#7173 - Public Enforcement By The Accc And Cdpp - Competition Law

• 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.

• 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.

• 1) A court may impose a pecuniary penalty if satisfied that a person (includes bodies corporate) has contravened a provision of Part IV.

  • 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:

  • $10 million

  • 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.

  • 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.

• 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)).

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

• 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.

  • 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.

• 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.

• 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.

• The matters to be taken into account in exercising discretion are:

  • The nature and extent of the act or omission;

  • The nature and extent of any loss or damage suffered as a result of the act or omission;

  • The circumstances in which the act or omission took place; and

  • Whether the person has previously been found by the court to have engaged in similar conduct.

• 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.

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

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

• So long as the penalty is in the range of what the court would of chosen it will endorse the parties’ submissions.

• 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...