Harper puts more public and private enforcement of the CCA in play

Published On 09/12/2015 | By David Crino | Enforcement, Litigation, Reform

In adopting key recommendations of the Harper Review, the Government has moved to enhance the ACCC’s information gathering powers, promote enforcement by private parties and remove impediments to reliance on extraterritorial conduct.

ACCC’s information gathering powers under section 155

The Government’s position

As previously noted, the Government supports the Harper Review’s recommendations that:

  • the ACCC’s information gathering powers under s 155 be extended so that it can investigate alleged contraventions of court enforceable undertakings;
  • the ACCC should review its guidelines on s 155 notices, having regard to the increasing burden imposed as a result of the digital age, with the Government’s response also noting the ACCC Statement of Expectations which includes a commitment to reducing red tape and compliance costs for business and the community;
  • there be a defence to an allegation of refusal or failure to comply with a s 155 notice where the recipient can demonstrate that a reasonable search was undertaken; and
  • the fine for non-compliance with a s 155 notice should be increased in line with that for ASIC powers, which would suggest an increase from the current position – up to 20 penalty units ($3,600) or imprisonment for 12 months – to a potential fine of closer to 100 penalty units ($18,000), imprisonment for 2 years or both, as per s 63(1) of the ASIC Act.

What it means

These changes are largely uncontroversial.  The review of s 155 guidelines with a view to limiting the compliance burden of notices should promote the preparation of notices with more reasonable and targeted scope. The reasonable search defence should also provide companies with a greater degree of certainty regarding their obligations.

In a bill introduced by the Abbott government, however, it is also proposed that the ACCC should have the power to seek orders directing recipients of a section 155 notice to comply with the notice.  This was not a change proposed by the draft or final Harper Reports and, as we have previously noted, this proposed change has a number of vices including the possibility the non-compliance with a direction could result in a criminal contempt of court.

Private enforcement

The Government’s position

Section 83 of the CCA assists private parties to prove their case against a respondent who has been found to have contravened specific parts (including Part IV) of the CCA. However, its application is currently considered to be limited to findings of fact made by the Court following a contested hearing, and does not apply to admissions by a party, for example in the course of reaching a Court-approved settlement or in an agreed statement of facts.  The Government supports the Harper Review’s recommendation that s 83 be amended so that it extends to all admissions of fact made by parties.

What it means

Despite the recent increase in private competition litigation in Australia, levels of private enforcement are lower than in other jurisdictions such as the United States, Canada or Europe. The proposed amendment of s 83, as well as the accepted recommendation in relation to ministerial consent (set out below) will remove practical impediments to private enforcement actions, which may prompt an increase in their frequency. It remains to be seen what utility this particular change will have, given the challenges involved in making use of the provision – for example, facts may need to be established in relation to the particular party bringing the action, rather than a general finding that conduct occurred, to be completely effective.

The change may however impact the willingness of parties to settle with the ACCC, and particularly the scope of admissions given, having regard to the potential for follow-on litigation especially where class action proceedings may be anticipated.


The Government’s position

The Harper Review recommended two changes to s 5 of the CCA so as to:

  • remove the requirement in ss 5(3) and (4) for private parties to seek ministerial consent before relying on extraterritorial conduct in proceedings under the CCA.  The Government has supported this change and already has a bill before Parliament which would give effect to it; and
  • amend s 5(1) to remove the requirement that a contravening firm has a connection with Australia through residence, incorporation or business presence in order for the CCA to apply to conduct engaged in outside Australia, and replace it with an overriding requirement that the conduct relates to trade or commerce within Australia or between Australia and places outside Australia.  The Government does not currently support this recommendation, but will consider how to effectively capture conduct that harms competition in an Australian market, having regard to international law and policy considerations.

What it means

The removal of the requirement to seek ministerial consent will eliminate an administrative burden on applicants in terms of the time and cost of obtaining foreign legal advice, as well as the delay in awaiting a decision.

The removal of the residence, incorporation or business requirement from section 5 would have been more significant as would have removed a significant matter of debate, particularly in actions involving global cartel conduct.  The proposed amendment would also have been consistent with competition law extraterritoriality in other countries, such as the United States.  What approach the Government decides to adopt in defining the appropriate territorial nexus required for extraterritorial conduct to be caught by the CCA remains to be seen.  In the meantime, foreign companies are faced with continuing uncertainty in circumstances where conduct does not have a clear effect on an Australian market.

Next steps following Harper

Taken together, these changes are likely to fuel the trend of increased private competition enforcement.  As yet, the timing of draft legislation is yet to be made public, but with Parliament having already risen for the summer we anticipate lots of time for hot debate on the best approach.
Image credit: Author: Rafael Amado Deras / photo on flickr / remixed to B&W and resized

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About The Author

is a solicitor in the competition litigation practice of King & Wood Mallesons in Sydney.

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