it is in trade or commerce. Whether that deals with the licensing exemption is another matter, but we would prefer that those issues could be looked at under the act. Of course, state governments might have a different view.

Senator McKIM: I am sure the Tasmanian state government would, but that is not a matter that I will put to you. Are you also aware that Federal hotels have in effect said that they would like to invest about $100 million in the Tasmanian tourism sector but that they will not be going ahead with that investment unless they have some certainty over their gaming arrangement with the Tasmanian government?

Is there any part of the act that inciting uncompetitive behaviour or encouraging uncompetitive behaviour might fall foul of?

Mr Sims : I think that sort of statement, Senator, would capture quite a number of firms, and so unfortunately not, but it is often said that 'If you give us some exclusivity we will invest in return.' It is not unfortunately an unusual statement to make.

Senator McKIM: Do you have an indicative time line of when you might be hoping to get back to Ms O'Connor with response to her letter?

Mr Sims : I think we will try and get back in a few weeks. We should be able to do that.

Senator McKIM: Within a few weeks?

Mr Sims : Within a few weeks, absolutely.

Senator McKIM: Thank you. I want to move on to an effects test as recommended by the Harper review that you just mentioned. Could you please share with the committee how important the ACCC thinks an effects test would be as a tool in your armoury?

Mr Sims : I have to make one minor point, which I keep making to the journalists, and this is one that they never actually report. The concern the ACCC has with the current section 46 are the words 'take advantage'. Once you move to get rid of those words, as Professor Harper is doing, you end up with purpose or effect of substantially lessening competition almost as a logical consequence. But the flaw in the act at the moment is that for us to be able to use section 46—let me put it this way—the problem is if a firm has substantial market power and they seek to exclude their competitors, provided the steps they took to do so were ones that affirm without substantial market power could take, they can do it.

Senator McKIM: Because they are not taking advantage?

Mr Sims : That is right. That is in our view a gaping hole in the law, and we believe that can prevent a lot of innovation occurring, because it can stop small firms challenging incumbent big firms; those big firms can seek to exclude them and the law is not there to do the job that we think it should be doing.

Senator McKIM: Is there any way that you could estimate how many investigations or potential prosecutions were abandoned or not proceeded with, because of the difficulty in the way the act is currently drafted?

Mr Sims : The best way to answer to that, to give you the best big picture, is we would at best think that if the law changed, as Professor Harper recommends, there might be only one or two extra investigations a year, if that. But the key point is: when you change the law, that does affect companies' behaviour, and taking one or two cases then would send a signal to large, powerful firms that they could not seek to exclude their competitors in ways that substantially lessen competition and that would have a big effect on behaviour. We think it would be an important change to make to improve innovation and growth of small business in Australia.

Senator McKIM: Thank you, I appreciate that. I have got some questions on the grocery code of conduct, but I will put them on notice.

Senator CANAVAN: I have some to follow-up from Senator Xenophon on the grocery code of conduct, as well. You mentioned that you are disappointed that the supply agreements currently under the negotiation continue to provide retailers with scope to demand extra payments, and I am probably using the wrong terms there. Can you flesh out for us what those additional payments could look like? Are you still concerned that the kind of behaviour that was exposed in the Federal Court with Coles and those perfect profit days and extra contractual payments that they could still be allowed or permitted under these supply agreements? Are those the things that you are referring to?

Mr Sims : That is the broad sort of thing, particularly for wastage or profit gaps. The way the agreements are written looks to us as if that could happen. The supermarkets perhaps have a different view about that, and so we are discussing that issue with them. I should also say the Australian Food and Grocery Council is right in the middle of this as well, so there is a lot of work going on to try and make it work. We are not pessimistic about the code, we are just trying to make it work and so we are working particularly closely with Woolworths and ALDI.

Senator CANAVAN: From my recollection of that federal court case, some of the payments demanded by Coles are the kinds of things that would be difficult to outlaw in an agreement. They just seem to straight-out demands for cash; they are fairly bald claims and demands for cash.

Mr Sims : Yes.

Senator CANAVAN: Are you envisaging that these supply agreements could make those somehow not allowed under the contracts themselves? Would there be a specific revision?

Mr Sims : I think there are two reasons. Firstly, that that would not be held to be good faith dealings, particularly the way—

Senator CANAVAN: That would be captured onto the generic good faith provisions of the supply agreement.

