Reading time: 7 minutes

Consumables is LegalVision’s weekly update on all things competition and consumer law. The update follows the activities of the national regulator, the Australian Competition and Consumer Commission (ACCC) – and keeps you informed about key developments relating to the Competition and Consumer Act 2010 (CCA) and the Australian Consumer Law (ACL).

In July, the ACCC is seeking input from industry participants on several important issues – so get your pens ready.

This week’s highlights:

  • The regulator kicked off a public inquiry to decide whether ADSL (asymmetrical digital subscriber line) should still be a service that is regulated under legislation;
  • Metcash offered up draft undertakings in an attempt to allay fears about its acquisition of a hardware wholesale business from Woolworths;
  • The ACCC voiced preliminary concerns that a proposed acquisition could reduce competition for fibreboard products; and
  • The ACCC published a collective bargaining guide for small businesses and farmers.

Access to the Internet

ADSL is the technology most commonly used for delivering fixed-line broadband internet services in Australia. Since 2012, the wholesale supply of ADSL has been a “declared service”, which means that the service is regulated under legislation.

Part XIC of the CCA establishes a comprehensive regime providing for access to “declared services” in the telecommunications industry. The object of the regime is to promote the long-term interests of end-users of telecommunications services. Businesses that provide a declared service (“service providers”) have obligations to supply that service to other businesses that want to use it (“access seekers”).

The regulatory framework empowers the ACCC to make a written determination specifying terms and conditions of access to a declared service. Where an access determination is in place, that determination provides the default terms and conditions on which the service provider must provide the declared service to an access seeker. However, the parties are still free to negotiate a commercial agreement for access, which will prevail over the ACCC’s determination.

The ACCC made a Final Access Determination in relation to ADSL in May 2013. That Determination is due to expire in February 2017. The ACCC has therefore started the process of reviewing the market to determine whether wholesale ADSL should remain a declared service after 2017.

One of the key issues that may affect the ACCC’s decision is the increasing availability of the NBN across the country. The NBN rollout is a significant change in the dynamics of the industry compared to when ADSL was originally declared as a regulated service.

The ACCC has kicked off its inquiry process with a discussion paper. Responses to the discussion paper are due in late July.

Building an Undertaking

The Australian supermarket giants, Coles (owned by Wesfarmers) and Woolworths, are often attracting the attention of the ACCC. But this time, it’s a transaction between Woolworths and Metcash (the owner of the IGA supermarket brands) that’s under the regulator’s radar.

Woolworths has decided to shed its hardware businesses Masters and Home Timber & Hardware (HTH). Metcash, who currently owns Mitre 10, had put in a bid for HTH. To complete the picture, Bunnings is owned by Wesfarmers.

From its initial market inquiries, the ACCC was concerned that the HTH transaction would reduce competition for the wholesale supply of hardware to retailers (hardware stores). According to the ACCC, Metcash will have a stake in over 100 retail stores if the deal goes ahead. The fear is that Metcash’s wholesale arm might preference the stores within its network, rather than other retailers.

The ACCC was in the process of reviewing the deal, with a decision due in late June. But the regulator delayed its decision, to allow time to consider draft undertakings put forward by Metcash. Under section 87B of the CCA, the regulator may accept written undertakings in relation to a proposed merger. In this case, Metcash’s undertakings are intended to resolve the preliminary competition concerns raised about the deal.

The ACCC has made clear that it has not yet formed a view about whether it will accept the undertakings. However, if the ACCC does accept the undertakings, it is more than likely that the deal will go ahead.

The ACCC has asked for submissions on the draft undertakings by mid-July.

Statement of Issues for Manufacturing Acquisition

Next up, another proposed acquisition that has raised competition concerns. This acquisition relates to medium-density fibreboard products – which probably sounds a bit more obscure than supermarket giants and home improvement stores. But apparently, these fibreboard products are common fare in residential and commercial buildings.

The Borg Group is seeking to buy up some manufacturing assets currently owned by Alpine MDF Industries. But the ACCC is not convinced. The regulator has released a Statement of Issues setting out concerns about reduced competition, leading to price hikes down the track.

In the merger review process, the ACCC will often publish a Statement of Issues if it has identified some preliminary concerns with a transaction. The purpose of the Statement of Issues is to set out the regulator’s early views on competition, flag areas for further consideration and seek input from market participants.

The competitive constraint of imports may save the day for Borg’s acquisition aspirations. Other than Borg and Alpine, there is only one other Australian manufacturer of these fibreboard products – which is part of the reason why the ACCC is worried. But if the regulator could be convinced that the Australian manufacturers would be kept in line by imports from overseas, it might be less concerned about concentration in the domestic market.

Again, the ACCC is seeking submissions in July.

Even if the outcome is bad for Borg, we saw from last week’s authorisation of the Sea Swift/Toll transaction that there’s always the plan B of proving a public benefit to the Australian Competition Tribunal.

Power in Numbers

Finally this week, the ACCC has published a new guide about collective bargaining. The guide is pitched at small businesses and farmers that may be required to negotiate important deals with larger companies.

In general, competitors are required to act independently in their business dealings. The CCA prohibits competitors from colluding about pricing and other business decisions. However, in some circumstances, it makes sense for competitors to work together to finalise the terms and conditions on which to deal with a common customer or supplier.

For example, several farmers might sell their milk to a supermarket chain. The bargaining power of each farmer would be heavily unbalanced compared to the supermarket – and it is likely that a better outcome could be reached if the farmers jointly negotiated with the supermarket.

The CCA strikes this balance by providing mechanisms for collective bargaining arrangements to be allowed where there is a net public benefit. Similarly, the ACCC recognises that collective boycotts may be a necessary evil in some negotiation scenarios. Collective boycotts involve a group of competitors all refusing to deal with a common consumer or supplier unless the consumer or supplier meets the demands of the group.

Importantly, collective bargaining is not just intended to benefit small businesses that decide to collaborate in their dealings with larger entities. According to the ACCC, collective bargaining is also good for the company on the other side of the negotiation table, because it can lead to reduced costs and increased certainty.


Questions? Get in touch with our consumer lawyers on 1300 544 755 or tag us on Twitter @legalvision_au. Tune in next week for more Consumables.


Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards