Recent changes to the ACCC Immunity Policy
In September 2014, the ACCC updated its Immunity and Cooperation Policy for Cartel Conduct (Immunity Policy). While key aspects of the Immunity Policy have not been changed there are some amendments that seek to provide immunity applicants with greater certainty about satisfying the conditions for immunity, the role of the CDPP, derivative immunity, and revocation of immunity.
Key features remain unchanged
The following key features of the Immunity Policy have not been changed:
- the process for applying for immunity from the ACCC and CDPP;
- the condition that full and frank disclosure and cooperation is required to obtain immunity; and
- immunity applications made under the previous policy will be governed by that policy (applications prior to 15 August 2014).
Major changes to the Immunity Policy
Clear leader and coercion: the condition that an applicant not be the “clear leader” of a cartel to be eligible for immunity has been removed. The condition that the applicant not “coerce” other parties into the cartel however remains. Accordingly, a party may now be eligible for immunity if it was a primary convenor of the cartel conduct but did not coerce others to being parties to the cartel.
Immunity from criminal prosecution: previously, the CDPP was not required to provide criminal immunity to an applicant at the same time that the ACCC provided civil immunity. Accordingly, there was a risk that applicants cooperating with the ACCC could be exposing themselves to criminal liability. In light of this concern, the Immunity Policy has been amended so that the CDPP will provide a letter of comfort to applicants about criminal immunity at the same time that the ACCC provides civil immunity.
Derivative immunity for related bodies: previously applicants for immunity could seek derivative immunity for partly owned or controlled related entities (subject to ACCC discretion). Now, applicants can only seek derivate immunity for entities in which they have a controlling interest and/or for a parent company.
Revocation of immunity: previously, if the ACCC revoked immunity, the applicant would be given an “opportunity to respond” to the revocation. In light of concerns that this process was ambiguous, there is now a formal process for revoking immunity. This involves the ACCC discussing potential breaches of immunity conditions with an applicant to resolve issues informally; where those issues are not resolved, the ACCC will issue a caution to the applicant to remedy the breaches or explain why they cannot be remedied; the ACCC may then issue a second letter requesting further explanation/justification for the breaches; and finally, where the ACCC is not satisfied with the explanation/justification, it may issue a notice of revocation and recommend that the CDPP also revoke immunity.
Specific cooperation policy for cartel conduct: previously, the cooperation policy applied to all conduct in potential contravention of competition and consumer laws. The Immunity Policy now makes it clear that for cartel conduct, where a party is not the immunity applicant but wishes to cooperate, the ACCC will assess the nature and extent of cooperation by reference to factors that are similar to the conditions of immunity (rather than the general cooperation principles as was previously the case).
Recent experiences with the ACCC Immunity Policy
JWS is currently acting for an immunity applicant in cartel conduct proceedings commenced by the ACCC. The hearing is expected to be set down in late 2015.
In light of our recent experiences with the ACCC in acting for our client, potential immunity applicants should be aware of the following issues:
Your executives and employees will be ACCC witnesses: Given that your staff is likely to be required to provide evidence for the ACCC as the immunity applicant, it will be important to ensure that:
- the ACCC provides you and relevant individuals with sufficient time to prepare witness statements/affidavits in support of the ACCC case. This is often underestimated and witnesses may be unavailable due to employment or other issues which in turn can cause significant stress on individuals and the company and difficulties in meeting ACCC deadlines
- witnesses are available to cooperate with the ACCC at all times irrespective of their employment or other commitments (including former employees);
- former employees fully understand that a condition of their immunity is full and frank disclosure. If former employees cease cooperating, you will need to ensure that this will not in turn affect the company’s immunity; and
- you regularly brief your PR team to deal with news enquiries and reports.
Competitors will seek access to your confidential information to prepare their case: As the immunity applicant, your business records and evidence from your employees will form part of the ACCC’s case. Much of this may contain information that is commercially sensitive to the company. Given that a cartel proceeding will involve your competitors being prosecuted (while you have immunity), those competitors and their lawyers will want access to confidential information to prepare their defences. Accordingly, you must ensure that you implement a robust confidentiality regime to protect confidential information from your competitors.
Your commercial relationships will need extra attention: As the cartel may have adversely affected your customers or suppliers, you will need to ensure you have appropriate communication strategies in place for affected parties with which you continue to trade.
The costs of cooperation are not small, but you have immunity from penalties: While you will not be a party to the proceeding or subject to penalties, the costs of compliance will not be trivial. This is because in order for the ACCC to make out its case, it will need full cooperation from your company and its individuals which may include establishing document management systems, producing and reviewing large volumes of documents, ensuring witnesses cooperate with ACCC requests for documents and evidence preparation and engaging in legal battles with other parties over confidentiality regimes and access to confidential documents. You will also not be immune from follow-on actions.