Someone recently bought our

students are currently browsing our notes.

X

Public Enforcement By The Accc And Cdpp Notes

Law Notes > Competition Law Notes

This is an extract of our Public Enforcement By The Accc And Cdpp document, which we sell as part of our Competition Law Notes collection written by the top tier of University Of New South Wales students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Competition Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Public enforcement by the ACCC and CDPP: Responsibilities

*

*

The ACCC must ensure compliance with the CCA and investigate Part IV complaints. After the investigation process and when a breach has been found, the ACCC can litigate for the imposition of pecuniary penalties or other punitive orders. The ACCC may also accept undertakings pursuant to s 87B.

*

Criminal cartel provisions (s 44ZZRF and 44ZZRG) are dealt with by the DPP.

Pecuniary penalties S 77 - the power and time limit

* The ACCC may institute proceedings in court to recover a pecuniary penalty referred to in s 76 on behalf of the Cth.

* This proceeding MUST be commenced within 6 years after the contravention. S 76 - the limits of pecuniary penalties

* 1) A court may impose a pecuniary penalty if satisfied that a person (includes bodies corporate) has contravened a provision of Part IV. o Also if a person has attempted, aided or abetted, induced, conspired with others to contravene or in any way is knowingly or unknowingly concerned in or a party to the contravention:

*

*

*

(b) has attempted to contravene such a provision; or (c) has aided, abetted, counselled or procured a person to contravene such a provision; or (d) has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision; or (e) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or (f) has conspired with others to contravene such a provision;

(1A)(b) applies to a body corporate. It states that the court may for EACH act or omission order the greatest of the following: o $10 million o If the court can determine the benefit to that body corporate or any related body corporate which was obtained directly/indirectly and that is 'reasonably attributable to that act or omission' = 3 times the value of that benefit. o If the court cannot determine the value of that benefit = 10% of the annual turnover of the body corporate during the period 12 months immediately before the month in which the act or omission occurred.
? S 86E: Individuals could also be disqualified from being a director or managing a corporation for some time (a period which the court considers appropriate).
? S 77A: They will also not be indemnified for their legal costs. (1B) for a person the maximum pecuniary penalty is $500,000 for each act or omission. (3) allows multiple fines for two or more contraventions of Part IV. But a person is not liable for more than one pecuniary penalty in respect of the same conduct.

S 151BX - if the prohibition keeps going

* The Federal Court has the power to impose pecuniary penalties on persons in breach of the competition rule, a tariff filing direction or a record keeping rule.

* The maximum penalty payable of contraventions of less than 21 days is $10 million.

* An additional $1 million per day may be imposed for each day the contravention continues.

*

For contraventions that continue for more than 21 days, the maximum penalty payable is
$31 million and an additional $3 million for each day in excess of 21 days that the contravention continues (s 151BX(3)(a)).

Standard of proof Bringinshaw v Bringinshaw (1938)

* The facts in issue must be proved to the satisfaction of the decision maker on the balance of probabilities.

Purpose/objective of a pecuniary penalty

* TPC v Stihl Chain Saws (Aust) Pty Ltd (1978): Found that the objective is punishment. TPC v CSR Ltd (1991)

* French J said it was deterrence.

* This is the better position. o E.g: NW Frozen Foods Pty Ltd v ACCC the penalty was reduced because s 76 was found not to be focussed on punishment because it is not a criminal sanction. It went from $1.2 million to $900,000.

Accessory liability Rural Press Ltd v ACCC (2002) FCFCA

* Main case on accessory liability.

* Mr Law and Mr McAuliffe appealed against the finding that each of them was knowingly

*

*

*

*

*

*

concerned in the contraventions by Rural Press and Bridge Printing of s 45(2)(a)(ii) and (b) (ii) and s 46(1) of the Act. Issue: The appellants argued there was no evidence that they had actual knowledge that the purpose or effect, or likely effect, of the arrangement between Wikerie Printing and those companies would be a substantial reduction in competition in the Murray Bridge Newspaper Market. The question was never put to them by the TJ. Outcome: Mr Law and Mr McAuliffe were aware of the material facts and circumstances constituting the contraventions of s 45(2)(a)(ii) and (b)(ii). They were instrumental in making the arrangement, that gave rise to the contravention. The intended to stop River News being distributed in Mannum (because it was in competition with the Standard).

