alexandra-merreth

The ACCC is raiding my office: what do I do?

alexandramerrett@bigpond.com (Alexandra Merrett ) — Wed, 28 Apr 2021 02:57:09 GMT

Keywords: ACCC, enforcement

The top 10 things to do if you're served with a search warrant by the ACCC and who should do them...

1. [ Most senior person in attendance, eg the manager ] Review the search warrant , checking for the following info:

a. the identified premises

b. the time specified for the execution of the warrant

c. the kind of evidence sought

d. the alleged breaches of the Competition & Consumer Act

e. who’s in charge (that is, the ACCC officer responsible for executing the warrant)

2. [ Preferably another person, eg receptionist ] Take a copy of the warrant (in fact, take a few) . Occasionally a warrant may be a telephone warrant, in which case write down the above details and ask an ACCC officer to verify them. Again, make several copies of this summary

3. [ Manager/receptionist ] Check the credentials of those conducting the search and take the details of each person involved (probably easiest by photocopying their ID cards)

4. [ Manager ] Ask the ACCC to wait while you call a lawyer . They don’t have to say yes, so ask politely! If they say no, you cannot obstruct their search. If they agree, choose an appropriate waiting room for them (one with no evidence that can be examined in your absence) and treat them in the same manner as a visiting client/customer

5. [ Manager ] Call a lawyer – ideally one who is familiar with your business (regardless of their area of practice). Failing that, just get a lawyer who can help, preferably in person. If they can’t get to your premises quickly, keep them on the phone throughout the search process

6. [ Manager ] Ask if you can send an all-staff email :

a. advising of the warrant

b. instructing staff to cooperate and not to destroy or hide documents, and

c. barring any external communications relating to the search.

This is also a good time to call for assistance . Ideally, you want at least three staff members present, including where possible a senior IT manager

7. [ Senior staff ] Ensure a senior member of staff accompanies all ACCC officers throughout the search process . Arm each staff member with a copy of the warrant. Note that the ACCC is likely to break its staff up into search teams of 2-3 people

8. [ Manager/senior staff ] If you have privileged material onsite, pay close attention – the ACCC is NOT entitled to take such documents. If you think a document is privileged (that is, it was prepared by or for your lawyers for the dominant purpose of giving legal advice), tell the ACCC. If the ACCC still wishes to take it, don’t try to stop it but make specific note of the document and the officer with whom you’ve discussed it

9. [ Everyone ] Cooperate with the search process, be polite and DO NOT obstruct the ACCC officers . Cooperating includes answering factual questions honestly. That said, do not volunteer information – in other words, only answer what you have been asked

10. [ Manager/senior staff ] Make sure you inspect all evidence which the ACCC seeks to remove from the premises and get a detailed receipt for that evidence

A search warrant entitles the ACCC to:

enter the premises identified in the warrant
search the premises for the kind of evidence specified in the warrant
seize that evidence and make copies of it
check to see whether the evidence is accessible (eg by opening documents on ACCC staff laptops)
take photographs or make video recordings of the search process
seize evidence that is unrelated to the warrant where it may be evidence of an indictable offence under specified legislation

Disclaimer

The information on this page is intended to be a general guide only. It is not intended to constitute professional or legal advice. While all efforts are made to ensure information is accurate as at the date it is published, there is no guarantee that it will have been updated to reflect subsequent developments .

I know what you did last Summer (and Spring, Winter & Autumn): what the ACCC got up to in 2020

alexandramerrett@bigpond.com (Alexandra Merrett ) — Tue, 16 Mar 2021 12:54:18 GMT

Key words: ACCC, enforcement

Competition law in Australia adheres to a calendar of sorts, with February marking the annual release of the ACCC’s enforcement priorities. These are typically published via a speech from the Chair at a specific event and then duly reported both within the industry and more broadly.

But the ACCC’s enforcement priorities don’t always provide insight into what is happening on the ground. For a start, there’s a lag: serious cases can take years to get to court. For example, criminal cartels were quite the focus for the ACCC for some time before they gave rise to activity worthy of reporting. Second, the enforcement priorities don’t tend to highlight the ACCC’s bread and butter, which can mean the daily work of Australia’s competition regulator is overlooked. Third, we need to remember the ACCC wears many hats, not just that of “enforcer”. Finally (something I imagine we can all relate to), there can be significant gap between one’s plans and reality. After all, in February 2020, did the ACCC really think that COVID would being its leading topic of conversation?

With these limitations in mind, I spent a little time going through all 283 ACCC media releases for 2020, trying to ascertain what caught its attention both in terms of issues and industries. The analysis gives rise to some interesting insights (and allowed me to try making my own word clouds).

