iSelect’s $8.5 Million Fine

iSelect’s $8.5 Million Fine


The Federal Court of Australia has ordered that iSelect pay $8.5 million in penalties for making false or misleading representations about its electricity comparison services.

iSelect Limited admitted that between November 2006 and December 2018 it misled consumers by representing that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan when this was not the case.

The commercial agreements that iSelect Limited had in place with its partner electricity retailers restricted the number of electricity plans those retailers could upload onto the comparator system, and therefore the plans recommended to consumers were not necessarily the most suitable or competitive.

“iSelect was not upfront with consumers that it wasn’t comparing all plans offered by its partner retailers. In fact, about 38 per cent of people who compared electricity plans with iSelect at that time may have found a cheaper plan if they had shopped around or used the government’s comparison site Energy Made Easy,” ACCC Chair Rod Sims said.

In addition, the ACCC noted that iSelect Limited failed to adequately disclose that cheaper plans from its preferred retail partners were only available via call centre and were not displayed on its online comparator service.

Further, iSelect Limited admitted that between March 2017 November 2019 it misrepresented the prices of some of the plans it recommended to almost 5000 consumers as a result of an error in its website and call centre code. The error resulted in a total quoted price for some plans which underestimated the cost to the consumer by up to $140 per quarter.

“Comparator websites also have a responsibility to ensure that their algorithms are correct, and must implement measures to prevent incorrect recommendations. This is particularly so when they generate significant revenue in commissions from those recommendations,” Mr Sims said.

Read more here:

ACCC Gas Inquiry April 2018 Interim Report


ACCC gas inquiry

By Anne Wardell, Compliance Quarter. 

The Australian Competition and Consumer Commission (ACCC) has released its third interim report in relation to gas supply arrangements in Australia; Gas Inquiry April 2018 Interim Report (the report).

The report covers three topics:

  • an update on gas prices, which confirms the recent fall in gas commodity price offers for 2018 and 2019 and that prices struck under gas supply agreements (GSAs) remain generally higher in the Southern States than in Queensland;
  • the ACCC decision to publish on its website an LNG netback price series to improve gas price transparency and assist commercial and industrial (C&I) users in negotiating for gas supply; and
  • the ACCC assessment of new reporting in relation to transportation services for non-scheme pipelines, which questions whether early information on standing offers and standing price methodologies is adequately addressing the objective of reducing information asymmetry between pipeline operators and users of pipeline services.

The first two interim reports released by the ACCC indicated that there are major problems with the workings of the gas market on the east coast[1].  The third report continues to consider the problems encountered in this market.

The report defines the east coast market as including ‘Queensland, South Australia, New South Wales, the Australian Capital Territory, Victoria and Tasmania’. It is worth noting that the Northern Territory will be connected to the East Coast Gas Market from 2019 and will thereafter be part of the consideration.

The report provides the following key points to consider in relation to the domestic gas price outlook:

  • The average gas commodity prices paid by all gas buyers in the East Coast Gas Market in 2017 under gas supply agreements (GSAs) have gradually increased over the course of 2017 as GSAs with historically low prices continue to roll off. Under more recent GSAs entered into since January 2016, in the last quarter of 2017:
    • gas buyers paid, on average, $8.62/GJ to producers in Queensland
    • C&I users paid, on average, $9.00/GJ to gas retailers across the East Coast Gas Market.
  • After peaking at over $20/GJ in early 2017, gas commodity prices offered by suppliers for gas supply in 2018 and/or 2019 have continued to trend downward over the course of 2017. By the end of 2017, most offers for gas supply in 2018 and/or 2019 were priced around $8–10/GJ for gas commodity.
  • The range of prices offered for gas supply more recently is narrower than the range of prices offered in the earlier part of 2017.
  • This could reflect a less uncertain gas supply-demand outlook for 2018 and 2019 following the commitment made by the LNG producers under the Heads of Agreement with the Australian Government to make additional quantities of gas available into the domestic market. ACCC monitoring and close attention to specific deals may also have had an effect. The ACCC’s monitoring and public reporting can inhibit some of the exercise of market power in gas price negotiations.
  • The average prices under GSAs struck at the end of 2017 for gas supply in 2018 and 2019 are similar to the average prices under the GSAs struck earlier in the year across the east coast. GSA prices vary between Queensland and the Southern States: o In Queensland, the average producer prices are $8.54/GJ for supply in 2018 and $8.41/GJ for supply in 2019. o In the Southern States, the average producer and retailer/aggregator prices for gas supply in 2018 are in the $8–10/GJ range, while the average prices for gas supply in 2019 are generally around $9/GJ.
  • Simple average gas prices in the domestic short-term trading markets are lower than they were at the same time last year. Comparing the period from 1 January to 28 March for both 2017 and 2018 shows that the simple average prices are about:
    • 7 per cent lower in 2018 in the Sydney STTM, Adelaide STTM and the Victorian Declared Wholesale Gas Market (DWGM) – $9.01/GJ this year compared to $9.65/GJ last year o 22 per cent lower in 2018 at the Wallumbilla Gas Supply Hub (GSH) – $7.95/GJ this year compared to $10.23/GJ last year
    • 26 per cent lower at the Brisbane STTM – $7.55/GJ this year compared to $10.15/GJ last year (footnotes omitted).[2]