Whitlam, Sackville and Gyles JJ: The TJ found that the competition was not great in the area. BUT the appellants perceived it to be (clear in their communications) = they had the purpose to end competition between the River News and Standard. Yorke v Lucas HCA: S 76 requires: Each accused needs to have actual knowledge of the essential elements constituting the contraventions and engage in the conduct. Yet it is not necessary that an accessory realised that the conduct was unlawful. A person will be guilty of aiding, abetting or counselling and procuring the commission of an offence only if he intentionally participates in it. To form the requisite intent he must have knowledge of the essential matters which go to make up the offence whether or not he knows those matters amount to a crime. Ignorance of the law is not a defence. Pereira v DPP: Where knowledge is inferred from the circumstances it must be the only rational inference available. It is not necessary for the TJ to find that they knew and appreciated that the purpose or effect of the arrangement was substantially to reduce competition in the market ultimately identified by the TJ. Defining the market is difficult and thus liability should not depend on them knowing the market. They had actual knowledge of the essential elements of contravention.

Rural Press Ltd v ACCC (2003) HCA

* Appeal based on whether Mr McAuliffe and Mr Law had sufficient knowledge to make them accessories to the corporate contraventions.

*

*

*

Issue: The main issue was that they did not know the principal's conduct was engaged in for the purpose or had the likely effect of substantially lessening competition in the market, as defined. Gummow, Hayne and Heydon JJ: It is wholly unrealistic to seek to characterise knowledge of circumstances that way. Only a handful of lawyers think or speak in that fashion and then only at a late stage of analysis of the legal problem. In order to know the essential facts and

satisfy s 75B(1) and like provisions, it is not necessary to know that those facts are capable of characterisation in the language of the statute. Ignorance of the implications of your conduct is not a defence. The individuals need only know the essential elements of the contravention.

Factors to take into account when imposing a penalty S 76(1)

* The matters to be taken into account in exercising discretion are: o The nature and extent of the act or omission; o The nature and extent of any loss or damage suffered as a result of the act or omission; o The circumstances in which the act or omission took place; and o Whether the person has previously been found by the court to have engaged in similar conduct. TPC v CSR Ltd (1991) - very important factors

* CSR found in a penalty hearing that it had substantial degree of power in the ceilings materials

*

*

market; refused to supply plaster board for the purpose of deterring North Perth and Boral from engaging in competitive conduct it it's market; took advantage of its power in the market to contravene s 46; refused to supply plaster board to North Perth because it resupplied the products; engaged in conduct with the purpose of substantially lessening competition and engaged in exclusive dealing under s 47. $220,000 fine imposed.

French J: The first three are the most important in deciding the penalty amount: 1) The factors to impose a penalty that will deter include the nature and extent of the contravening conduct; 2) The amount of loss or damage caused; 3) The circumstances in which the conduct took place; Other factors: 4) The size of the contravening company; 5) The degree of power it has shown by market share and ease of entry into the market; 6) The deliberateness of the contravention and the period it extended over; 7) Whether the contravention arose out of conduct of senior management or lower level; 8) The corporate culture of the company of either compliance or not; and 9) Whether the company has shown a disposition to co-operate with the authorities. It is important whether the conduct actually harmed consumers. If the harm was negligible there will not be as substantial a penalty.

ACCC v Mayo International

* A deterrent to a small company may not have the same impact to a large one.

When the parties agree to a penalty with the ACCC

*

Court will have regard to any submissions by the parties about what the penalty should be.