The big issues

Not only did COVID “win” first place in terms of mentions, it provided the foundation for the second-place getter: notifications and authorisations. It’s unusual for the CCA’s statutory immunity processes to feature so heavily, but this largely reflected the significant number of authorisations filed by various industries in response to COVID. In a six week period, the ACCC received more authorisation applications than it typically does in a year.

The two other key issues of similar magnitude were misleading & deceptive conduct (which really IS the bread and butter of the ACCC) and mergers. I found it a little surprising that there were almost as many releases focusing on mergers as there were on s18 matters. When you consider that most mergers are dealt with on a strictly confidential basis, it suggests the ACCC is more active in this space than many realise.

Next cab off the rank – no pun intended – was product safety. While the ACCC covered a broad range of safety concerns, motor vehicles featured strongly. This was mostly due to the ACCC’s efforts to publicise issues with Takata airbags, although there was also a fair amount of focus on quad bikes.

It’s also interesting to consider the issues that didn’t feature that often: for example, cartels were the subject of significantly fewer releases than the various codes. (Indeed, until December, the Dairy Code featured more frequently in media releases than did the ACCC’s favourite bête noir, conspiring competitors.) And the major changes to the CCA that occurred in 2017 have yet to trigger much in the way of activity: while market power issues featured occasionally, there was not a single mention of concerted practices. Similarly, class exemptions warranted just one media release.

Also, given the ACCC is very actively campaigning for the imposition of penalties for unfair contract terms, it was surprising to see this issue feature so rarely.

Given the year that was, concerns about refunds also seemed strangely low-profile (even though the travel & transport industries featured quite strongly). It will be interesting to see whether this issue continues to pass by unnoticed in 2021.

What industries were in the gun?

It’s not a great shock to learn that online & digital businesses were the ACCC’s main focus of attention. This was the result of a few factors, especially the ongoing fallout from the ACCC’s digital platforms inquiry and the huge swing to online purchasing in the wake of COVID.

Similarly, telco – especially the NBN – featured strongly. The ACCC’s role in such matters is often more that of a regulator or even just commentator rather than enforcer: as such, it regularly reported on NBN take-up, speeds and pricing.

Outside the immediate world of technology, a number of industries featured strongly. The following averaged just under a media release a fortnight: motor vehicles (often due to the product safety issues mentioned above); retail; travel & transport (frequently due to COVID); energy; health (including pharmaceuticals, as well as health insurance); and agriculture. Agriculture might seem the odd one out here, but its inclusion reflects the ACCC’s enforcement priorities over recent years (not to mention the clear focus on the Dairy Code last year).

And those industries which didn’t get as much ACCC attention as one might expect? Well, franchising didn’t receive a whole lot of focus: given the massive case launched against RFG towards the end of the year, and the ongoing concerns about how franchisees are to make enough money to allow both themselves and their employees to eat, this strikes me as something of a surprise.

Finally, it’s notable that supermarkets rated quite low on the ACCC's hit parade. After years of being on the receiving end of ACCC opprobrium, perhaps the entire country had a renewed appreciation for our purveyors of toilet paper and other wondrous goods.

Disclaimer

Call & Answer: if the ACCC asks, do you have to respond?

Mon, 02 Nov 2020 12:15:12 GMT

Keywords: ACCC, Compliance, Investigations, Confidentiality, s155

I’m asked by clients surprisingly often whether they have to respond to ACCC requests for information. These aren’t dodgy folk; rather they’re private and/or concerned about what will happen to their information. Ultimately, there are several contexts in which the ACCC might ask you questions, which means whether (and how) you respond really depends.

Most information requests from the ACCC are just that: requests. Consequently, whether you respond is really a matter for you. But please bear in mind certain practicalities.

Voluntary requests

The key issue here is why is the ACCC asking?

For example, if the ACCC is investigating your conduct, then ultimately they can compel the information (see below). As such, it’s better to hand it over without escalating the issue. Here, cooperation is key. Alternatively, the ACCC may be asking in order to investigate someone (or something) else. This might arise in the context of mergers (or various statutory processes), in which case many parties choose not to respond. If it’s an enforcement investigation, again the ACCC may be able to force your hand. If you really don’t want to respond, it may be best to seek advice about how to manage your engagement.

Finally, the ACCC may be asking because you’ve initiated a process (for example, a merger). Where this happens, it is always an option to decline to cooperate, but this strategy may well come at the cost of the process concerned. If you really don’t want to answer the ACCC’s questions, then you have to consider (for example) how much you want that merger clearance you’ve sought.

I have had some clients who operate in the form of very closely-held private companies – they’ve deliberately structured their business (including finances) in a way that means they don’t have to let people inspect their underwear. In such businesses, privacy may be worth more than a given project. This approach might be hard for some to understand, but that doesn’t render it invalid. That said, it can mean some fancy tapdancing with the ACCC which typically assumes that squirrely behaviour is dodgy.

