This is a service specifically targeted at the needs of busy non-executive directors (NEDs). We aim to give you a ‘heads up’ on the things that matter for NEDs in the week ahead - all in two minutes or less.
In this edition, we discuss the publication of revised environmental, social and governance (ESG) engagement guidelines for listed companies by the Australasian Investor Relations Association (AIRA), and the Market Integrity Update issued by the Australian Securities and Investments Commission (ASIC) for the month of February, which encourages market participants to take a vigilant approach to cyber resilience.
We also examine the recent decision of the Australian Competition Tribunal (Tribunal) to overturn the decision of the Australian Competition and Consumer Commission (ACCC) and approve the acquisition of Suncorp Group Limited (Suncorp) by ANZ Banking Group Limited (ANZ), and the Federal Court of Australia decision which imposed a criminal conviction on two former CEOs and their respective companies for engaging in criminal cartel conduct.
In Over the Horizon, we discuss the competition-related events that have dominated domestic news headlines in the past week.
GOVERNANCE + REGULATION
AIRA publishes revised ESG engagement guidelines for listed companies. On 20 February 2024, AIRA published the second edition of its ESG Engagement Guidelines: Recommended Practices for Australasian Listed Entities . This new edition incorporates significant updates since the publication of the first edition in 2017 to reflect the evolving landscape of ESG considerations in corporate governance. The updates include: (1) underscoring the enhanced role of investor relations in ESG engagement; (2) acknowledging a broader range of ESG topics and acknowledging the complex nature of ESG within the investment community; (3) providing comprehensive recommendations for ESG engagement, aimed at enhancing transparency, strategic planning, and stakeholder communication; and (4) identifying key ESG stakeholders and analysing their inter-relationships to provide what is described as ‘a roadmap for effective stakeholder engagement ’. See AIRA media release and AIRA ESG Engagement Guidelines .
ASIC Market Integrity Update encourages vigilant approach to cyber resilience. ASIC has published its Market Integrity Update: Issue 156 (February 2024) which contains a compilation of regulatory developments and issues affecting market intermediaries for the month of February 2024. One of ASIC’s key recommendations for the period includes a reminder to market participants to be vigilant in their approach to cyber resilience. ASIC encourages organisations to register as a partner of the Australian Signals Directorate, the federal agency that oversees the Australian Cyber Security Centre (Australia’s lead agency for cyber security), or to sign up for alerts to receive actionable intelligence to enhance their corporate cyber resilience. ASIC notes that ‘[t]his is an easy step that all organisations - including those with obligations under the market integrity rules - can take to stay on top of known risks and respond appropriately ’. See ASIC Market Integrity Update .
LEGAL
Australian Competition Tribunal approves ANZ’s proposed acquisition of Suncorp Bank on appeal . In a major win for ANZ, on 20 February 2024, the Tribunal set aside the ACCC’s decision to quash ANZ’s proposed $4.9 billion acquisition of Suncorp’s banking business. The ACCC had denied the authorisation of the proposed acquisition because it was of the opinion that it would entrench an oligopoly market structure dominated by Australia’s four major banks. On appeal, the Tribunal found that the deal ‘would not result in a substantial lessening of competition in any relevant market ’. The Tribunal concluded that while there would be a small increase in the market share of ANZ should the acquisition proceed, it would not have a ‘meaningful impact’ on the likelihood of the four major banks participating in successful coordination to suppress price and non-price competition in the home loan, agribusiness and small and midsize enterprise markets. The Tribunal concluded that there was a net public benefit from the merger because any detriments from the acquisition were unlikely to be sufficiently certain and significant to outweigh the more certain integration and productive efficiencies forecast to arise from the acquisition. See the Tribunal’s summary of reasons for determination . ACCC Chair, Ms Gina Cass-Gottlieb, noted that ‘[t]he ACCC will continue to apply scrutiny to these markets across the breadth of our functions including merger assessments and enforcement investigations ’. See ACCC media release .
Federal Court sentences former CEOs for cartel conduct in connection with price fixing. On 23 February 2024, the Federal Court of Australia published Wigney J’s reasons for the decisions in CDPP v Aussie Skips Bin Services Pty Ltd & Ors [2024] FCA 122 and CDPP v Bingo Industries Pty Ltd; CDPP v Tartak [2024] FCA 121. Justice Wigney found Mr Emmanuel Roussakis and Mr Daniel Tartak - the CEOs of Aussie Skips Bin Services Pty Ltd and Bingo Industries Pty Ltd respectively - had colluded by meeting together to discuss increasing the prices of their competing companies’ services which was implemented shortly thereafter. His Honour held this conduct was egregiously anti-competitive. Bingo Industries was fined A$30 million - the second largest fine imposed for criminal cartel offences under the Competition and Consumer Act 201 0 (Cth) - and Aussie Skips was fined A$3.5 million. His Honour also handed down an 18-month imprisonment to both Mr Tartak and Mr Roussakis and a five year ban from managing corporations. Mr Tartak was also fined $100,000 and Mr Roussakis was fined $75,000. See CDPP v Bingo Industries Pty Ltd; CDPP v Tartak [2024] FCA 121 . See CDPP v Aussie Skips Bin Services Pty Ltd & Ors [2024] FCA 122 . These prosecutions were brought by the Commonwealth Director of Public Prosecutions following an investigation and referral from the ACCC. ACCC Chair, Ms Gina Cass-Gottlieb, noted that the ACCC would ‘continue to investigate cartel conduct and refer appropriate matters to the [CDPP] for consideration of criminal prosecution ’. See ACCC media release .
OVER THE HORIZON
Combating anti-competitive behaviour. Many of the past week’s news headlines have revolved around the topic of competition policy and regulation: a hot topic given the approval of ANZ’s acquisition of Suncorp, the sentencing of two former CEOs for engaging in anti-competitive cartel conduct in the industrial waste services sector, and the sudden retirement of Woolworths Group Limited CEO Mr Brad Banducci following a controversial interview with ABC’s Four Corners. The Prime Minister, Mr Anthony Albanese, noted in an ABC radio interview on 22 February 2024 that ‘we need to put in place proper competition measures. That’s what the ACCC are looking at, constructive ways to go forward. And we will do that. And we’re prepared to take intervention measures in order to achieve that outcome ’. While it’s not clear what these intervention measures might be, the ACCC has repeatedly stated that it will continue to take anti-competitive behaviour seriously, and has warned that it may seek penalties against individuals where serious contraventions of competition laws occur. Directors are reminded of the importance of ensuring their governance frameworks are appropriately tailored to enable the effective oversight and management of the competition risks facing their specific industry or business.