ACCC v Cabcharge Australia Ltd is a Federal Court of Australia case between the Australian Competition and Consumer Commission (ACCC) and Cabcharge Australia Ltd.[1] The case alleged misuse of market power by Cabcharge in breach of the Commonwealth Trade Practices Act (TPA).
In June 2009, the ACCC began proceedings in the Federal Court of Australia against Cabcharge alleging that Cabcharge had breached TPA by misusing its market power and entering into an agreement to substantially lessen competition. The action centered on Cabcharge's conduct in refusing to deal with competing suppliers to allow Cabcharge payments to be processed through EFTPOS terminals provided by rival companies and supplying taxi meters and fare updates at below actual cost or at no cost.[1]
In September 2010, the Federal Court imposed the highest ever penalty for misuse of market power when Cabcharge settled court proceedings with the ACCC. The case resulted in Cabcharge being fined $15 million ($14 million in civil penalties and $1 million in costs).
Cabcharge provides payment systems for taxi operators and drivers to manage non-cash taxi fares. The company holds a dominant market position in these services across Australia as it supplies almost 97% of Australian taxis with its electronic payment system. The ACCC began proceedings in June 2009 in the Federal Court of Australia against Cabcharge. The ACCC action alleged that Cabcharge had breached the Trade Practices Act (TPA) by misusing its market power and entering into an agreement to substantially lessen competition. The action centered on Cabcharge's conduct in refusing to deal with competing suppliers to allow Cabcharge payments to be processed through EFTPOS terminals provided by rival companies and supplying taxi meters and fare updates at below actual cost or at no cost.[1]
To breach the TPA, a corporation must have misused its substantial market power to:
Section 46 of the TPA was amended numerous times since September 2007 to strengthen the ACCC's ability to successfully bring proceedings for alleged contraventions. For example, in September 2007, a new section 46(1AA) was introduced into the TPA to prohibit corporations with substantial market share from engaging in predatory pricing. Predatory pricing occurs when a company sets its prices below cost for a sustained period for one of the anti-competitive purposes referred to above. In November 2008, the TPA was amended again to make clear the circumstances when corporations had 'taken advantage' of their market power. This change sought to deal with the evidentiary difficulties the regulator encountered in establishing this element in earlier cases. Since January 2007, the courts have also been given power to impose a civil penalty for each act or omission contravening the TPA. Civil penalties can now be imposed up to the greater of $10 million, three times the value of the benefit obtained from the misconduct, or 10% of the annual Australian turnover of the company involved.
On 24 September 2010, Justice Ray Finkelstein approved the settlement of the action. The court declared that Cabcharge had breached the TPA by taking advantage of its substantial degree of power in the Australian markets for the supply of services to enable non-cash payments for taxi fares and charges by taxi passengers and non-cash instruments that could be used only for the payment of taxi fares and charges.
To settle the proceedings, Cabcharge admitted to three contraventions of the TPA. The company agreed to the issue by the court of declarations, compliance orders, civil penalties of $14 million and costs of $1 million.[1]