On 8 September 2015, the Federal Court ordered Michael Anthony Boyle to pay a $3,500 penalty for knowingly giving false or misleading evidence to the ACCC in response to a section 155 notice – the highest total penalty imposed on an individual to date. The criminal proceedings against Mr Boyle for two contraventions are just one in a number of recent proceedings commenced by the ACCC alleging failure to comply with notices.

Background

Under section 155(6A) of the Competition and Consumer Act 2010 (Cth) (CCA), a person who refuses or fails to comply with a section 155 notice, or who gives evidence that is false or misleading in purported compliance with a notice, is guilty of an offence. The maximum penalty is currently $3,600 for individuals (or 12 months’ imprisonment) and $18,000 for corporations. At the time of Mr Boyle’s offence in 2011, the maximum penalties were $2,200 and $11,000 respectively.

There has recently been a high level of public discussion regarding the adequacy of this section and the maximum penalties for non-compliance, particularly during the course of the Harper Review (discussed below).

Proceedings against Mr Boyle

In 2011, the ACCC issued a section 155 notice requiring Mr Boyle to give evidence in the course of its investigation into SensaSlim Australia Pty Ltd (in liquidation). That investigation concerned claims of misleading and deceptive conduct in relation to SensaSlim’s product, business opportunities offered, and the identity of its officers (see our previous post on the investigation here).

Pursuant to the section 155 notice, Mr Boyle was asked to provide information relating to a key individual’s involvement with SensaSlim. That individual was later found to be knowingly concerned in, and party to, some of SensaSlim’s contraventions.

In September 2014, the ACCC commenced criminal proceedings against Mr Boyle in relation to two charges of knowingly giving false or misleading evidence about his knowledge of that individual’s involvement. Mr Boyle pleaded guilty to both charges and the proceedings concluded on 8 September 2015 when Justice Rangiah of the Federal Court ordered Mr Boyle to pay a $3,500 penalty.

The Federal Court is yet to publish its reasons for the decision.

The penalty imposed on Mr Boyle is the highest penalty imposed on an individual for non-compliance with a section 155 notice. Prior to that, the highest total penalty to be imposed was $2,160 (ordered by the Federal Court in 2007, also for two contraventions).

However, Mr Boyle’s case is not the only recent instance where the ACCC has commenced criminal proceedings alleging non-compliance with section 155. In October 2014, the ACCC announced it had begun proceedings against Robert Paul Davies for allegedly aiding and abetting a failure by Natural Food Vending Pty Ltd (of which he was sole director) to comply with a section 155 notice.  Those proceedings are yet to be determined by the Federal Court.

Is reform on the way?

ACCC Chairman Rod Sims has publicly stated that the ACCC takes non-compliance with section 155 notices “extremely seriously”, given they are a “critical tool” for the ACCC in investigating potential breaches of the CCA.

In its submission to the Harper Review, the ACCC:

  • argued that the current financial penalties for non-compliance are “woefully inadequate and fail to reflect the seriousness and criminality of the conduct”;
  • submitted that the process involved in prosecuting non-compliance was a time consuming and intensive process that failed the address fact that, even if the criminal proceedings result in a conviction, that conviction cannot compel the provision of information, documents or evidence; and
  • sought amendments to section 155 so that it could seek civil court orders compelling compliance with a notice, which would subsequently expose individuals to contempt proceedings for non-compliance, rather than requiring the commencement of separate criminal proceedings by the ACCC (arguably a much speedier process).

However, the final report of the Harper Review did not make any recommendations to that effect and was, in fact, silent on the issue. In addition, although the Harper Review recommended that penalties for non-compliance by corporations be increased, it did not make any comments in relation to the adequacy of penalties for individuals.

But that’s not the end of the line for reform on this front – in a post earlier this year, we reported on the Competition and Consumer Amendment (Deregulatory and Other Measures) Bill 2015 (Cth) (Bill), which was introduced into Parliament on 18 March 2015 as part of the Federal Government’s “repeal day”.

The Bill proposed the introduction of a new sub-section which would permit a court (on application by the ACCC) to make an order directing compliance with a section 155 notice. The proposed sub-section is to the same effect as the amendments sought by the ACCC in its submission to the Harper Review.

Since our previous post, the Bill has been referred to the Economics Legislation Committee, which tabled its final report on 13 May 2015 recommending that the Bill be passed. It is interesting to note that the Economics Legislation Committee was not concerned by the absence of a safeguard in the proposed sub-section to exempt persons who are not capable of complying (similar to other exemptions in section 155). The Committee instead considered that a matter within the court’s discretion when deciding whether to make such an order.

To date, no further steps have been taken in Parliament in relation to the passage of the Bill.