Price Fixing Case Study: ANZ vs ACCC

This assignment examines a specific case study involving price-fixing allegations against ANZ bank by the Australian Competition and Consumer Commission (ACCC). The ACCC ultimately failed to prove its case, leading to an unfavorable outcome. Students are expected to analyze the legal arguments presented by both sides, evaluate the evidence considered in court, and discuss the implications of this case for Australian competition law.

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Executive Summary
ACCC (Australian Competition and Consumer Commission) is an independent authority of
Australian government. In 1995, ACCC was established with an aim to administer the Trade
Practices Act, 1974 with the amalgamation of the Australian Trade Practices Commission
(TPC) and the Prices Surveillance Authority. The functions of Australian Competition and
Consumer Commission is to perform industry regulation and price monitoring, protect
business rights and obligations consumer rights and prevent illegal anti-competitive
behaviours. The competitive and consumer Act is administered by ACCC. Australia and
New Zealand Banking Group Limited is known as ANZ. This is the fourth largest bank of
Australia. In the case ACCC vs. ANZ limited, according to Australian Competition and
Consumer Commission, ANZ limited wish to limit the refundable amount that could be
provided by mortgage bank to its customers for the arrangement of ANZ home loans. So as
per Australian Competition and Consumer Commission, this is the case of price fixing
agreement in breach of the act. ANZ has two brands in New Zealand. One is ANZ and
second is the National Bank of New Zealand. The industry of ANZ is banking and financial
services.

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Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................4
Facts of the case.........................................................................................................................5
Full Federal Court’s decision.....................................................................................................5
Reaction of ACCC against the judgement.................................................................................6
Reasons behind court’s decision................................................................................................7
Duties breached by ANZ............................................................................................................8
Impact of court’s decision on the operating of companies in Australia.....................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
The case was related to ANZ’s wish that Mortgage refunds agree to limit the refund amount
for the customers in respect of arranging ANZ home loans. Australia and New Zealand
Banking Group Limited is providing the mortgage loans to customers through internet and
external channels. Mortgage refunds are an independent firm which is engaged in the
distribution of mortgages of ANZ. Mortgage refunds are offering refund to customers from
some part of its commission if its mortgages are approved by ANZ (MacCallum, 2016). The
ACCC’s claim was that ANZ is providing loan arrangement facilities to its customers
internally. ACCC had fought two cases of fixing of prices. One was against Fight centre and
other was against ANZ. In the case related to Fight centre, the Australian Competition and
Consumer Commission alleged that Fight centre entered into contract with three airlines to
maintain the prices for air travel. This report describes in detail the facts of the case, the
duties breached by ANZ, the decision of Full Federal court and the reasons behind the
decision.

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Facts of the case
ACCC’s main aim is to avoid anti-competition agreements. As per ACCC’s allegation, ANZ
was indulging in the price fixing. ACCC alleged that Australia and New Zealand Banking
Group Limited made an agreement that it is going to only allow Mortgage Refunds to offer
Australia and New Zealand Banking Group Limited mortgage products if the Mortgage
refunds agreed on the terms and conditions of Australia and New Zealand Banking Group
Limited. The terms and conditions include that Mortgage refunds was required to limit the
amount of refund to its customers to $600 for the arrangement of loan services and it will
allow Australia and New Zealand Banking Group Limited branches to match the deal if they
chose to waive the Australia and New Zealand Banking Group Limited’s loan establishment
fee (Adams, 2016). As per ACCC, Mortgage refunds and Australia and New Zealand
Banking Group Limited were competitors in the market for the provision of services related
to loan provisions.
Full Federal Court’s decision
The court’s decision was in favour of Australia and New Zealand Banking Group
Limited .The Full court of the Federal court of Australia dismissed the price fixing appeal
made by the Australian competitive and consumer commission. The Full court dismissed
Australian Competitive and Consumer commission’s allegation against the Australian and
New Zealand Banking Group Limited for breaching the provisions of price fixing under
Competition and Consumer act, 2010 (ACL, 2015). The court has given the decision that
ANZ did not complete with Mortgage refunds and other independent mortgage brokers. The
full court also observed that The competition can be possible for the internal and external
distribution channels. The court also ordered that ACCC’s priority is to avoid anti-
competitive practices and agreements because impeding competition damages the businesses
and consumers and this is harmful for the entire economy. The Australian Competition and