Mr Sims : That is right. Secondly, the code says that the circumstances under which you make claims for payments must be clearly spelt out up-front in the agreement. We are working with them to make sure that that is done. Once that is done, if other claims are made, then we would very much look into it.

Senator CANAVAN: That helps and assists. Moving on to the effects test quickly too, I do not want you to necessarily comment much on the proposals from Harper. I am more interested in part 11B of the Competition and Consumer Act, which specifically deals with telecommunication service providers. The anticompetitive conduct provisions under that part actually define anticompetitive conduct to be conduct engaged in by a service provider with a substantial degree of power in a telecommunications market and that they take advantage of that power in that market or any other market with the effect or likely effect of substantially lessening competition.

Mr Sims : Correct.

Senator CANAVAN: Putting aside the taking advantage test, which you have commented on, others in this debate have said that somehow the insertion of an effects test itself will create uncertainty and, indeed, the insertion of a substantial lessening of competition test would create uncertainty. Have you seen any deleterious impacts in the telecommunications market on the implementation and enforcement of this particular provision?

Mr Sims : I would say absolutely not.

Mr Cosgrave : I have very much the same response. That provision has been in place since 1997 and has been used on a number of occasions. No, there is no particular suggestion—

Senator CANAVAN: You do not get complaints from Telstra, in particular? Telstra is a particular one that is targeted here, I presume, but it does apply to other service providers.

Mr Cosgrave : We do not get complaints under—

Senator CANAVAN: You do not get complaints from the telecommunication companies that they cannot understand these provisions or that they do not quite know how to comply with them?

Mr Cosgrave : No. Nor do we get them under section 45 or 47, which also deal have the purpose or effect of substantially lessening competition.

Senator CANAVAN: But this particular one has both the effects test and the SLC test and is not a major issue in your regard—

Mr Cosgrave : Again, there are guidelines in place there. They have been recently updated and there were very few submissions in response to a routine update of those guidelines.

Senator CANAVAN: It might be helpful for me in particular, and this could be taken on notice, if you could provide a list of those. You mentioned there were a number of actions or cases?

Mr Cosgrave : They go back some time, but we are certainly happy to do that.

Senator CANAVAN: Is there case law on this provision?

Mr Cosgrave : No, because there is a different enforcement regime that allows for the issue of a notice and then for somebody who is the subject of the notice either to alter its conduct or are essentially challenge it in court. In every case in which we have issued a notice, the recipient has either altered its conduct or come to some agreement with the commission pursuant to an undertaking. We are happy to give you a full list of actions taken under that—

Senator CANAVAN: Maybe just the number of them and the details themselves. Perhaps if you could provide the actual actions—in the last, say, five years—that have taken. The number since 1997 would be useful as well.

Mr Sims : We are happy to do that.

Senator CANAVAN: Just turning to another topic. I have written to you recently, Mr Sims—and I appreciate your very prompt responses; as always, they are much appreciated—about some practices of banks in providing services to digital currency companies. You would probably be aware that this committee had a Senate inquiry into this matter. Concerns about this kind of behaviour were raised in our inquiry, but it was not, I suppose, widely evident. It would appear now that a number of financial institutions have denied services to digital currency operators. I know that you cannot speak about particular cases, but what stage are you at currently with these investigations that have been raised in the last month?

Mr Sims : At a fairly early stage. We have certainly met with the Bankers' Association, and we have written out. Obviously, the issue is going to be establishing the behaviour. But there are also explanations there which are quite complex, and that we are going to have to get to the bottom of.

Senator CANAVAN: This is not going to the specific facts of this case but, potentially, a defence against an accusation of this kind of conduct would be a legitimate reason, or business and commercial reason, to deny services. Is that—

Mr Sims : Yes, that is right. There would still be potential questions of collusion, if they got together. But, yes, if there looked to be a common driver that caused that to happen, that would be an explanation that would be sensible.

Senator CANAVAN: At this early stage, what particular provisions are you looking at in this investigation, or have you not got to that level of detail?

Mr Sims : We have a fairly open mind at this stage. We are trying to get to the bottom of it, but we are looking at, potentially, forms of collusion that could amount either to some form of cartel conduct or, much more likely, a substantial lessening of competition.

