In support of its competition law enforcement authority, the Australian Competition and Consumer Commission (ACCC) employs a wide range of techniques to gather evidence. Possibly the most effective is its statutory powers under section 155 of the Competition and Consumer Act 2010 (the Act). As described in our prior alert failure to comply with a notice issued attracts hefty consequences including criminal fines for companies and individuals but also imprisonment for individuals. This month, the Federal Court of Australia has found yet another company director guilty of offenses under section 155, sentencing him to 200 hours of community service.
Section 155 gives the ACCC the power to require a person to provide information and documents and give oral evidence at an examination. Failure to comply with section 155 is a criminal offense. A court may impose penalties for failure to comply – a fine up to $3,400 or imprisonment up to 12 months.
Recent action under Section 155
The ACCC has brought proceedings against Mr. Robert Paul Davies for allegedly aiding and abetting the failure by Natural Food Vending Pty Ltd to comply with a compulsory notice issued by the ACCC.
In 2010, the ACCC issued a section 155 notice to Natural Food Vending, requiring it to provide certain information and documents. The notice was issued as part of the ACCC's investigation into allegations that Natural Food Vending made false or misleading representations in the promotion and sale of vending machine business opportunities.
Natural Food Vending appointed a liquidator on the day the response was due, and Natural Food Vending failed to provide any of the information or documents required by the notice on the due date. The ACCC alleges that Mr. Davies, the sole director of Natural Food Vending, aided, abetted, counseled or procured the company's failure to comply with the notice, including by failing to inform the liquidator of the existence of the notice or of the ACCC's investigation into representations allegedly made by Natural Food Vending. The Federal Court found that Mr. Davies intended to, and did, aid and abet the failure of Natural Food Vending to comply with the section 155 notice.
In his sentencing judgment, the court noted Mr. Davies' lack of contrition and unwillingness to take responsibility for his actions. The court stated that the penalty of 200 hours of community service imposed on Mr. Davies would reflect the court's condemnation of his conduct and act as a general deterrent to others.
The ACCC relies heavily on the powers in section 155 to perform its functions. The importance that the ACCC places on these tools is evidenced by the increasing number of prosecutions to date. However, the ACCC continues to be frustrated by non-compliance and is seeking legislative change to deter non-compliance.
The current review of Australia's competition laws, the "Harper Review," has recommended changes to bring Australia's competition laws in to line with similar companies legislation which will likely result in civil penalties in addition to the existing criminal regime. It is also likely the fines will increase in value.
What to do when receiving a notice
With increasing Australia competition law enforcement and possibly increasing sanctions, recipients must take a request for information very seriously. Recipients will likely consider that the time for compliance will be surprising short and a request for information and material will likely require significant search of document management systems. As Mr. Davies learned, ignoring a notice is a failed strategy. Recipients are well advised to give the notice immediate attention and to focus resources on complete compliance. Additionally, recipients are recommended to ensure that they have a line of communication with the ACCC. If they are facing difficulties in complying, it is always better to raise the problems early rather than follow Mr. Davis' example, as in consultation a solution might be developed with the ACCC.