Consumers and small businesses to ‘benefit’ from proposed new regulation of digi...

Friday, 08 December 2023 15:10

Consumers and small businesses to ‘benefit’ from proposed new regulation of digital platforms Featured

Catriona Lowe, Deputy Chair, Australian Competition and Consumer Commission (ACCC)

Australia’s competition watchdog the ACCC has welcomed the Australian Government’s in-principle agreement to new competition and consumer laws recommended by the ACCC to address harms caused by digital platforms, and the potential benefits to consumers and small businesses from the regulatory changes.

The Australian Competition and Consumer Commission recommendations, made in its September 2022 Digital Platform Services Inquiry report, called for mandatory codes of conduct for certain digital platforms to prevent anti‑competitive conduct.

Anti-competitive conduct identified in the report included self-preferencing, where platforms favour their own services in search results and app stores, and tying, for example with developers being forced to use app stores’ in-app payment systems that charge commissions of up to 30 per cent.

The report also noted examples of unfair and arbitrary treatment of smaller businesses that rely on the platforms to reach customers.

“Companies like Google, Apple, Meta, Microsoft and Amazon supply services that most Australians use every day. These digital platforms are often unavoidable ‘gatekeepers’ between Australian businesses and consumers, giving them huge influence across the whole economy,” ACCC Acting Chair Catriona Lowe said.

“The proposed reforms will ensure fairer and more transparent treatment of small and medium-sized businesses, allowing Australians to fully realise the benefits of participating in the digital economy. By promoting competition in these markets, the reforms will also provide consumers more choice, higher quality services, and fairer terms and conditions.”

The Government has also agreed in principle to address consumer harms caused by scams, harmful apps and fake reviews. This will include requesting that digital platforms develop voluntary internal dispute resolution standards by July 2024 and doing further work to develop internal and external dispute resolution requirements for platforms.

In late November, the Government also committed to introduce mandatory industry codes for industries including digital communications platforms to address scams, and today’s announcement follows action from governments and regulators globally to address conduct by large digital platforms that harms competition and consumers.

“The United Kingdom, Germany, Japan and the European Union have already announced or implemented significant new competition and consumer regulations for digital platforms,” Lowe said.

“It is our experience that platforms rarely extend changes made in one jurisdiction to others, so it is critical that the Australian Government works quickly to implement these reforms so that consumers and small businesses aren’t left behind.”

Regulatory reform recommendations:

The recommendations the Government has agreed to in principle today, were set out in the ACCC’s fifth Digital Platforms Services Inquiry report. The report made a range of recommendations to address harms to Australian consumers, small and medium-sized businesses, and competition.

The recommendations include new service-specific mandatory codes of conduct for particular ‘designated digital platforms,’ based on principles set out in legislation.

This new regulatory regime would work alongside Australia’s existing competition laws and each code would introduce targeted obligations to address the types of anti-competitive conduct most relevant to that service.

The ACCC also proposed new obligations on all digital platforms to address scams, harmful apps and fake reviews.

In the fifth report, the ACCC reiterated support for economy-wide reforms to the Australian Consumer Law, which included reforms for unfair contract terms and unfair trading practices laws. Changes to the unfair contract terms came into effect at the beginning of November 2023, and Treasury recently finished consultation on unfair trading practices reform.

The ACCC’s Digital Platforms Branch is conducting a five-year inquiry into markets for the supply of digital platform services in Australia and their impacts on competition and consumers, following a direction from the Treasurer in 2020. The ACCC reports to the Government every six months and examines different types of digital platform services.

The eighth report, due to the Government in March next year, will examine data brokers.

Previous reports are published at Digital Platform Services Inquiry 2020-2025.

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