Senator CANAVAN: A substantial lessening of competition because of collusive conduct or—

Mr Sims : If they reach some form of agreement—whether it amounts to a substantial lessening of competition or whether it amounts to a per se action—I am not exactly sure which provision will work. So we have an open mind and are looking at both. In some cases, we have to prove that there is anticompetitive purpose or effect. In some cases, if they take certain actions, then it—

Senator CANAVAN: It is just simply per se.

Mr Sims : It is per se, that is right. So we have an open mind at this stage.

Senator CANAVAN: In the case of just simply denying someone a service, would that come under the generic section 46 misuse—

Mr Sims : No, it would not, because they are likely not a competitor with that—well, I guess your letter would indicate that they probably could be potential competitors.

Senator CANAVAN: Yes.

Mr Sims : Sure. So, look, we have an open mind. But if they have a legitimate reason, such as legislative requirements to be able to track the money, that is something we will have to get to the bottom of.

Senator DASTYARI: I guess that there may be other industries where there is a similar comparison. For me, the thing that seems interesting about this is that it would appear—again, I say it as an outsider—in the financial services space that having access to banking is a fundamental requirement to being able to run a business.

Mr Sims : Correct.

Senator DASTYARI: I suppose from a policy perspective that this may be something for us is—and I do not know if it is something we should be looking at—but are there provisions, or do I have anything unique about having a right to banking services?

Mr Sims : A fair bit of banking overlaps with so many other regulators.

Senator DASTYARI: Of course.

Mr Sims : We are really the bit player in the banking sector.

Senator DASTYARI: Mr Sims, no-one has ever called you a bit player.

Mr Sims : Well, you have called us a range of things!

Senator DASTYARI: They have called you lots of things, that is right!

Mr Sims : But probably not that—you are right. Again, I think it gets back to there being particular provisions which the banks are responsible for, to do with the ability to trace money. How they react to those responsibilities could actually have some effect in this particular matter, and that is what we have to try to understand.

Senator DASTYARI: Mr Sims, if you conduct an investigation or inquiry and you turn around and say at the end of this process, 'Well, this is the bank's decision on how to interpret money laundering,' or whatever reasonable reason they have chosen to give as part of your investigation, do you then come out with that publicly? That would be signalling to us, 'Hang on, if this is what they are doing in response to public policy, perhaps there is a public policy failure that needs to be looked at and changed?'

When you decide 'no', does all that stay private? How does it—

Mr Sims : No. When there has been public focus on the inquiry—which there has been, because Senator Canavan and has written to us and the press have picked that up—

Senator DASTYARI: How did they pick all that up?

Mr Sims : we generally then make public where we got to, because we judge that there is a public interest in knowing that outcome. There are no hard-and-fast rules, but whereas the confidential investigations we do stay confidential, when something has been brought to public notice otherwise we will often—not always, but often—make a public statement about where it ended up, just so the public have confidence that these things come to a proper end.

Senator DASTYARI: Is this unique or not? If I were looking at telecommunications and needed to use someone else's network to be able to compete with them—would that be a like comparison or not? The financial services industry is so unique in that space. I will give you the example of a telco competitor—

Mr Sims : No, I think it is the same sort of issue. It does come down to whether there is a legitimate business reason for what they are doing. That is quite a common framework that we would use. We are fairly sceptical people, but that same—

Senator DASTYARI: You don't want egg on your face!

Senator CANAVAN: Presumably, the difference is that the services offered by the banks do not appear, on the face of it, to share natural monopoly characteristics—

Mr Sims : No, it is more like—

Senator CANAVAN: There might only be legitimately one—

Senator DASTYARI: But Mr Sims—

Mr Sims : But in the case of Telstra, for example, I thought the parallel with what Senator Dastyari was talking about was where you have telecommunications and Telstra refuses to supply services to somebody. That could be caught under a range of provisions. But if they had a legitimate reason for doing it that we thought passed muster then that would be very relevant.

Senator CANAVAN: Could you declare banking services under part 3A, or is that outside your remit?

Mr Sims : I do not think we could—no.

Senator CANAVAN: That would be—

Mr Cosgrave : Firstly, I do not think it is our decision. It is the decision of a national competition—

Senator CANAVAN: They are still around? Right.

Mr Sims : But it would not count as a monopoly, I would think.

