The ACCC is targeting the payment giants as one of its key enforcement priorities, which should benefit small retailers who can avoid higher fees charged by VISA and Mastercard.
Outgoing ACCC chief Rod Sims highlighted so called “least cost routing” in his annual CEDA speech on Thursday. That takes on new significance, because the speech was vetted by his successor Gina Cass Gottlieb.
The Gilbert & Tobin partner has served on the Payments Board in recent years so is close to the concerns.
Retailers prefer it if customers chose EFTPOS payments because they charge lower fees that Mastercard and Visa, but the payments giants try to pressure them to use their services for both debit and credit card transactions.
As noted in SmartCompany earlier this week, Sims will join ANU Crawford School of Public Policy after leaving the ACCC later this month, as well as the London-based Centre for Economic Policy Research.
In his speech today Sims said “one of the core issues affecting competition in the payments markets is ‘least cost routing’ which enables businesses to choose which network will process their debit card transactions, and which now make up around 75% of all card payments in Australia”.
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In fact, this year’s priorities include a range of issues concerning small businesses.
“To ensure that small businesses receive the protections available under the competition and consumer laws it is important they know their rights when dealing with larger businesses,” Sims said.
“We will continue to update and promote our online resources on key consumer protections for small businesses, including business-to-business unfair contract terms, industry codes and consumer guarantees,” he added.
“And where we see unlawful conduct by larger businesses is causing significant harm to small businesses, we will take enforcement action.
“The ACCC continues to hear concerns about the lack of transparency in agreements between essential service providers and small businesses and consumers, misleading advertising claims, and recurring mis-selling of essential service products.”
The ACCC’s role, simply put, is to make markets work for consumers now and in the future.
Another area of focus is manipulative advertising from the digital platforms, stemming from the ACCC’s concern that more targeted advertising increases the risks for small business and consumers.
Supply chains will be a big focus post-COVID, as are environmental concerns.
“We are hearing growing concerns that some businesses are falsely promoting environmental or green credentials to capitalise on these consumer preferences,” Sims said.
“The ACCC continues to hear concerns about the lack of transparency in agreements between essential service providers and small businesses and consumers, misleading advertising claims, and recurring mis-selling of essential service products,” he added.
The imbalance in the relationship between motor vehicle dealers and manufacturers, and the unwillingness of individual dealers to deviate from the manufacturers’ wishes, means many consumers are not getting the remedies they are entitled to.
Sims cited specific concerns on some including the TPG and Telstra mobile infrastructure sharing agreement.
“This will require extremely close examination by the ACCC to examine its implications for mobile pricing and coverage. The agreement raises complex issues,” he said.
He also singled out Qantas and Virgin’s behaviour with a couple of potential new competitors.
“We are particularly focused on monitoring Rex’s and Bonza’s ability to access permanent slots at Sydney Airport,” Sims said.
“We will also be watching to see that Qantas and Virgin do not fly new routes to damage competition,” he added.
Sims has an aggressive reform policy which his successor Cas Gottlieb and new enforcement boss Liza Carver have criticised in their private practice days.
They fell short of endorsing his policy reforms, which include reversing the onus of proof in merger applications.
Sims noted his successors’ experience saying “they will bring valuable insights and perspectives to the debate.”
In 2021, 472 mergers were notified to the ACCC, up 41% on the previous year. The number of mergers considered by the ACCC in 2021 was 63% higher than the average over the last five years.
Carver started in her new role this week and Cass Gottlieb will start on March 21. Whether time in the job will change their views on Sims’ merger slate remains to be seen.
The market can expect no great support any time soon.