Compulsory demands

The ACCC has several bases upon which it can require you to provide information. The best known of these are s155 notices and search warrants. If you’re dealing with a search warrant, you don’t have time to read all this - go here instead .

In the case of s155 notices , you will have time to seek advice about your rights and responsibilities. The long & short of it is: there are limited bases upon which to protest. While you may be able to confine the scope of the notice, you’re almost certainly going to have to comply. I strongly advise s155 recipients to seek qualified legal advice as soon as possible (certainly within a day or two of receiving the notice). Putting together a response almost always takes longer than you expect.

Before calling your lawyer, try to ascertain the following (it’s all on the first couple of pages of the notice):

What sort of notice is it – (a) [furnishing of information]; (b) [production of documents]; and/or (c) [to appear for an examination]?
What are “the matters that constitute” (that is, what is the essence of the alleged conduct) and when did it -allegedly- occur?
What are the relevant provisions which may have been contravened? and
What is the return date (that is, the date by which you have to comply)?

How will the ACCC use my info (whether acquired compulsorily or voluntarily)?

The ACCC can do a lot of things with your information, which is why people can be a little leery. You should assume that it will be kept on file, and may be looked at again even in relation to a different matter. It can definitely be used against you, now or at a later point.

Do I have to answer everything I’m asked?

This question presumes that we’re in s155 territory (hence the use of “have to”). In short, no. The ACCC is not entitled to violate legal professional privilege, and the privilege against self-incrimination also applies. That said, this is tricky territory – never try to play these cards without proper legal advice. If you’re in a voluntary situation, then the answer is definitely no, although that might itself provoke a s155 notice (see above).

How does confidentiality work?

If you’re providing a voluntary statement, you can ask for information to be treated confidentially. Where the ACCC considers this is appropriate, it will look after your info (although it did have a very embarrassing slip-up in 2019).

That said, all information may be used internally within the ACCC (including down the track) and may be provided to its advisers (e.g. lawyers and consultants). In addition, certain information may be released to other government bodies under specific provisions of the CCA.

Note that where you are under a confidentiality obligation to a third party (for example, a former employer), you may not be able to provide the ACCC with information voluntarily. In such circumstances, the ACCC may serve you with a “friendly” s155 notice.

Ultimately, the ACCC tends to be pragmatic: in game theory terms, it is a repeat player. While it is (almost always) entitled to play hardball in virtually any situation – compelling information to be produced and then being able to treat it with relative freedom – it understands that sensitive information has to be treated in a way that will encourage others to cooperate in future. As such, delicate matters are typically managed with appropriate sensitivity.

Above all else, to the [ACCC] be true…

Whatever you do – whether engaged in a voluntary or compulsory process – don’t be tricksy in your dealings with the ACCC. It’s not going to end well, and may even result in criminal charges. As Yul Brynner would say, “don’t [lie], whatever you do, just don’t [lie]”. It’s best not to smoke either.

PS: in case you wish to be reminded of the gorgeousness of the Bare Naked Ladies’ Call & Answer , here’s a link : as Molly Meldrum would say, do yourself a favour…

Disclaimer

Is Merger Clearance Necessary?

Fri, 02 Oct 2020 14:12:41 GMT

Is Merger Clearance Necessary?

Keywords: ACCC, Mergers.

How Do We Know if Our Merger Needs ACCC Approval?

Unlike some other jurisdictions, in Australia it is not compulsory to notify the competition regulator of an intended merger. Rather, it’s up to the parties. This can lead to a lot of questions. Here are five to start with.

What Exactly Is a Merger?

First, some terminology. Some people get confused by the use of the term “merger”, as they’re simply planning an “acquisition" or a “takeover". But “merger” is just the language of (international) competition law. Our mergers provision (section 50 of the Competition and Consumer Act) actually applies to any acquisition of shares or assets, regardless of how that acquisition is described. Section 50 doesn’t require all shares to be acquired, nor do you have to acquire all the vendor’s assets. It’s triggered where enough has been acquired to allow the purchaser a real say in the target’s business (or to expand its own operations). But this is not a question of tax law, where it’s essential to know whether there is a going concern at stake. Ultimately, under competition law, it’s all semantics; even if section 50 doesn’t apply, (essentially) the same legal test will arise under another section of the act.

What Is the ACCC’s Role?

The Australian Competition and Consumer Commission (the ACCC ) wears many hats, including as principal enforcer of our competition laws. Typically, it won’t advise parties whether it considers proposed conduct to be acceptable, except in the case of mergers. Over many years, an informal practice has developed whereby parties can approach the ACCC to see whether their merger is okay. This is known as “informal merger clearance”. While there is a formal avenue available, informal clearance dominates Australian merger assessments.

