The ACCC has granted new interim authorisation for an expanded range of measures allowing participants in the gas and electricity markets to work together to help safeguard Australia’s energy supply during the COVID-19 pandemic.

On April 3, the ACCC granted interim authorisation to the Australian Energy Market Operator (AEMO), allowing energy market participants to co-operate on certain measures intended to maintain secure and reliable energy supplies while the pandemic continues.

AEMO had applied for approval for a broader range of conduct, which the ACCC required more time to consider.

The ACCC has now granted interim authorisation for an expanded set of measures, including allowing market participants to share information about the operation of critical facilities and any risks to their continued operation. AEMO is also able to notify the ACCC of further types of conduct it needs to undertake in order to respond to the COVID-19 pandemic.

The ACCC has expressly excluded any conduct relating to gas availability from this new interim authorisation because at this stage it is not persuaded about the need for coordinated conduct regarding gas.

Importantly, the new interim authorisation imposes the same strict conditions as the original interim authorisation, including that AEMO report regularly on any measures taken, a ban on any contracts that would outlast the ACCC’s authorisation period, and a requirement that parties to the authorisation continue to comply with other conditions of authorisation that apply to conduct occurring under this authorisation.

“It is essential that Australian businesses and households have access to reliable and efficient energy supplies during this difficult time. There is a clear need for co-operation between industry participants to prevent any disruption to these supplies,” ACCC Chair Rod Sims said.

“However, it is important to note that this co-operation cannot extend to making agreements about energy prices or to sharing confidential information about pricing or profits. It will also only take place during the COVID-19 pandemic.”

“We are going to closely monitor the effect of these arrangements and assess when it is appropriate for this authorisation to be revoked,” Mr Sims said.

The need for co-operation in the energy sector during the pandemic was raised at last month’s COAG Energy Council. COAG’s newly formed Energy Coordination Mechanism, made up of government and industry leaders, will be kept informed about measures taken to secure energy supplies. The ACCC will also be informed of such measures through this authorisation.

More information is available on the ACCC public register at Australian Energy Market Operator.

Background

AEMO manages electricity and gas markets and systems across Australia to ensure a reliable, secure, affordable and sustainable energy system. Its members include government and industry participants.

Electricity industry participants that might qualify for the interim authorisation include electricity generators, retailers, network service providers, metering service providers, and many other industry specific service providers. Gas industry participants that might qualify include producers, traders, retailers, storage providers and many other industry specific service providers.

Notes to editors

ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.

Section 91 of the Act allows the ACCC to grant interim authorisation when it considers it is appropriate. This allows the parties to engage in the proposed conduct while the ACCC is considering the merits of the substantive application.

The ACCC may review a decision on interim authorisation at any time, including in response to feedback raised following interim authorisation.

Broadly, the ACCC may grant an authorisation when it is satisfied that the likely public benefit from the conduct outweighs any likely public detriment.

The ACCC today announced that Scott Gregson would assume the role of acting Chief Operating Officer effective from Monday 27 April 2020 following the retirement of Chief Operating Officer Rayne de Gruchy.

Ms de Gruchy joined the ACCC in 2010 and commenced in her current role in 2014, driving and shaping the ACCC’s culture to enhance its capabilities, performance and impact. She had announced her departure earlier this year and assisted Mr Gregson in the transition.

Ms de Gruchy was awarded the Public Service Medal in 2003 and was appointed a Member of the Order of Australia in 2008 for her contribution to public administration.

Before joining the ACCC, she led the Australian Government Solicitor as its inaugural Chief Executive Officer from 1999 to 2010, creating a successful government business enterprise in Australian Government ownership.

A lawyer by profession, Ms de Gruchy also held other senior executive positions in the public sector, been a non-executive director of a public company and practised law as a banking and finance partner of the law firm now known as Herbert Smith Freehills.

“We will miss Rayne’s calm and measured guidance and advice, and wish her and her family well in her much deserved retirement,” Mr Sims said.

“We thank Rayne for her outstanding career of public service and the pivotal role she has played in her time at the ACCC. Indeed, the ACCC owes much of its governance, culture, flexible working practices and success to her,” ACCC Chair Rod Sims said.

Mr Gregson spent most of his career in enforcement roles at the ACCC. His most recent role was as executive general manager of its Merger and Authorisation Review Division.

Recruitment for the permanent appointment for the COO position is expected to go ahead later in the year.

7-Eleven and its franchisees have been granted conditional interim authorisation to discuss potential temporary store closures or reduced trading hours in light of reduced customer demand because of COVID-19 restrictions.

7-Eleven owns and operates stores in competition with its franchisees in some areas and therefore discussions and agreements between them risk breaching the competition laws.

“We recognise that 7-Eleven and its franchisees are facing difficult trading conditions due to the COVID-19 pandemic, and believe this co-operation could help the network and individual stores to remain viable,” ACCC Chair Rod Sims said.

“Importantly, franchisees are not required to temporarily close or reduce their store hours if they do not wish to. Our decision to grant interim authorisation does not force franchisees to agree to the terms offered by 7-Eleven.”