The report provides the following key points to consider in relation to the LNG netback price series:

  • The ACCC has decided to publish an LNG netback price series on its website on a trial basis for the duration of this inquiry. At the conclusion of the inquiry, the ACCC will assess the merits of the publication and will make a recommendation on whether it should continue.
  • The publication will commence in the coming months and will include LNG netback prices based on measures of recent and historic Asian LNG spot prices. It will also include a forward LNG netback price indicator extending to the end of the following calendar year. The ACCC will also publish accompanying documentation that will explain the concept of LNG netback pricing, the formula used to derive LNG netback prices and provide guidance on its interpretation.
  • The publication of this series by the ACCC does not represent the ACCC setting a level of domestic gas prices nor the ACCC’s forecast of domestic gas prices. The primary purpose of the publication is to improve transparency.
  • Availability of an indicative price and information about the factors that are driving domestic gas prices would greatly assist C&I users in negotiations for gas supply. Absence of this information inhibits competitive bargaining and makes it more difficult for C&I users to make informed long-term investment decisions.
  • The publication of the LNG netback price series is an important step towards improving transparency of pricing as LNG netback prices currently play an important role in influencing domestic gas prices in the East Coast Gas Market. However, the LNG netback price is not sufficient on its own – there is potentially a range of factors that can influence prices offered to domestic gas buyers.
  • The final price a particular domestic C&I user may need to pay to acquire gas could also vary considerably from the LNG netback price due to a range of factors specific to the C&I user’s individual circumstances. This includes the cost of transporting gas to the user’s location and non-price terms they request in their gas supply agreement (GSA).
  • The ACCC is currently exploring the key factors that may influence domestic gas prices in the East Coast Gas Market. The ACCC will discuss its findings in future interim reports and will consider whether to include this information alongside the LNG netback price publication on its website[3].

The report provides the following key points to consider in relation to transport issues:

  • Under the terms of reference for this inquiry the ACCC has continued to monitor the publicly available pipeline information to assess whether it addresses the information asymmetries identified in the ACCC’s 2015 inquiry into the east coast gas market. For this interim report, we have reviewed the information recently published by operators of non-scheme pipeline operators under Part 23 of the National Gas Rules.
  • This has revealed that on the key pipelines used to transport gas from Queensland to the Southern States, the standing prices offered by pipeline operators for firm forward haul services are generally higher than the prices that shippers are currently paying for these services or will pay under recently negotiated contracts. This suggests that standing prices are viewed as a price ceiling by pipeline operators and that shippers should be able to negotiate a better deal bilaterally. Together with the limited pricing methodologies published by pipeline operators, we are concerned that the information published may not be achieving the intended objective of reducing the information asymmetries faced by shippers in negotiations.
  • While additional information is due to be published by operators of non-scheme pipelines later this year that should further reduce the information asymmetries faced by shippers, we have identified some potential improvements that could be made to the published pricing methodologies . These improvements would allow shippers to better understand how standing prices have been calculated and to negotiate more effectively with pipeline operators.
  • We will continue to review the information published under the new disclosure obligations, including the financial and weighted average pricing information as it is published from October this year. We will provide updates in future reports.
  • The ACCC has examined new 36-month uncontracted capacity information published by operators of non-scheme pipelines. This confirms that some of the key pipelines used in the transportation of gas from Queensland to the Southern States are contractually congested. However, discussions with pipeline operator, APA Group, indicate that there may be more uncontracted capacity on the South West Queensland Pipeline than publicly available information suggests, which the ACCC continues to examine with APA[4].

[1] Speech delivered by Ms Nicole Ross, Gas Inquiry Unit, ACCC on 28 February 2018 at 6th Annual Australian Domestic Gas Outlook Conference.

[2] Gas Inquiry April 2018 Interim Report at p 15.

[3] Ibid at p 31.

