The latest in competition and consumer law
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Opus writes a new chapter – ACCC gives the green light for acquisition of Ovato’s book printing business
The ACCC has announced that it will not oppose Opus Group Pty Ltd’s acquisition of Ovato Limited’s book printing business. As part of the transaction, Ovato will issue a convertible note to Opus, which can be converted into approximately 15% of Ovato’s issued share capital.
Opus and Ovato overlap in the supply of both book and commercial printing services. The ACCC’s public consultation revealed a number of concerns in relation to the supply of book printing services, including:
- that the proposed acquisition would reduce competition by combining the two largest suppliers of printing services for black-and-white books; and
- A concern from publishers that vital printing capacity would be removed if, absent the transaction, Ovato’s financial position resulted in it closing down.
Despite these concerns, the ACCC concluded that there was unlikely to be any lessening of competition in the supply of commercial printing services. Ovato will continue to operate its commercial printing business following the acquisition and, despite Opus’s stake, Ovato will continue to face competition from other suppliers of commercial printing services. The ACCC also found that:
- Ovato’s insolvency was likely imminent if the transaction did not proceed, which would mean that it would also exit the book printing market if not for the transaction; and
- The sale of Ovato’s book printing business and the injection of cash via the convertible note meant it could continue to effectively compete in the supply of commercial printing services.
ACCC announces 2022–23 Product Safety Priorities
On 16 June 2022, the ACCC announced its Product Safety Priorities for 2022–23.
This year, the regulator has set seven Product Safety Priorities:
- product safety issues relating to lithium-ion batteries;
- product safety issues affecting young children;
- improving the mandatory standards regulatory framework;
- product safety issues relating to infant inclined products;
- strengthening product safety onlinewith a focus on expanding participation in the Australian Product Safety Pledge, online surveillance and contributing to greater consistency of international practice;
- compliance with the button battery safety standards; and
- product safety issues relating to toppling furniture.
The ACCC also reiterated its support for a General Safety Provision in the Australian Consumer Law that prohibits the sale of unsafe goods in Australia.
Product safety remains a compliance and enforcement priority of the ACCC, and the regulator is ‘committed to pursuing businesses and individuals that do not comply with their product safety obligations’, said the ACCC Chair, Ms Cass-Gottlieb.
To learn more, see our Insight: ACCC announces 2022-23 Product Safety Priorities: what they mean for youwhere we describe the regulator’s proposed approach to reducing the safety risks identified.
Aviation sector off to a flying start in 2022
The ACCC has released two monitoring reports focused on the aviation industry.
In its airport monitoring report, it was found that the number of passengers visiting Sydney, Melbourne, Brisbane and Perth airports was 60–83% lower over 2020–21 compared with pre-pandemic levels. However, aside from Melbourne Airport, the nonetheless airports made a profit margin of 10–20% during this period.
In the report, the ACCC expressed concern that the current ‘light-handed’ approach to regulating airports is not fit for purpose because they are likely to exercise market power in negotiations with airlines about aeronautical charges. This contrasts with a recent Productivity Commission report from 2019 that found airports have not exercised their market power in negotiations with airlines.
In its airline monitoring report, the ACCC observed that the number of passengers flying domestically was at 89% of pre-pandemic levels, giving airlines the confidence to forecast a sustained recovery in domestic travel, but this may be impacted by high fuel prices, which may result in higher airfares.
The ACCC is also monitoring how airlines respond to the entrance of new low-cost competitor Bonza, anticipated to launch in Australia during the second half of 2022.
Electricity market in focus
On 20 June 2022, the ACCC published an addendum to its latest Electricity Markets Inquiry report. The May 2022 report examined electricity retailers’ billing data to assess electricity prices paid by customers. The ACCC’s addendum to this report examines changes in electricity markets in May and early June 2022.
The addendum states that a combination of factors, including the war in Ukraine, a cold start to winter, and a reliance on aging coal-fired power stations, caused significant and unprecedented wholesale electricity price rises in recent weeks. On 15 June 2022, the Australian Energy Market Operator (AEMO) temporarily suspended operation of the spot market in the National Electricity Market states of New South Wales, South Australia, South East Queensland and Victoria. The suspension means that AEMO will apply a predetermined suspension pricing schedule for wholesale electricity, rather than prices being set competitively.
Relatedly, on 10 June 2022, the ACCC and AER jointly wrote to energy retailers to remind them of their obligations in relation to electricity prices under the Competition and Consumer Act 2010 (Cth) and the National Electricity Retail Code.