Franchisees that agree to close temporarily will receive an ex-gratia payment from 7-Eleven to cover certain unavoidable operational costs. For franchisees that agree to reduce their hours, the minimum guaranteed income that the franchisee receives from 7-Eleven would be pro-rata adjusted to reflect the temporary reduction in trading hours.

“Franchisees are strongly encouraged to seek independent legal and financial advice when considering whether to adopt these temporary measures,” Mr Sims said.

Interim authorisation is subject to a condition that requires 7-Eleven to notify the ACCC of arrangements reached with franchisees to provide some ACCC oversight.

“We are going to closely monitor the effect of these arrangements and when it is appropriate for this authorisation to be revoked,” Mr Sims said.

Having granted interim authorisation for the arrangements, the ACCC will seek feedback on 7-Eleven’s application for authorisation. 

Details on how to make a submission and more information, including the ACCC’s interim authorisation decision, is available at 7-Eleven Stores Pty Limited.

Background

Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.

The Franchising Code of Conduct will continue to apply to franchisees that operate non-fuel stores and the Oil Code will continue to apply to franchisees that operate fuel stores. Both codes contain a dispute resolution process.

Dispute resolution services are provided by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO). More about resolving franchising disputes and oil code dispute resolution is available on the ACCC website.

Section 91 of the Act allows the ACCC to grant interim authorisation when it considers it is appropriate. This allows the parties to engage in the proposed conduct while the ACCC is considering the merits of the substantive application.

Members of the Minerals Council of Australia (MCA) and other mining associations will be able to work together to manage critical services and supplies during the COVID 19 pandemic, after the ACCC granted interim authorisation for the arrangements today.

The COVID-19 pandemic has led to shortages and supply chain disruptions for some critical services and supplies used by the mining sector.

The interim authorisation will help ensure Australia’s mining industry continues to operate safely and efficiently, by allowing members that have been notified to the ACCC to co-ordinate on the sourcing, purchase and distribution of crucial supplies and services such as health and safety equipment, logistics, equipment maintenance and consumables like fuel and explosives.

“The COVID-19 pandemic has had a dramatic impact on global manufacturing and supply chains, which has created challenges for those sectors, such as mining, that are still operating and still in need of crucial equipment and services,” ACCC Chair Rod Sims said.

“To help address these challenges, we have authorised mining companies to co-ordinate on a limited range of activities to help ensure they can continue to operate safely and efficiently.”

The authorisation only applies to activities relating to these critical services and supplies. It will, for example, allow companies to share inventories and manage demand for these critical services and supplies, coordinate deliveries, and share details of potential suppliers of personal protective equipment (PPE), such as N95 masks needed to work in underground mines.

“Importantly, the approval does not allow mining companies to coordinate on the terms, conditions or prices in supply contracts,” Mr Sims said.

“We are going to closely monitor the effect of these arrangements and when it is appropriate for this authorisation to be revoked.”

The authorisation applies to members of the MCA and seven other mining associations. The ACCC must be notified in advance of any arrangements made under the authorisation.

The ACCC will now seek feedback on interim authorisation, as well as the application for final authorisation, which is sought for a period of 12 months from the date of authorisation. More information, including the ACCC’s statement of reasons, a list of associations included, and the supplies and services covered by the authorisation, is available at Minerals Council of Australia.

Background

The Minerals Council of Australia’s membership includes many of Australia’s biggest mining companies. It has 51 full member companies and 29 associate member companies including mining service providers, state chambers, energy and transport companies and consultancy firms.

Notes to editors

ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.

Section 91 of the Act allows the ACCC to grant interim authorisation when it considers it is appropriate. This allows the parties to engage in the proposed conduct while the ACCC is considering the merits of the substantive application.

The ACCC may review a decision on interim authorisation at any time, including in response to feedback raised following interim authorisation.

Broadly, the ACCC may grant a final authorisation when it is satisfied that the likely public benefit from the conduct outweighs any likely public detriment.

The ACCC has granted conditional interim authorisation to allow the Australian Energy Council and wholesale and retail energy businesses to co-operate to provide financial relief to residential and business customers who may be financially impacted by the COVID-19 pandemic.

This interim authorisation allows business in the electricity and gas markets to hold discussions, share information, and enter into arrangements for the purpose of providing financial relief and other measures to small, medium and large businesses, and to expand support under existing hardship programs for residential customers.

“We know the COVID-19 pandemic is having a significant economic impact on consumers and businesses in Australia, which is why we have granted this interim authorisation,” ACCC Chair Rod Sims said.  

“Energy is an essential service and this is an important opportunity to allow energy market participants to support consumers and businesses through the pandemic.”

Importantly, authorisation is only granted on the condition that any agreements between energy retailers are not materially inconsistent with the relevant applicable principles in the Australian Energy Regulator (AER) Statement of Expectations of energy businesses: Protecting consumers and the market during COVID-19.

The Statement of Expectations sets out ten principles the AER expects businesses to adhere to during the COVID-19 pandemic to ensure the continued safe and reliable supply of energy to homes and businesses. This includes expectations about payment plans and hardship arrangements, no disconnections and deferring referrals to debt collection agencies for recovery actions.