TPC v Axive Pty Ltd (1994)

* So long as the penalty is in the range of what the court would of chosen it will endorse the parties' submissions. ACCC v NW Frozen Foods Pty Ltd (1996)

* Heerey J rejected the negotiated figure of $900,000, believing it was the court's place to determine the penalty and substituted $1.2 million.

* The FCFCA found that by negotiating the corporations prevented lengthy and complex litigation and the negotiation may include measures that promote future competition in the market concerned and the court will not depart from it to select another figure except in a clear case.

* Judges process of reasoning: It is open to the court to address the appropriate range of penalties independently of the parties' proposed figure however and then determine whether the penalty is in that range. 1) It is the responsibility of the court to determine an appropriate penalty under s 76 for a contravention; 2) Determining the quantum of penalty is not an exact science and there is a permissible range where the court cannot say one award is more appropriate than another; 3) There is public interest in promoting settlement of litigation particularly where it is likely to be lengthy and so the regulator and contravener can reach agreement and make joint submissions about the penalty to be imposed; 4) The view of the regulator is important in questions of penalty as it has views in areas of expertise (as opposed to subjective matters); 5) In determining whether a proposed penalty was appropriate, the court examines the circumstances of the case; 6) Where the parties have jointly proposed a penalty, it will not be useful to investigate whether the court will have arrived at that precise figure absent the agreement. The question is whether it is appropriate in the circumstances of the case and the court will not reject it if within a permissible range. ACCC v Ithaca Ice Works Pty Ltd (2002) The regulator should also always explain the process of reasoning that justified its discounted penalty. ACCC v Australian Safeway Stores Pty Ltd (1997)

* Safeway had a compliance program but still was found to breach the act.

* There was an agreement and the parties could not agree on the penalties imposed. The ACCC wanted $2 million against George Weston Foods Ltd and the Federal Court awarded $1.25 million.

How much should the pecuniary penalty be? Court may seek assistance Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd

* Over 2 years Mobil operated retail sites exceeding the permitted number specified in the Petroleum Retail

*

*

*

Marketing Sites Regulations 1981(Cth). This was a contravention. Mobil admitted to these contraventions and agreed to pay a pecuniary penalty of $844 500. Before agreeing to make an order imposing that penalty, Gyles J recommended to the CJ that a question be referred to the FCFCA about whether the court was bound by the decision in NW Frozen Foods Pty Ltd v ACCC (1996) to consider whether the proposed amount was within the permissible range in all the circumstances and it so, impose a penalty of that amount.

Branson, Sackville and Gyles JJ: A proper figure will be one within the permissible range in all the circumstances and the court will not depart from the agreed figure merely because it might otherwise have been disposed to select some other figure. Joint submissions are important for savings in resources. If the court considers that the evidence or information before it is inadequate to form a view about the appropriateness of the penalty, it can request additional

*

evidence to verify it from the parties. It may also seek the assistance of an amicus curiae or of an individual or body prepared to act as an intervener. Also if the court is disposed not to impose the penalty, it may be appropriate in the circumstances for each of them to be given the opportunity to withdraw consent to the proposed orders and for the matter to proceed as a contested hearing.

Take into account assistance in the ACCC's investigations. Minister for Industry, Tourism and Resources v Mobil Oil Australia Pty Ltd

* What must be taken into account is also if the contraveners assisted the ACCC in its investigations. ACCC v Australian Safeway Stores Pty Ltd

* This was a mitigating factor in the penalty amount.

No point in making analogies with other cases

*

There seems to be little point in making analogies with other cases because of the myriad of distinctions but similar contraventions should be visited with similar penalties. Cases are authorities for matters of principle but the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case.

NW Frozen Foods Pty Ltd v ACCC (1996)

* It was found that similar contraventions should incur similar penalties. However other things are rarely equal under the Act.

