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In Competition

Current trends in competition law litigation

16 April 2015

The ACCC is undertaking more investigations and litigation, including on novel matters, and seeking higher penalties.  In this video, King & Wood Mallesons Competition Partners Trish Henry and Stephen Ridgeway discuss the role of the ACCC in Australian court proceedings. They present case studies on cartel and other competition and consumer protection proceedings, together with key learnings for businesses.

ACCC’s activity

The ACCC’s activity continues to increase and it has reported that it has more than 10 active in-depth cartel investigations and more than 20 competition investigations on foot, in addition to its consumer protection investigations.

This trend is not just reflected in investigations – the ACCC is actively taking matters to court.  Rod Sims, the Chairman of the ACCC, noted in a recent speech that last year the ACCC commenced 8 competition cases and 20 consumer protection cases in the Federal Court.

In this video, Trish and Stephen discuss the Flight Centre and Informed Sources cases, in which King & Wood Mallesons is involved.  The cases involve novel issues, as the Flight Centre matter involves claims of price fixing on the basis of a principal-agent arrangement, and Informed Sources is a proceeding alleging a substantial lessening of competition from the electronic exchange of information between retailers about petrol retail prices.

Trish and Stephen also discuss the recent Federal Court decision which dismissed the ACCC’s proceedings for misuse of market power against Pfizer.  Our coverage of the case can be found here.

Rod Sims has previously suggested that he wants the ACCC to test the law and take more complex cases to court.  Looking at the above case examples and the ACCC’s general investigative and litigious activity, it appears that the ACCC is following through with these statements.

Deterrence and penalties

As Trish notes, it appears that the ACCC wants to set some precedents, but it also sees a great deterrence to business and the public when it takes on proceedings, given the potentially significant penalties.

Stephen mentions that the ACCC has indicated that it will seek outcomes with the highest deterrence value.  As pointed out in one of our previous posts, Rod Sims’ speech earlier this year emphasised that the ACCC “will be continuing to advocate for the courts to impose penalties of appropriate deterrent value in each case”, to take full advantage of the “new” penalty regime (in place since 2007), which permits a court to impose a maximum penalty per contravention of:

  • $10 million;
  • three times the gain from the contravening conduct; or
  • if the gain cannot be ascertained, 10% of the company’s turnover.

Rod Sims acknowledged the media commentary that the Court’s award of penalties of $11m in the Flight Centre case was “immaterial” given the size of Flight Centre and said, “Penalties should not be seen as simply a cost of doing business. They need to be at a level which achieves both specific and general deterrence.

What does this mean for you?

There is a higher chance of companies becoming the subject of ACCC investigations and court proceedings, including in novel, complex and controversial matters.

Clients should be aware that the investigation stage will have a significant impact on the likelihood of litigation and the level of penalties sought.

Companies also need to keep in mind that the ACCC will seek much higher penalties than it has in the past.

It is now more important than ever for businesses to have effective competition and consumer law compliance programs in place and to carefully manage early interaction with the ACCC in investigations.

Photo credit:  “ACCC Complaints” by Scott Lewis on Flickr. Some rights reserved by hnnbz. Remixed to black and white and resized.

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