[4] Ibid at p 46.

Unfair contract terms

Unfair contract terms

Consumer, Uncategorized


By Anne Wardell, Compliance Quarter

UPDATE: In the JJ Richards matter the Federal Court has declared by consent that eight of the terms in the contract were unfair contract terms. The unfair terms are set out below. See ACCC MR 176/17

The Australian Competition and Consumer Commission (ACCC) has recently instituted two proceedings in relation to unfair contract terms. These are the first proceedings instituted by the ACCC under the new laws that protect small businesses from unfair contract terms.

JJ Richards

JJ Richards & Sons Pty Ltd is one of the largest waste management companies in Australia.

The unfair terms:

  • binding customers to subsequent contracts unless they cancel the contract within 30 days before the end of the term;
  • allowing JJ Richards to unilaterally increase its prices;
  • removing any liability for JJ Richards where its performance is “prevented or hindered in any way”;
  • allowing JJ Richards to charge customers for services not rendered for reasons that are beyond the customer’s control;
  • granting JJ Richards exclusive rights to remove waste from a customer’s premises;
  • allowing JJ Richards to suspend its service but continue to charge the customer if payment is not made after seven days;
  • creating an unlimited indemnity in favour of JJ Richards; and
  • preventing customers from terminating their contracts if they have payments outstanding and entitles JJ Richards to continue charging customers equipment rental after the termination of the contract.

ACCC alleges the terms are unfair because they:

  • create a significant imbalance in the rights and obligations of JJ Richards and small businesses
  • are not reasonably necessary to protect JJ Richard’s legitimate interests
  • would, if relied on, cause significant financial detriment to small businesses.

Source: MR 151/17


The ACCC has instituted proceedings against Servcorp Ltd and two of its subsidiaries. Servcorp supplies office space and virtual office services such as office suites, secretarial services, IT, communications and personal assistants.

The unfair terms:

  • automatically renew a customer’s contract and allow Servcorp to unilaterally increase the contract price after the renewal and without prior notice to the customer
  • permit Servcorp to unilaterally terminate the contract and to impose penalty-type consequences on the customer
  • unreasonably limit Servcorp’s liability or which impose unreasonable liability on the customer
  • permit Servcorp to unilaterally determine whether the contract has been breached
  • permit Servcorp to unilaterally acquire the customer’s property without any notice.

The ACCC is concerned about the ability of Servcorp to unilaterally terminate a contract and apply unreasonable termination fees. It also received a number of complaints about Servcorp automatically renewing contracts and then increasing the rental.

Source: MR 154/17.

We will follow the progress of these cases and provide updates.

On 12 November 2016 a new law was introduced to protect small businesses from unfair terms in B2B standard contracts. A number of companies amended their contracts following the introduction of the law.

Further information about Unfair terms in small business is available from the ACCC here.

Understanding ‘Markets’ in Australian Competition Law: The Recent High Court Decision

Understanding ‘Markets’ in Australian Competition Law: The Recent High Court Decision


On 14 June 2017, the High Court of Australia delivered its decision in Air New Zealand Ltd v ACCC; Pt Garuda Indonesia Ltd v ACCC [2017] HCA 21. In this case the court confirmed an expansive definition of what it is to be a ‘market in Australia’, in respect of cartel or price-fixing behaviour.

competition law

By Dr. Drew Donnelly, Compliance Quarter

Today we summarise the decision, and suggest what the implications of this expansive approach to ‘markets’ could be. This is the first part of a two-piece series on developments in competition law in Australia.


Background to the case

In 2009 and 2010, the Australian Consumer and Competition Commission (ACCC) commenced proceedings against Air New Zealand and Garuda, claiming that they had engaged in price-fixing for surcharges on air cargo. The proceedings related to flights which began outside Australia, with Australia as the destination. 13 other airlines settled with the ACCC and penalties were imposed against them.


Initial proceedings in Federal Court

In initial proceedings in the Federal Court, the primary judge found that the airlines had been parties to an understanding which amounted to price-fixing, in relation to air cargo between ports in Singapore, Indonesia and Hong Kong and Australia. This would have been a contravention of section 45(2) of the Trade Practices Act 1974 (TPA) which prohibits an understanding intended to, or that is likely to have the effect of substantially lessening competition. However, the TPA also required that that competition be in a market for goods and services in Australia. In the primary judge’s view, the anti-competitive behaviour did not occur in Australia.

In the view of the primary judge, what mattered was the location of the “switching decision”, where one good or service could be switched or substituted for another. And for Air New Zealand and Garuda, this location was the originating ports of Hong Kong, Singapore and Indonesia.

