In a surprising move, the government is using a repeal day bill to beef up the ACCC’s investigative powers.
If passed, amendments contained in the Competition and Consumer Amendment (Deregulatory and Other Measures) Bill 2015 (Cth) (the Bill) would enable the ACCC to bring recipients of section 155 notices before a court to seek orders directing them to comply with the notice. Non-compliance with any orders made under the new provision would expose the recipient to sanctions for contempt of court.
More in keeping with “repeal day”, the Bill also seeks to remove antiquated provisions which require ministerial consent to be obtained in order for a claimant to rely on conduct which took place overseas in certain types of proceedings.
As part of its promise to cut $1 billion in red tape annually the government holds two parliamentary “repeal days” each year. The 2015 Autumn Repeal Day was held in the House of Representatives on Wednesday, 18 March and included the Competition and Consumer Amendment (Deregulatory and Other Measures) Bill 2015 (Cth).
The Bill contains a number of sensible amendments to the Competition and Consumer Act 2010 (Cth) (CCA), including changes to food safety reporting (see our earlier post) and streamlining of procedures for international competition and consumer cases (discussed below).
However, one provision in the Bill pre-empts reforms presently under consideration by the Harper Review by enlarging already burdensome investigative powers without important concessions canvassed by the review panel.
Under section 155 of the CCA, the ACCC has the power to require a person to produce documents or answer questions under oath if it believes they are capable of providing information relating to a matter that may constitute a breach of the Act. This power is not confined to those suspected of breaching the Act and is often used to obtain information from third parties — such as their suppliers, customers or competitors (see our post on section 155 notices here). Failing to comply with a notice already carries a penalty of up to 12 months imprisonment or a fine of up to $3,400 (for individuals) or $17,000 (for companies), though a person is not required to comply where they are not capable of complying.
Importantly, the Act does not contain any express limitation on this power requiring the scope of the ACCC’s information request or its timeframe for production of documents to be reasonable. For instance, the ACCC can (and has) served notices requiring that documents within a particular category be produced to it within timeframes as short as 24 hours. The Harper Review’s Draft Report acknowledged the “regulatory burden” imposed by section 155 and referred to submissions which had criticised “the ACCC’s use of its current section 155 powers, citing the scope of the notices and the costs of compliance”.
The vice of the new sanctions
In its first submission to the Harper Review, the ACCC argued for the power to seek a court direction to comply, which has now found its way into the Bill.
While the Harper Review’s draft report found that current sanctions were inadequate, it did not endorse the ACCC’s proposed amendment and also recommended that the ACCC be required to frame notices in the narrowest form possible, suggesting that a legislative amendment or guidelines be introduced to that effect. The absence of a qualification of this kind in the Bill is concerning for two reasons:
- The availability of the power to seek a direction increases the likelihood of costly litigation, including proceedings against third parties not involved in the conduct under investigation, where there is a disconnect between the ACCC’s expectations about timeframes and scope of production and those of the recipient of the notice. Submissions to the Harper Review provide evidence of this disconnect in practice. A statutory requirement that notices adopt a reasonable scope / timeframe would address this tension.
- There is a danger that the absence of an appropriate limitation on scope and timeframes will expose individuals to contempt sanctions in circumstances where production of documents is very difficult or costly. Notwithstanding their residual discretion, courts applying the new provision will have no express textual basis for taking such issues into account.
Streamlining international proceedings
On a more positive note, the Bill will also remove some outdated provisions which require ministerial consent in relation to certain proceedings concerning conduct abroad.
As it currently stands, the CCA applies to the conduct of Australian residents and citizens, and the conduct of companies incorporated or carrying on business within Australia, when that conduct takes place overseas. Some competition provisions also apply to conduct which takes place outside Australia in relation to the supply of goods or services to people within Australia.
However, in order to rely on the provisions which extend the CCA to overseas conduct in a claim for damages or other orders a claimant has to obtain written ministerial consent. The Minister is required to grant consent unless the conduct is required or specifically authorised by a foreign law and the Minister believes that it is not in the national interest that consent be given.
In practice, the process of seeking consent involves obtaining costly legal advice on the laws of each foreign jurisdiction in which the conduct took place and providing that advice to the Minister. Other parties can also challenge the Minister’s decision to give consent through judicial review proceedings, resulting in delays in the conduct of the primary proceedings.
As noted in the Harper Review’s draft report, the ministerial consent requirement was imposed when many jurisdictions did not have competition laws and there was international concern over the reach of some competition laws such that diplomatic issues could arise. Such concerns no longer exist and accordingly the Panel recommended the removal of the requirement for ministerial consent. The Bill seeks to implement this draft recommendation
On Thursday, 26 March 2015, the Bill was referred to the Economics Legislation Committee for inquiry and report by 13 May 2015. While the focus of the reference was the food safety elements of the Bill (posted about here), we hope that all aspects of proposed reform are considered.