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Consumer Commission appealed against the decision given by the Federal court. As per the
investigation of Australian Competition and Consumer Commission, ANZ breached the duty
of care, improper use of information and the duty to act with diligence under the corporation
law by fixing the prices. So, ANZ breached two laws, one was corporation law and the other
was Competition and Consumer Act 2010 (Journals talk, 2016). ACCC was successful in its
appeal against fight centre but was unsuccessful in the appeal against ANZ. The ACCC
alleged that ANZ is liable for fixing of prices under section 45 of Trade Practices act, 1974
now it is Competition and Consumer act, 2010. The court held that price fixing applied to
contracts between competitors. The ANZ and Mortgage refunds were not competitors so
there were zero chances of price fixing between them. The court also stated that section 45A
was not applicable on this case. Because this section says competition may occur between
two parties with relevant arrangements. Section 45A applies when two parties are having
relevant arrangements with two profit centres and there will be two separate entities of both
the parties. These conditions are not satisfied in this case (Yuile, 2017). So, ANZ is not
liable under section 45A. The decision of the court was clear after Justice Dowsett’s says that
between the loan arrangement services of ANZ and Mortgage refunds, there was no
competitive overlap.
Reaction of ACCC against the judgement
ACCC was not satisfied with the judgement given by the full federal court. ACCC reacted
against the judgement given by the full federal court. According to ACCC, there was no issue
with healthy competition because healthy competition brings prices down, results in
innovation and better quality services to the customers. This type of competition leads to
various types of advantages to customers. But the competition that was in this case results in
factors that harm the interests of consumers. According to ACCC, in this case, both Mortgage
refunds and ANZ were dealing in loan services. So, it was the proof for the fixing of prices.

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The major reason behind federal court’s decision in favour of ANZ was the lack of evidence
with ACCC (Akman and Sokol, 2017). ANZ did not show any evidence in its defence
because ANZ was aware about the fact that the case was not strong from the side of ACCC
because ACCC was putting allegation without evidence. As per the rules and regulations of
court, a case without evidence was considered as irrelevant. It was impossible for ACCC to
prove that ANZ breached the duties under Competition and Consumer act, 2010.
Reasons behind court’s decision
ACCC argued that the fixing of prices between Australia and New Zealand Banking Group
Limited and Mortgage refunds took place because ANZ and Mortgage refunds are
competitors in the market for providing loan arrangement services (Varney, 2016). But the
court found that Australia and New Zealand Banking Group Limited and Mortgage refunds
were not the competitors for the loan arrangement services provisions in the market. So,
Australia and New Zealand Banking Group Limited was not held liable for any price fixing
agreement. ACCC alleged that Australia and New Zealand Banking Group Limited was
competing with other brokers in the market. The court again dismissed this allegation of
ACCC by stating that ANZ was not involved in the marketing of any loan services against the
brokers. The court found Australia and New Zealand Banking Group Limited innocent in
both the allegations made by Australian Competition and Consumer Commission. So, these
were the reasons behind the court decision favouring Australia and New Zealand Banking
Group Limited (McHugh and Foster, 2016). The case against Fight centre was also related to
fixing of prices. The Federal court decided against the Fight centre because according to the
full federal court, the fight centre was in competition with other airlines for booking services.
So, there were chances that Fight centre was engaged in price fixing. The reason behind the
judgement of full federal court against ACCC in this case was that the court found that ANZ
was not in competition with the Mortgage refunds. So, without having competition in the

