A recent case in the Federal Court underlines the importance of properly responding to investigations which are undertaken by the Australian Competition & Consumer Commission (ACCC). The case is ACCC v Narnia Investments Pty Ltd [2009] FCS 395.

In this case, the ACCC was investigating potential unconscionable and misleading conduct by a franchisee in relation to the entry into a contract with a customer and the customer's right to a refund. In the course of its investigations, the ACCC sought from the franchisee details of its customer complaint handling procedures. This information was sought pursuant to the ACCC's statutory powers of investigation under section 155 of the Trade Practices Act (the Act). However, in its response to the ACCC, the franchisee provided false information to the ACCC. At a subsequent formal oral examination, the franchisee's director admitted that false information had been provided.

Accordingly, the ACCC brought proceedings against the franchisee and its director prosecuting them for breach of section 155 of the Act. The franchisee and the director pleaded guilty to the charges. The maximum penalties applicable to these offences were an $11,000 fine for the franchisee and either a $2,200 fine or imprisonment for 12 months for the director. The Court ultimately imposed penalties of $5,600 on the franchisee and $1,400 on its director. The Court also ordered that the franchisee and its director pay the ACCC's legal costs of the proceeding.

The case is a salutory lesson to all businesses in the franchise industry that the ACCC takes very seriously proper compliance with its investigatory functions. All businesses ought to have a clear policy in place which ensures that any contact received from the ACCC (whether in written or oral form) is directed to the appropriate person within your organisation who is responsible for trade practices compliance.