What happens when parties admit to a contravention?
ACCC v Visy Industries Holdings Pty Ltd (No 3)

* ACCC alleges that companies in the Visy Group and certain officers of those companies engaged

*

*

*

*

*

in price fixing and market sharing with companies in the Amcor Group, contrary to s 45. Amcor alerted the ACCC to the cartel conduct under the ACCC's Immunity Policy for Cartel Conduct. Visy admitted liability but state that the agreement is not to be taken as an admission to other facts outside the context of the proceeding. Issue: The TJ found that he is not bound to accept facts merely because they are agreed to between the parties and can draw inferences from the accepted agreed facts. The FCA accepted the ACCC's $36 million figure.

Heerey J: S 76(1) provides that the Court may order the payment of such pecuniary penalty as the Court determines to be appropriate 'having regard to all relevant matters. The fact that the ACCC and respondents have agreed on a penalty between themselves is relevant but not conclusive. They have admitted liability and saved a great deal of public expense. But it was a 5 year cartel and there is no Visy corporate culture to abide by the CCA obligations. None of the most senior people hesitated to embark on unlawful conduct. It is the most serious cartel case to come to court for the past 30 years. The penalty is appropriate in the circumstances.

Compliance program as a mitigating factor? The totality principle?

*

French J factor in TPC v CSR: The corporate culture conducive to compliance with the Act as evidenced by education programs.

ACCC v Australian Safeway Stores Pty Ltd (1997)

* George Weston Foods (GWF) admitted engaging in horizontal price fixing, contrary to s 45, and

*

rpm, contrary to s 48. These contraventions arose from the conduct of employees at the Victorian Tip Top division and occurred even though there was a compliance program. Issue: What weight should be accorded to GWF's compliance program as a mitigating circumstance?

*

*

*

*

*

*

*

Golberg J: For a compliance program to be a mitigating factor it must satisfy 2 requirements: 1) There must be a substantive compliance program which is actively implemented; and 2) The respondent must be able to demonstrate that the program was successfully implemented. Senior employees were involved (not directors but still high up in management). This warrants significant penalties. It was not a GWF officers off on a frolic of his own. Also the high management turnover is not a mitigating factor. There were 5 separate contraventions willingly engaged in and it was engaged in for a substantial amount of time - at least 4 months. It would have continued if the ACCC had not discovered the conduct. It had a large impact on consumers and the contraventions should therefore not be trivialised. The compliance program was a substantial program. But the implementation of the program was not successful in the circumstances of the case. There was no check or control. Although the effect of the contraventions was localised, it does not diminish their significance as deliberate contraventions. The size of GWF is relevant to increase the penalty. It is a leader in the community and should uphold ethical and lawful business practice. But: GWF is entitled to have consideration for assisting the ACCC as soon as the contraventions came to light. How to deal with 5 separate contraventions?
o Each separate contravention attracts s 76(3) - they may receive separate penalties. o Totality principle:
? Meant to ensure that an overall appropriate sentence/penalty is given. Ensures that the total sum imposed for the contraventions does not result in penalties exceeding what is proper.
? A judge initially imposes a penalty appropriate for each contravention. Then as a check at the end, consider whether the aggregate penalty is appropriate for the total contravening conduct.
? Yet here the circumstances underpinning the making and implementation of the price fixing agreement and the various resale price circumstances are quite separate and not otherwise connected. The compliance program was not effective and it must be brought home that the company must obey the law. o Penalties were: $300,000, $450,000, $100,000, $200,000 and $200,000 for the 5 contraventions of the Act.

Conduct of director, employee or agent of a body corporate S 84(2)

* Attributes the conduct of a company's directors and officers to the company. But they must be acting in the scope of the person's actual or apparent authority. If this occurs their actions shall be deemed to be those actions engaged in by the body corporate.

Separate contraventions or a single course of conduct?

*

S 76(1A) is the maximum penalty PER CONTRAVENTION. Therefore it will only be a maximum for multiple penalties if they are found to constitute a 'one course of conduct.'

S 76(3)

* Provides that if conduct constitutes a contravention of 2 or more provisions of Part IV, a proceeding may go against the person for any one or more of the

Buy the full version of these notes or essay plans and more in our Competition Law Notes.