Senator CANAVAN: Are they still around? The National Competition Council is still there?

Mr Sims : Yes, but they are really dealing with—

Senator DASTYARI: Why do we have them?

Senator CANAVAN: They do part 3A—that is pretty much it, isn't it?

Mr Sims : Their essential job is to assess applications under part 3A.

Senator CANAVAN: Okay.

Mr Sims : But the banks do not—

Senator KETTER: I just have a quick follow-up question on the closure of the bank accounts. This might be a difficult question for you to answer, Mr Sims, but do you consider at this stage that Bitcoin is a significant competitor to the traditional banks?

Mr Sims : I am not really sure I have a view on that. It is a pretty small part of the market. I do not really know much about it is the honest answer, but I would struggle to think that it would be up to one per cent of the market. That is the way that it would be defined traditionally. So it is a very small player.

Senator KETTER: They reckon it is about $6 billion worldwide—

Mr Sims : Worldwide, I understand, yes.

CHAIR: But—

Mr Sims : Well, that is not much.

Senator DASTYARI: As part of the investigation detail, the information that was provided to us was the letters from the different banks which, on face value, looked very similar and pro-forma.

Mr Sims : Yes.

Senator DASTYARI: Were they provided to you as well? Is that the evidence that you have?

Mr Sims : I am honestly not sure what evidence we have, but we are very interested in appearances of action taken in a coordinated fashion. That is very much at the centre of what—

Senator DASTYARI: It is kind of—

Senator CANAVAN: If people out there in the digital currency space are listening to this, how would they provide that information to you?

Mr Sims : We have a website where people can provide information to us. They can ring us up on this number that I keep—

Senator DASTYARI: Will you put out your mobile phone number right now, Mr Sims?

Senator CANAVAN: Go on now—they will just ring you up and say—

Mr Sims : If people go to our website they can easily find how to get in touch with us, and we would welcome anything they had to say.

Senator DASTYARI: You cannot afford to mess up!

CHAIR: We need to wrap this up, guys.

Senator CANAVAN: The only other thing I would like to add is one last comment—it is not really a question. You may not be aware that a number of banks have made investments and/or long-term contractual arrangements with digital currency companies in recent times. I think that would be of relevance to your inquiry—whether some digital currency companies have been denied services but others are allowed, through these specific dealings they have with certain financial institutions.

Mr Sims : Okay, Senator—thank you for that information.

CHAIR: You are on 10 minutes overtime so far.

Senator KETTER: I am going to try to keep my questions brief, and perhaps we will try to get through this quickly. I think you were in the room when I was asking Markets Group questions relating to the credit card surcharge issue and the government's recent announcement. I am just going to hit you with some of those. Have you formulated how you are going to undertake the task that has been allocated to you in this area?

Mr Sims : Not at this stage. We will now, with the announcement, work with Treasury and the Reserve Bank to find out exactly what they want to put in place. As I understand it, it is now the Reserve Bank's job to work out exactly how they are going to do this, and I am sure Treasury will be involved. We will get involved because ultimately we are the ones who have to enforce it.

Senator KETTER: We heard that the RBA will be involved in determining what is a reasonable cost in terms of excessive surcharges. In terms of whether you are proactively approaching businesses or just being responsive to complaints, is that something you—

Mr Sims : I will answer your question very directly: we do not know exactly how the regime is going to work yet—that is up to them—but, once the regime is in place, our standard approach is to do compliance and education work for possibly a year and give everybody a chance to understand what the regime is. It will depend on what the regime is and how big a change it is from what was there before, but—and we will publicly announce this—there will come a time when the education in compliance is over and we will be taking an enforcement stance, and that would be proactive.

Senator KETTER: We have already heard tonight that there is consideration of extra funding for you in this area. Have you thought about what level of funding you might require?

Mr Sims : Our current understanding is there will not be extra funding. That is our understanding. If you can get us some funding, that would be great, thank you.

Senator KETTER: I will see what I can do, but I thought there might have been a suggestion about that.

Mr Sims : The suggestion we have had so far is that there is not any.

Senator KETTER: Okay. Do you consider that this policy announcement addresses the key competition and consumer issues related to the credit card surcharging? Is it the whole answer to the problem?