In 2016, ACCC appealed that decision to the full bench of the federal court, who by majority, upheld the appeals. In the High Court, Air New Zealand and Garuda sought to overturn that decision, arguing that the alleged price-fixing, did not occur in a market in Australia.


Appeal to the High Court: the market was in Australia

The High Court held that the initial decision in the Federal Court had placed too much emphasis on the place where one good or service could be substituted or switched for another. For the High Court, following existing case law “a market, within the meaning of the TPA, is a notional facility which accommodates rivalrous behaviour involving sellers and buyers” (paragraph [12]). Accordingly, the question for the High Court was, did the rivalrous behaviour occur in Australia? The place of the substitutability or switching decision might be evidence of where the rivalry occurred, but it is not conclusive.

Australia was a source of the demand for the services that the airlines were providing (paragraph [109]). And this was confirmed by the airlines marketing themselves to Australian customers (paragraph [107]). In light of this, the High Court found, there was a market in Australia (which does not mean that there was not also a market in Indonesia, Singapore and Hong Kong).


So what does this mean? 

The TPA has been replaced by the Competition and Consumer Act 2010 (Cth). Under the CCA, penalising cartel behaviour no longer requires that the markets be in Australia. However, other parts of the CCA still require that the anti-competitive behaviour occur with respect to markets in Australia; for example, mergers that are likely to substantially reduce competition. It may be that this expansive definition will be applied to such cases.

In our next piece on developments in competition law we will look at the Competition and Consumer Amendment (Competition Policy Review) Bill 2017, currently before Parliament.







Budget 2017 and financial services: an opening for the minnows and a warning for the sharks

Budget 2017 and financial services: an opening for the minnows and a warning for the sharks


Last week we talked about the Government’s new rules for temporary working visas. On 9 May, the release of Federal Budget 2017, the Government filled in some key details of this initiative – including the hefty new levy of $1200 to $1800 (depending on the size of the business) for each temporary visa sponsored. This money will go into a ‘Skilling Australians’ fund which a state or territory government will be able to draw on in training new apprentices.

Today we want to clarify a host of changes that have been announced for the financial services sector. In Budget 2017, the Government signalled reform of the financial services sector, especially increased competition, as a key lever for strengthening the Australian economy. Below we highlight four key changes that should make it easier for small operators to compete with the established banks, we well as two changes targeting those who would flout the rules.

1) A loosening up of the term ‘bank’

The Government intends to open the way for small authorised deposit-taking institutions (ADIs) to call themselves a ‘bank’. The term ‘bank’ will no longer be reserved for ADIs with $50 million or more in capital. The marketing advantage of calling oneself a ‘bank’, should help the smaller players attract more business.

2) Ending the required 15% stake

Currently, banking legislation requires that any one shareholder in a bank not have more than a 15% ownership interest in the bank. In Budget 2017, the Government announced an intention to alter the law so that “innovative new entrants” will be exempt from this requirement.

3) Expanding crowd-sourced equity funding (CSEF)

This change is not just for smaller ADIs, but to level the playing field for small businesses (some of which are ADIs) generally. Currently, only publicly listed companies are allowed to attract stakeholders through CSEF. In Budget 2017, the Government announced that it will introduce legislation to extend this to proprietary companies (the most common sort of private company in Australia) and these companies will be able to have an unlimited number of CSEF shareholders.

4) The levy

Perhaps the most controversial announcement in Budget 2017 is the new levy for large banks. From 1 July, a new levy will be introduced for ADIs with licensed entity liabilities of $100 billion or more. The effect of this will be that Australia’s five biggest banks will be required to pay approximately $300 to $400 million a year, to raise $6.2 billion over a projected four-year period. As well as drawing revenue for the Government, the Government has emphasised that this is intended to help smaller ADIs gain market share.

In addition to reducing barriers to entry for the small ADIs, in Budget 2017 the Government has declared open season on those putting the financial system at risk.

(1) A new Banking Executive Accountability Regime

Senior executives in banks will need to register with the Australian Prudential Regulation Authority (APRA). APRA will have the power to:
• deregister senior executives
• disqualify from holding senior positions
• strip significant bonuses.

(2) Australian Competition and Consumer Commission (ACCC) funding increase

The ACCC will receive $13.2m for a specialised team devoted to investigation competition within the financial system.

It is important to note that while some of the Budget announcements have a set commencement date (e.g. 1 July for the levy), others, involve the passage of legislation (such as changes to CSEF and the 15% stake) and would come into force at some future point. As always, consult a professional for further information.