“The AER’s Statement of Expectations provides important principles that should be adopted by energy retailers in their dealings with customers during the COVID19 pandemic, and we expect  any conduct under this authorisation to meet or exceed the expectations set out in these principles” Mr Sims said.

The AEC must also regularly update the ACCC and the AER about the information shared and the decisions made by retailers as part of the authorisation.

The ACCC and AER will also be invited to attend any meeting where the energy retailers discuss or agree on financial relief arrangements. This will provide important transparency and oversight of these discussions.

“We believe that allowing the AEC and energy businesses to work together will enable customer relief to be provided more quickly and efficiently than it would if the parties were to work on these measures independently,” Mr Sims said. 

“We will closely monitor the effect of these arrangements and when it is appropriate for this authorisation to be revoked.”

Having granted interim authorisation for the arrangements, the ACCC will now seek feedback on the application for final authorisation which is sought for a period of 12 months from the date of authorisation.

More information, including the ACCC’s interim authorisation decision, is available on the ACCC public register.

Background

The Australian Energy Council is an industry organisation representing 23 major electricity and downstream natural gas businesses operating in the wholesale and retail energy markets.

Notes to editors

ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.

Section 91 of the Act allows the ACCC to grant interim authorisation when it considers it is appropriate. This allows the parties to engage in the proposed conduct while the ACCC is considering the merits of the substantive application.

The ACCC may review a decision on interim authorisation at any time, including in response to feedback following interim authorisation.

Broadly, the ACCC may grant a final authorisation when it is satisfied that the likely public benefit from the conduct outweighs any likely public detriment.

The Full Court of the Federal Court has today delivered its judgment on the ACCC’s appeal in relation to proceedings brought to stop Pacific National’s acquisition of the Acacia Ridge Terminal in Brisbane by Aurizon (ASX: AZJ).

The ACCC had appealed the 2019 judgment of the Federal Court which held that the acquisition would not be likely to substantially lessen competition due to an undertaking that Pacific National had offered the Court.

While the ACCC was successful in relation to a number of legal issues, the Full Court found there was insufficient evidence to establish that the acquisition was likely to result in a substantial lessening of competition, and dismissed the ACCC’s appeal.

Although the majority of the Full Court agreed with the ACCC’s position on the meaning of ‘likely’, the case hinged on the ACCC establishing the likelihood of another player seeking to enter the market in the next five to ten years. The Full Court considered that the prospect of new entry was no more than speculative.

“This was a particularly important case for Australia’s merger laws, and the outcome demonstrates the real difficulty of applying the substantial lessening of competition provisions in the legislation,” ACCC Chair Rod Sims said.

The result of the Full Court’s decision is that Pacific National’s acquisition of the Acacia Ridge Terminal may proceed, without the access undertaking accepted by the trial judge.

“This is also a sad day for the economy, because the ACCC’s view is that the prospects of competition in rail freight have been significantly diminished and the impacts of this will be with us for more than a decade,” Mr Sims said.

The ACCC’s case was that Pacific National’s ownership of the Acacia Ridge Terminal would allow it to effectively prevent access to new entrants, entrenching Pacific National’s position as the dominant rail freight carrier on the east coast.

“We will now carefully consider the Full Court’s judgment. The ACCC will continue to consider what changes are needed to make Australia’s merger laws work in the way they need to, to safeguard the economy from highly concentrated markets,” Mr Sims said.

Notes to editors

The term ‘intermodal’ freight is used to describe the carriage of general freight usually in a container using two or more modes of transportation, such as truck and rail. ‘Intermodal rail linehaul’ refers to the rail leg of the movement of intermodal freight. ‘Steel rail linehaul’ refers to similar services that are provided in respect of steel products.

An intermodal terminal, such as the Acacia Ridge Terminal, comprises infrastructure with a connection to a rail line where containers can be transferred between transportation modes.

Background

The ACCC commenced proceedings on 18 July 2018 alleging that Pacific National’s acquisition of the Acacia Ridge Terminal from Aurizon would have the likely effect of substantially lessening competition in breach of section 50 of the Competition and Consumer Act 2010.

The ACCC was concerned that the acquisition of the Acacia Ridge Terminal would deter a new entrant from providing interstate linehaul services in competition with Pacific National.

The ACCC had commenced a public investigation of Aurizon’s proposed exit plans, including the proposed acquisitions by Pacific National of the Acacia Ridge Terminal and Queensland intermodal business on 27 October 2017. The ACCC issued a statement of issues on 15 March 2018.

The Federal Court dismissed the ACCC’s proceedings on 15 May 2019. The trial judge found that, with Pacific National’s undertaking offered to the Court, the acquisition of the Acacia Ridge Terminal would not be likely to substantially lessen competition.

The ACCC lodged an appeal on 27 June 2019. The appeal, and cross appeals by Pacific National and Aurizon, were heard before the Full Court of the Federal Court from 17 – 20 February 2020.