Competition and Market Regulation Update August 2009

Emirates – latest target in ACCC air cargo investigation
Sydney anaesthetists face needle of ACCC investigation
CSL and Baxter price fixing claims widen
Marine hose cartel proceedings – an update
Cadbury settles damages claim
Dr Jill Walker joins the ACCC
ATM network authorisation

Emirates – latest target in ACCC air cargo investigation

The ACCC has issued proceedings in the Federal Court against Emirates Airlines for alleged price fixing in the air cargo industry. Emirates is the ninth airline to be the subject of ACCC proceedings in relation to the alleged cartel. The ACCC is seeking declarations, pecuniary penalties, injunctions and cost orders. Emirates has indicated that it will file a defence and contest the matter. A directions hearing has been set for 22 October 2009.

As we have previously reported, proceedings have also been initiated against Singapore Airlines and Cathay Pacific in the past twelve months. In addition, a class action lawsuit was also commenced in Australia in early 2007. To date, $41 million in pecuniary penalties has been ordered against airlines in Australia, the largest being the $20 million settlement agreed with Qantas in 2008. (See our May 2009 newsletter for more information)¹.

Sydney anaesthetists face needle of ACCC investigation

The ACCC has launched an investigation into the allocation of anaesthetic work at Sydney’s St. Vincent’s Private Hospital (SV Private). At issue is the protocol which, in most cases, requires that, as a pre-condition to accreditation at SV Private, anaesthetists must first be accredited to St Vincent's Public Hospital. The complainants argue that the practice means that external doctors are effectively locked out of work at SV Private.

The protocol last came to public attention back in November last year in the form of a third line forcing notification to the ACCC. However, the notification was withdrawn by SV Private in December. A large number of submissions were lodged with the ACCC opposing the practice. At the time, SV Private stated that its intention was to cease requiring, as a matter for consideration for accreditation at SV Private, that an anaesthetist has first obtained accreditation at SV Public.

This is not the first time that health care professionals have been the subject of antitrust scrutiny. The New Zealand Commerce Commission succeeded against the Ophthalmology Society in 2004 in relation to an arrangement to prohibit Australian doctors from entering the market. In that case, the court rejected claims of risks to patient safety and ordered the Society to pay $NZ100,000. Penalties were also imposed on two of the practitioners involved.

CSL and Baxter price fixing claims widen

In our July 2009 newsletter, we reported that Pemiscot Memorial Hospital had initiated a class action in the United States against Australian health care company CSL and its major competitor, Baxter International. The price fixing case has now escalated after a second litigant, Solaris Health System, lodged documents in a Pennsylvania court alleging that Baxter and CSL conspired to fix the price of blood plasma treatments. The litigants allege that Baxter and CSL colluded to restrict supply or prevent oversupply of the products in order to increase prices.

Baxter and CSL are the world’s largest makers of blood plasma products and control almost 60 per cent of the plasma derivative market in the United States. The litigation follows statements made by the United States Federal Trade Commission as part of its investigation into a proposed merger in the industry that there was ‘a strong possibility of ongoing coordinated interaction between firms in the plasma industry’. The two litigants, Solaris and Pemiscot, will now determine who should take the lead in the litigation.

Marine hose cartel proceedings – an update

In our June 2009 newsletter, we reported on the ACCC’s proceedings in the Melbourne Federal Court against global manufacturers of marine hoses for alleged cartel conduct. The ACCC alleges that between 2000 and 2007 Bridgestone (Japan), Dunlop Oil & Marine (UK), Parker ITR (Italy) and Trelleborg (France) engaged in price fixing, market sharing and other anti-competitive conduct in contravention of the Trade Practices Act 1974 (Cth). On July 7 2009, Justice Finklestein granted an order to serve Bridgestone and Trelleborg overseas. Since that time, both Trelleborg and Bridgestone have accepted service of the ACCC complaint. The next directions hearing has been scheduled for 25 September 2009.

Cadbury settles damages claim

In our April 2009 newsletter, we reported on proceedings instigated by Cadbury in the Federal Court against Amcor for anti-competitive behaviour. Cadbury had alleged that Amcor engaged in an illegal price fixing cartel with a competitor, Visy, to set prices for boxes and other products. Visy was also brought into the case when Amcor made a cross-claim against it. On 22 July 2009, it was announced that those proceedings have settled on confidential terms.

A class action against both Amcor and Visy by thousands of smaller customers seeking cash damages remains on foot and is expected to come to trial in 2010.

Dr Jill Walker joins the ACCC

The Hon. Dr Craig Emerson MP has announced the appointment of Dr Jill Walker as a member of the ACCC, filling the vacancy created when Dr Stephen King resigned late last year. Dr Walker will commence her new role on 22 September 2009.

Dr Walker has a wealth of experience in economics and trade practices issues—amongst other roles, she previously served as a member of the Australian Competition Tribunal, an economic advisor to the ACCC, and on the South Australian Government’s panel of expert assessors on gas pipeline access.

Presently, the ACCC consists of:

Chairman – Graeme Samuel
Deputy chairs – Michael Schaper and Peter Kell
Members – Sarah Court, Ed Willett and Joe Dimasi
Associate members – Christopher Chapman, Andrew Reeves and Steve Edwell.

ATM network authorisation

The ACCC has granted interim authorisation to an agreement between members of the rediATM branded sub-network of ATMs not to charge each other's cardholders a fee for transactions at ATMs owned by members. The ACCC has also granted rediATM sub-network members interim authorisation to coordinate the deployment of new ATM machines.

The agreements follow reforms introduced by the Reserve Bank in March 2009, which abolished the interchange fees previously paid by card issuers when cardholders use an ATM belonging to another institution. The reforms also give ATM owners the freedom to charge cardholders directly for the use of an ATM, with any charge being disclosed to the cardholder prior to the withdrawal being made.

In issuing the interim authorisation, the ACCC noted that the arrangements were consistent with the spirit of the ATM reforms introduced by the RBA. Back in early June of this year, the ACCC also granted authorisation for four years to Bank of China (Australia) Ltd and Cashcard for a similar network arrangement.

Endnotes

1. ‘Air-cargo investigation gathers speed’, Competition and Market Regulation Update May 2009

More information

For information regarding possible implications for your business, contact a member of the Competition & Market Regulation team.