ACCC’s approach to bank price signalling

In a recent speech, the ACCC Chair, Rod Sims, set out the ACCC’s views on enforcement of the new laws on anti-competitive price-signalling and disclosure of information which commence on 6 June.

The new provisions will initially apply only to the banking sector, and only in relation to the taking of deposits and making advances or loans.

It will be unlawful for an ADI to disclose prices to competitors – in private – where doing so is not in the ordinary course of business.

As to what is permitted in the ordinary course of business, Mr Sims said: “we think that an objective observer would regard the covert sharing of prospective pricing information – between competitors – as not in the ordinary course of business.”

He went on to say:

But what sort of communication would raise concerns under the prohibition on disclosures for the purpose of substantially lessening competition?

A great deal would depend on the purpose of the disclosure, or the reason for making it.

If it’s in order to facilitate coordinated conduct, that’s exactly what the law is intended to stop.

Here’s an example: a bank might make a public statement that its funding costs have risen.

And indeed, that statement might be in order to lay the groundwork – with its customers and shareholders – for an eventual rate rise.

But we think that statements that genuinely describe market reality are unlikely to raise concerns of anti-competitive conduct.

But our attention would be attracted where, say, a bank offers its support for a change in pricing strategy, effectively tipping that strategy to competitors and
testing how they might respond, without committing itself to action.

Further, of course, we would be concerned if, say, an Australian banking executive announced that he or she would be reluctant to lift rates beyond that of the Reserve Bank cash rate or introduce new fees, but they would follow if other banks did so.

I expect the banks will do everything they can to comply with these new laws.

They have strong systems and cultures that support strict compliance with the law.

The ACCC will of course take action if we see unlawful conduct.

Note that there are exceptions for disclosures between parties in a joint venture, between merger parties, as part of a corporate work-out, those authorised by
law, and those in compliance with the continuous disclosure requirements in the Corporations Act.

In addition to the exceptions, it will be possible to lodge an application for authorisation, and in some cases a notification, with the ACCC to obtain protection against legal action for proposed disclosures where those are likely to be in the public interest.

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