Mr Sims : The honest answer is that I do not think we yet know enough about what it is going to cover, but we certainly think it is a significant step in the right direction, because this is an issue that gets an enormous number of consumer complaints. The precise form it will take we do not know, so we do not know how much it will completely address the problem, but it is certainly addressing an issue of grave concern to a lot of consumers, so we are very keen to embrace it.

Senator KETTER: I am going to quickly switch to Harper recommendation No. 40, which deals with section 155 notices. It is recommending that those powers be watered down in terms of your ability to compel documents, information and verbal testimony. You have expressed concerns about that. Could you just expand on the importance of section 155 notices.

Mr Sims : Basically, we cannot do our job if we do not have them. We have to get reasonable grounds advice before we institute court proceedings. The only way we can get that information is from 155 notices. Of course, companies will say that they will provide us information voluntarily, but, frankly, why would they when it is potentially going to put them in court? So those 155 notices are essential for us.

Senator KETTER: The recommendation talks about the increased burden of document requests in the digital age, which seems counterintuitive, in that one would have thought it would have been easier to search for relevant correspondence.

Mr Sims : Easier to access, but we do accept that there are many more documents. There is a part of the Harper statements here which we are quite happy with, which is that we get with the business community and try to work out how best we can narrow those requests. But we spend a lot of time now narrowing those requests, and when the requests come in, if companies say, 'The way you phrase that brings in many more documents than are needed,' we often sit down with the companies and very often vary the notices. So it is a big issue. We understand it. They are essential for us, but we understand it is a burden on business.

Senator KETTER: I am going to switch very quickly to vocational training providers and the fact that you are investigating 10 registered training organisations currently. I know there may be some sensitivities about that, but are you able to provide the names of the RTOs under investigation?

Mr Sims : I cannot, because that is confidential as I understand it—unless I am wrong and there is something in the public record. No, it is all confidential. But we are at a very advanced stage. There is every chance we will have a couple of those matters in court before Christmas.

Senator KETTER: Are you able to tell us what sort of allegations are being investigated?

Mr Sims : In broad terms it is essentially misleading and deceptive conduct and unconscionable conduct in terms of the way this product has been sold and the type of person that has been targeted. They have made misleading statements to those people but we believe that the systemic way in which they have gone about targeting particular individuals in society has a reasonable chance of amounting to unconscionable conduct.

Senator KETTER: You might have to take this on notice. Are you able to provide the dates when the first complaints were made about each of the 10 organisations?

Mr Sims : We can certainly get you some complaints data.

Senator KETTER: How many prosecution cases have been launched?

Mr Sims : None, as yet. This issue has been running for only five or six months, I think. We will have at least a couple in court by Christmas.

Senator CANAVAN: I would not mind getting an update on your investigations into Volkswagen and the issues around the devices to defeat regulatory standards.

Mr Sims : I will make a quick statement and then pass to Richard Fleming, who is the expert here. We are looking at, firstly, misleading and deceptive conduct in terms of the cars being advertised falsely and, secondly, whether they meet the mandatory standards. So there are two issues. We have been meeting quite regularly with Volkswagen and we have a full-blown investigation underway. Richard, do you want to add much to that?

Mr Fleming : Yes. We have also been working closely with the Department of Transport, who obviously also administer the Australian design rules. We are in quite an early stage of the investigation but, as the chairman mentioned, we are focusing on some of the misrepresentations which are made publicly on websites and so forth. We expect the investigation to move along quite quickly. That is the status of the investigation.

Senator CANAVAN: Are you working with overseas authorities as well?

Mr Fleming : We have been in touch with some overseas regulators, yes.

Senator CANAVAN: Okay. That will do me.

CHAIR: Just the usual one from me: pharmacy advertising, double pricing. There was some action going on where it was all secret squirrels last time. Has there been any movement that you can talk about?

Mr Sims : We will certainly have some enforcement action very soon on that one. That one is quite close. We have done a lot of work on that, and we cannot say much now but—

CHAIR: Should I write to you and look for an outcome when you get it? Will that trigger you to respond to me when you actually have an outcome?

Mr Sims : If you want to write to us, by all means, but we will take it on notice now. We will let you know—

CHAIR: When you have got an outcome if you could let me know, that would be terrific.

Mr Sims : We will most certainly do that.

CHAIR: Thank you very much. See you in February.