Australian Consumer and Competition Commission v. Informed Sources

Compass Lexecon Senior Consultant Robert Willig was retained by counsel for Informed Sources (Australia) Pty Ltd., BP Australia Pty Ltd., Caltex Australia Petroleum Pty Ltd., Woolworths Ltd., and 7-Eleven Stores Pty Ltd. (Respondents), to analyze allegations by the Australian Competition and Consumer Commission (ACCC) that an information sharing service provided by Informed Sources to Respondents, all of whom sell retail gasoline in the metropolitan Melbourne area, had the likely effect of substantially lessening competition for the sale of gasoline in the metropolitan Melbourne area. Average retail gasoline prices in the relevant area regularly oscillate up and down with a wave length of about one week. The service that the ACCC challenged electronically collects retail gasoline prices from Respondents’ stations by location, grade, date and time, and redistributes the data and reports based on the data to Respondents at fifteen minute intervals. The expert economist for the ACCC concluded that the challenged service improved the ability and reduced the cost to the Respondents of effectively communicating with one another about price increases via strategic price changes at selected stations around Melbourne, and, consequently, had lessened or would be likely to lessen competition. Professor Willig showed that the opposing expert’s opinion was unreliable because it omitted any analysis of the information’s hastening of the downward phase of the price cycles and focused only on the upward phase. Professor Willig’s report also concluded that competition in both upward and downward phases was robust, and that the opposing expert’s analysis of the substantial size of the putatively anticompetitive effects was unreliable.

Within a month of receiving Professor Willig’s report, the ACCC settled with the Respondents on terms that imposed no fines or penalties, required no halt or change in the services Informed Sources provides to Respondents, and included no order as to cost. The only concession made by the Respondents was a five year commitment to provide Informed Sources’ data to consumers via a free platform, and to make the data available to third party commercial entities on reasonable terms. Professor Willig was supported by a Compass Lexecon team from the Princeton office that included John Bigelow, Jason Wu, Tamsen deRaat and others. We worked primarily with teams of counsel led by Mark McCowan of Corrs Chambers Westgarth and Stephen Ridgeway of King & Wood Mallesons.