24 January, 2020
"It's just a post for our followers. Nothing I write on social media can be taken seriously. No one else checks this page anyway."
Social media is now a central component of any business' sales and advertising: it's just another way to market your products and services, or to share ideas in the industry. It's important to remember, however, that beyond cute cat videos social media is simply another way to communicate. It's another way to communicate with your customers. It's another way to communicate with your staff. It's also another way to communicate with your competitors, and that's what went wrong for medium-sized Sydney roofing companies ANZ Roofing and Ivy Contractors.
The not-so-perfect storm
December 2018 saw a damaging hailstorm hit Sydney, causing relatively widespread damage, particularly to residential roofing. Following the hailstorm, ANZ Roofing and Ivy Contractors both took to Facebook to discuss the storm and its impact on the roofing industry. The Facebook groups that the companies posted in were used by a number of other Sydney roofing companies, competitors or likely competitors of ANZ Roofing and Ivy Contractors.
One comment broadly suggested pricing increases: "I think this latest storm is the perfect opportunity for the roofers of Sydney to increase pricing across the board as a standard that doesn't decrease!" The other comment was more explicit: "Let's agree that we start from $65 and go up".
After an investigation by the Australian Competition and Consumer Commission (ACCC), both companies agreed that the comments were likely to be an attempt to "fix" prices – which is illegal under competition law. In addition, the companies agreed that in some circumstances, the conduct could raise concerns under the prohibition against concerted practices. Instead of taking court action, the ACCC accepted a court enforceable undertaking from both companies, as well as the individuals involved, who agreed not to repeat the conduct, and to receive compliance training in competition and consumer law.
It is the first enforcement outcome for the ACCC in relation to concerted practices.
What did they do wrong?
Companies that compete, or potentially compete, with each other cannot agree the prices or customers that they supply to within the market. This is known as "cartel conduct". Since 2017, companies also cannot act in a way which, while not a direct agreement, substitutes some form of practical co-operation for the risk of competition in a market.
This is known as a "concerted practice", and is illegal if it has the purpose or likely effect of substantially lessening competition in a market.
Both cartel conduct and anticompetitive concerted practices carry significant risks of penalties. Even attempting to commit these activities is illegal.
Social media introduces a new risk for businesses in relation to cartel conduct and concerted practices. Social media content might not seem as detailed, or as formal, as normal advertising. It can be colloquial or can simply be seen as a public discussion between friends or work mates. Regardless, anything posted to social media can result in a compliance risk for the company and still needs to be considered for both competition and consumer law concerns.
Things to remember
You can:
- Promote your own products through social media.
- Advertise prices, sales and discounts that you will charge to customers on social media.
You must not:
- Get drawn into a discussion with your competitors on social media which discusses prices or customers.
- Seek to influence competitors' actions directly or indirectly through social media.
You should get legal advice when:
- You participate in industry social media groups, to make sure that you do not share the wrong information with your competitors.
- Considering what information should be posted to social media – remember, it is just another form of advertising and should have the same legal review processes.
For further information, please contact:
Lynsey Edgar Partner, Baker & McKenzie
lynsey.edgar@bakermckenzie.com