What Are the Risks if We Ignore the ACCC?

Obviously, there is a risk that you might breach the law (sound the alarms for huge penalties and the risk of having to undo the transaction). But in truth, this is a low level risk. A far more pressing issue is the reputational damage incurred when you don’t notify and the ACCC thinks you should have. This quickly leads the ACCC to conclude that you don’t care about compliance nor about the ACCC itself. No-one likes to feel unloved. And it’s not the best strategy when the spurned lover is one of Australia’s most effective law enforcers, with fingers in oodles of pies. So you have a cranky customer who complains about your handling of a warranty issue? The ACCC’s starting point is that you don’t respect the law and you don’t respect its enforcer. This risk is far more significant than many people realise.

So When Do We Have to Involve the ACCC?

Informal clearance really is informal, which means there are no hard and fast rules for when you should involve the ACCC. That said, where the ACCC is likely to notice a merger, or the purchaser wants the ACCC to notice it, then at least seek advice.

To this flesh out this, consider the following factors:

1. How big are the parties involved? The ACCC’s merger guidelines state that where the merger parties’ products are substitutes or complements and the merged entity’s market share will exceed 20%, notification is “encouraged”. Where it’s a vertical merger, these numbers don’t really help, but parties should at least seek advice if one has a market share of 20%+ or both have around 10%.

2. Is the ACCC on the look-out? Maybe one of the parties has a bad reputation with the ACCC (see above), so the ACCC is watching. Alternatively, it might be checking out the industry. For example, right now, mergers in the digital space are on the ACCC’s radar. Consequently, even parties to an apparently innocuous merger might need to consider notifying. ACCC interest can also be anticipated if another industry player is likely to make a complaint.

3. Is there a long-term strategy that warrants early engagement with the ACCC? For example, it may be important to affirm that you’re a good corporate citizen, or you might have more strategic interests at play – perhaps you plan a series of acquisitions and at some point you’ll need to engage with the ACCC. If yes, there are definite advantages to starting early.

One final trigger: does the transaction require approval from the Foreign Investment Review Board? FIRB relies heavily on the ACCC for guidance as to the competition assessment which forms part of its own requirements. As such, sometimes the approval process for a merger which wouldn't otherwise warrant clearance may run more smoothly if you first make contact with the ACCC.

Whose Responsibility Is It?

Traditionally, the purchaser has running of the clearance process. But the vendor is still liable should a contravention be established; as such, it definitely has skin in the game. The vendor might also wish to carry the process if it is set on exiting the industry via some form of tender process. That way, it can identify genuine prospects in advance and remove some uncertainty both as to ultimate clearance and timing – as everyone knows, increased certainty means a better price.

Disclaimer

ACCC Investigates Bargaining Power in Ag Chains

Mon, 07 Sep 2020 07:53:12 GMT

ACCC Investigates Bargaining Power in Ag Chains

Key words: ACCC, Agriculture, Supply Chain

Time to get your skates on... Australia's Federal Government recently asked the ACCC to examine bargaining power in supply chains for perishable agricultural products. The ACCC is to provide its report by 30 November, so seeks submissions by 18 September.

The headline issue is: how the relative bargaining power of farmers, processors and retailers involved in the relevant supply chains affects trading practices and consequently efficiency.

Dairy is an industry of particular focus, along with meat products, fish/shellfish, eggs, and horticultural & viticultural produce.

The inquiry's home page can be found here .

Submissions should respond to the Terms of Reference .

Disclaimer

alexandra-merreth

The ACCC is raiding my office: what do I do?

Keywords: ACCC, enforcement ﻿

I know what you did last Summer (and Spring, Winter & Autumn): what the ACCC got up to in 2020

Key words: ACCC, enforcement

The big issues

What industries were in the gun?

Call & Answer: if the ACCC asks, do you have to respond?

Keywords: ACCC, Compliance, Investigations, Confidentiality, s155

Voluntary requests

Compulsory demands

How will the ACCC use my info (whether acquired compulsorily or voluntarily)?

Do I have to answer everything I’m asked?

How does confidentiality work?

Above all else, to the [ACCC] be true…

Is Merger Clearance Necessary?

Is Merger Clearance Necessary?

How Do We Know if Our Merger Needs ACCC Approval?

What Exactly Is a Merger?

What Is the ACCC’s Role?

What Are the Risks if We Ignore the ACCC?

So When Do We Have to Involve the ACCC?

Whose Responsibility Is It?

ACCC Investigates Bargaining Power in Ag Chains

ACCC Investigates Bargaining Power in Ag Chains

Keywords: ACCC, enforcement