ACCC draws attention to anti-competitive behavior in international trade – Anti-trust/Competition Law

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On February 18, 2022, the Australian Consumer and Competition Commission (ACCC) announced that it has joined forces with its counterparts in the United States, United Kingdom, Canada and New Zealand to form a new “five eyes” task force to prevent anti-competitive behavior in the global supply chain. Shortly after this announcement, the ACCC also listed the global and domestic supply chain sector as one of its application priorities for 2022/23.

Both announcements follow heavy criticism over the past 12 to 18 months of stevedores and shipping companies from shippers, importers and freight forwarding groups. They argue that stevedores and shipping lines are taking advantage of growing demand for their services in the wake of the COVID-19 pandemic by raising freight rates beyond market-driven levels. This would have the effect of raising prices for consumers, another major concern of the ACCC.

In this article, we examine the preparation of these announcements by the ACCC and the direction of this new task force. We are also providing those who may be concerned or wish to review their business operations in light of these announcements with suggestions on what to do to avoid being subject to anti-corruption law enforcement action. competetion.

Ads Context

Since the start of the COVID-19 pandemic, the global container freight supply chain has been under tremendous pressure. Pandemic-induced lockdowns, border closures and travel restrictions have caused demand to shift from services such as leisure, hospitality and travel to manufactured goods. This has led to a huge increase in demand for containerized freight and caused extreme congestion in the global supply chain. Adding insult to injury, government-imposed health measures and intermittent outbreaks of COVID-19 in port operations have caused ports to close and infected workers to self-isolate for periods.

Due to this disruption and imbalance in the demand and supply of maritime services, freight rates have increased and significant delays have been experienced at levels never seen before. According to data from S&P Global Platts, freight rates in September last year were seven times higher than just over a year ago. It is these rising freight rates that have sparked controversy within the industry, with shippers, importers and freight forwarding groups arguing that rising freight levels are proof that stevedores and shipping lines take advantage of current demand levels beyond what should be allowed. This, they say, is also evidenced by major shipping companies’ investments in vertical integration that would push out third-party freight forwarders and leave exporters and importers at their mercy as ‘price takers’. On the other hand, shipping line agencies view freight cost increases as a result of fundamental supply and demand economics and that market competition remains robust.

In response to the above, at the end of last year, the ACCC released its annual “Container Securement Monitoring Report”, which was broader in scope than in previous years, to respond to these growing concerns. In that report, the ACCC found that the increase in freight costs and stevedoring profits were “largely due [to]the COVID-19 pandemic resulting in a significant and unexpected increase in throughput” and that “at the current level of land charges, longshoremen [did] do not seem to generate excessive returns. »

The “Five Eyes” Task Force

Notwithstanding its general findings, the ACCC will continue to monitor domestic and global supply chains, as evidenced by these recent announcements. Globally, the ACCC will work with its counterparts in the US Department of Justice and the Federal Bureau of Investigation, the UK Competition and Markets Authority, the Canadian Competition Bureau and the New Zealand Commerce Commission, which, unsurprisingly , have their own concerns about competitiveness within the global supply chain and have even recently sued industry operators. In New Zealand, for example, the Commerce Commission recently brought charges of alleged cartel conduct against two international freight forwarding companies and four associated persons.

The Five Eyes Task Force aims to detect similar anti-competitive behavior in the marketplace, such as collusion and exclusive dealing, through information sharing and other means. Announcing the task force, ACCC President Rod Sims said, “COVID-19 has caused the supply chain disruptions the world is currently experiencing, but the purpose of this task force is to detect any attempt by companies to use these conditions as a cover to work together and fix prices. Given the nature of the global supply chain, global partnerships enable better detection and enforcement of these practices.

How to prepare for the “five eyes”?

So what can you do to prepare and avoid the eyes of the “five”? Some of our suggestions include:

  • review your compliance policies undertake an internal review of your company’s competition compliance policies and sales force training programs in all relevant jurisdictions. This helps ensure that your policies and training are up to date and proactively deter or detect the type of anti-competitive practices the “five eyes” will be looking for, especially price fixing, market sharing and over inflated pricing. .

  • examine the local councils of the local authority If your business operates in multiple jurisdictions, especially one of the “five eyes” jurisdictions, it is important that your practices are reviewed against the requirements of each of those jurisdictions, as the requirements in one may differ requirements in another

  • make changes, if necessary – following this review, make any changes to your company’s compliance policies or training, as needed

  • training ensure that you conduct regular compliance training sessions on how to properly manage and identify anti-competitive behavior in the jurisdictions in which you operate and sales training on compliant selling and pricing practices.

Last word

The ACCC’s recent announcements indicate that it remains concerned that some companies are using the COVID-19 pandemic as a cover to engage in anti-competitive behavior. As a result, the global and domestic supply chain sector will be the focus of the ACCC’s attention for the coming year and until global supply chains return to a ‘new normal’. .

In addition, the abilities of the ACCC and its counterparts to detect and enforce anti-competitive and illegal behavior have also become easier through the Five Eyes Task Force.

So if you are concerned in any way about what this might mean for your business or any of your policies or procedures in any of these jurisdictions, now is the time to act.

This publication does not address all major topics or changes in law and is not intended to be relied upon as a substitute for legal or other advice which may be relevant to the specific circumstances of the reader. If you found this publication interesting and would like to know more or would like legal advice relevant to your situation, please contact one of the people named on the list.

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