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market, the chances of fixing of price do not arise. The reason behind the positive outcome of
Fight centre case was that ACCC was confident about the success because of proper
evidences at that time (Oliver and Schoff, 2017). In Fight centre case, ACCC was hoping
court’s judgement in its favour but in this case, ACCC was doubtful about the favourable
decision of the court.
Duties breached by ANZ
This is the case of price fixing. In price fixing, the competitors agree on a same price rather
than competing with each other. The duties breached by Australia and New Zealand Banking
Group Limited include duty not to use the information in improper manner, duty related to
good faith and duty of care. The reason behind the establishment of Australian Competition
and Consumer Commission is to give protection to the interests of consumers (Le Roy, et al.,
2017). In this case, Australia and New Zealand Banking Group Limited breached three duties
which affect the consumers at the end. The first duty breached because of fixing of prices is
duty not to use information in improper manner, Australia and New Zealand Banking Group
Limited used the market information for illegal purpose and fixed the prices by properly
understanding the consumer preferences. The second breached duty is duty related to good
faith. Every industry which is operating in the market is expected to conduct its business with
proper rules and regulation, honesty and without harming the interests of consumers. Price
fixing is against of all these principles. The last duty that was breached by Australia and New
Zealand Banking Group Limited is duty of care. Customers are the main motive of every
business (Stellios and Richman, 2016). Customers should be attracted with duty of care. This
duty is attached with the business from the day of set-up of the business. Every organization
is required to handle the customers with care. By fixing of prices, ANZ breached this duty
because fixing of prices ultimately results in the loss to customers.

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Impact of court’s decision on the operating of companies in Australia
Price fixing by one company affects the consumers and other companies operating in the
same market. For example: if consumer goods are transported by freight and if there is fixing
of price of freight then it results in affecting the whole chain of supply and increases the
prices of goods. In this way price fixing affects the market and the companies operating in the
market as a whole. Price fixing is illegal under the Competition and Consumer act, 2010 in
Australia (Petrucci, 2017). This decision impacted the other companies operating in the same
industry because this competition was not a healthy competition. It is an impending
competition that resulted from anti-competitive practices between Mortgage refunds and
ANZ.

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Conclusion
According to the report, the ACCC vs ANZ case is related to price fixing. Price fixing is an
illegal activity as per the corporation law and Competition and consumer act, 2010. The
decision in this case was against Australian Competition and Consumer Commission and in
favour of ANZ. ACCC is unsuccessful in its allegation because there is no evidence for such
price fixing with Australian Competition and Consumer Commission. This was the major
factor behind the failure of Australian Competition and Consumer Commission. Australian
Competition and Consumer Commission were unable to prove that Mortgage refunds and
ANZ were the competitors for loan arrangement services. Australian Competition and
Consumer Commission fought two cases of price fixing against Fight centre and ANZ.
ACCC succeed in its case against Fight centre because at that time, the court had sufficient
proof that Fight centre and other airlines services were competitors in the market. One thing
that needs to be focused in this case is that careful consideration should be given to evidence.

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References
ACL (2015) ACCC v ANZ Ltd. [Online]. Available at:
https://www.australiancompetitionlaw.org/cases/2013anz.html (Assessed: 22 September,
2017).
Adams, M.A. (2016) Contemporary case studies in corporate governance failures,
Governance Directions, 68(6), p.335.
Akman, P. and Sokol, D.D. (2017) Online RPM and MFN Under Antitrust Law and
Economics, Review of Industrial Organization, 50(2), pp.133-151.
Journals talk (2016) Australian Journal of Competition and Consumer Law update. [Online].
Available at: http://sites.thomsonreuters.com.au/journals/2016/03/20/australian-journal-of-
competition-and-consumer-law-update-march-2016-2/ (Assessed: 22 September, 2017).
Le Roy, F., Sentis, P. and Jerson, A. (2017) The Impact of Conviction for Anti‐Competitive
Practices on Firm Valuation: A Contingency Approach, Managerial and Decision
Economics, 38(4), pp.534-546.
MacCallum, W. (2016) Accessorial liability of board members, Governance Directions,
68(3), pp.164.
McHugh, N. and Foster, C. (2016) Collaborations among competitors in energy and resources
projects-a competition law primer, Australian Resources and Energy Law Journal, 35(1),
p.20.
Oliver, J. and Schoff, P. (2017) Agency and Competition Law in Australia Following ACCC
vs Flight Centre Travel Group, Journal of European Competition Law & Practice, 8(5),
pp.321-328.
Petrucci, C. (2017) Subsidiarity in Directive 2014/104 EU on damages actions for breach of
EU competition law, European Public Law, 23(2), pp.395-421.

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Stellios, K. and Richman, A. (2016) Competition law: Extending the reach of Australia's
cartel laws, Governance Directions, 68(8), pp.494.
Varney, C. (2016) The Cartels and Leniency Review. Law Business Research Limited.
Yuile, A. (2017) Case notes: High court judgments, Ethos: Official Publication of the Law
Society of the Australian Capital Territory, (243), pp.52.