International Comparative Analysis of Private Rights of Access (2)

(2) Divestiture Orders:

While private parties are barred from seeking injunctive relief in merger cases, they are permitted to seek an order requiring divestiture of shares or assets acquired in contravention of the merger provisions of § 50 of the Act. Section 81(1) of the Act provides as follows:

(1) The Court may, on the application of the Commission or any other person, if it finds, or has in another proceeding instituted under this Part found, that a person has contravened section 50, by order, give directions for the purpose of securing the disposal be the person of all or any of the shares or assets acquired in contravention of that section.

It would appear from the terms of this provision that a private party is permitted to seek this remedy even if the proceeding in which the contravention of § 50 was found was commenced by the ACCC or another private party.

Regardless of whether the divestiture provisions of § 81(1) of the Act are invoked by the a private party or the ACCC, the court is empowered to enter a consent order directing the disposal of assets or shares. Section 81(3) states:

(3) Where an application for directions under subsection (1) or for a declaration under subsection (1A) has been made, whether before or after the commencement of this subsection, the Court may, if the Court determines it to be appropriate, give directions or make a declaration by consent of all the parties to the proceedings, whether or not the Court has made the findings referred to in subsection (1) and (1A).

The consent order may be entered regardless of whether the court has made any findings upon the application for divestiture.

(3) Damages:

Turning to the remedy of damages, § 82 of the Act provides:

(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVB or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

(2) An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued.

Single damages are available to those who suffered loss or damage as a result of a contravention of, inter alia, the restrictive trade practices provisions of Part V of the Act. There is a three-year statute of limitations upon the time within which the action must be commenced.

It was suggested to the ALRC that punitive or multiple damages should be made available to private plaintiffs in addition to compensatory damages. The ALRC rejected this submission, saying:

DP (Discussion Paper) 56 noted the suggestion that punitive or multiple damages should be available in Australia to provide an incentive to private enforcement by helping to defray the cost of litigation. The Commission did not agree with that suggestion and proposed that punitive or multiple damages should not be available to applicants in proceedings under the TPA. With few exceptions, submissions agreed. Punitive or multiple damages should not be available for contraventions of the TPA because:

• they can provide a windfall to a plaintiff not matched by the deterrent effect
• they can be an incentive to frivolous or speculative actions
• recovery of multiple damages may still not exceed the risk and cost of litigation where the actual damages are very low
• the possibility that they may be awarded in separate actions involving the same contravention could result in multiple punishment being inflicted for a single wrongful act
• there is no justification for imposing a sanction, in the form of exemplary damages, on one person in order to deter other persons from acting in a particular way.

Many of these concerns are supported by critics of treble damages available under the antitrust laws in the USA. ... Contraventions of the TPA should only be punished under the relevant penalty provisions enforced by accountable public enforcement bodies. ...³⁶

The ALRC took the position that punishment of contraventions of the Act should be the exclusive province of public enforcement bodies.

(4) Representative, or Class, Actions:

In Australia, class actions are referred to as representative actions. They are described as follows:

Representative actions are a procedural mechanism allowing one person to take legal action on behalf of a number of people who are affected by a common problem. They allow people who have been wronged to enforce their rights as a group in a fair, efficient and economical fashion. Representative actions remove many of the financial barriers which ordinary people face when seeking to enforce their legal rights, give the courts a more efficient process for dealing with cases involving large numbers of people and help to ensure that laws are enforced more efficiently and more often. ... ³⁷

Representative actions are regarded as providing an economical method of enforcing the law in a more efficient manner.

Representative actions may be commenced by private plaintiffs under Part IVA of the Federal Court Act. Pursuant to Part IVA,³⁸ a representative action may be commenced if there are seven or more persons with claims against the same person, the claims are all "in respect of, or arise out of, the same, similar or related circumstances' and the claims give rise to at least one substantial common issue of law or fact."³⁹ As to the latter requirement, the representative party and the group need not have identical claims. Substantial similarity between claims is sufficient. Representative actions are only considered to be inappropriate where incompatibility between the claims of the representative party and the group would lead to conflict among their interests.⁴⁰

The ALRC noted that the Federal Court had yet to decide whether a consumer or business organization would be entitled to bring a representative action on behalf of its members. The question that would have to be answered would be whether the organization had a "claim" in its own right giving it standing to commence representative proceedings. The ALRC considered, however, that there was "merit in ensuring that Part IVA proceedings may be commenced by peak consumer or business organisations on behalf of aggrieved consumers or businesses."⁴¹

(5) Declarations:

Under §163A of the Act, private parties may seek declarations from the Federal Court regarding the operation or effect of most provisions of the Act, including the restrictive trade practices provisions of Part IV, as well as the validity of acts or proposed acts purporting to have been done under the Act. A declaration is an order of the court that has no other effect than to make an authoritative ruling on a particular issue. In itself, it does not impose upon a party liability for damages or other relief. Private parties may also seek extraordinary remedies in the form of orders prohibiting or directing the taking of certain actions by, e.g., administrative bodies. The jurisdiction of the court to make such orders must be exercised "by not less than 3 Judges."⁴²

3(b) Remedies Available to the ACCC:

As might be expected, the ACCC has a broader range of remedies available to it than do private parties. The ACCC can bring proceedings for civil injunction, divestiture and pecuniary penalties. It may have the power to bring representative actions for damages on behalf of individuals or businesses injured as a result of a contravention of Part IV of the Act. The ACCC also has the power to engage in administrative enforcement of the Act by taking enforceable undertakings from those with whom it negotiates settlements.

(1) & (2) Civil Injunctions & Divestiture Orders:

The ability of the ACCC to seek injunctions and divestiture orders is governed by the same provisions of the Act as those relating to private parties. As might be expected, however, the powers of the ACCC are broader. Unlike private parties, the ACCC may seek all forms of injunctive relief against mergers and foreign acquisitions. It is not restricted by the provisions of §§ 80(1A) and 80(1AAA) of the Act. Moreover, when seeking interim injunctions against alleged contraventions of the Act, the ACCC is not required to give any undertakings as to damages.⁴³

In its 1996 report, the ALRC noted that the then TPC was concerned about the apparent reluctance of the court to grant broad injunctive relief. The TPC "suggested that, if a business (that is) the subject of an injunction trades nationally, the injunction should apply nationally, irrespective of whether the conduct constituting a contravention was confined to one State. ..."⁴⁴

While the ALRC stated that it appreciated this concern, it declined to recommend any change in the Act to accommodate it. The most that it would do was to "encourage judges to take a broad view of the purposes to be served by injunctions and, where appropriate, to grant injunctions in terms sufficiently wide to meet the concerns expressed by the TPC, provided the respondent is given clear notice of the conduct prohibited."⁴⁵

In merger and acquisition cases, only the ACCC may seek an order from the court declaring "that the acquisition, insofar as it relates to the shares or assets ... (transferred to the acquirer) is void as from the day on which it took place."⁴⁶As to foreign acquisitions governed by the Competition Tribunal under § 50A of the Act, only the ACCC or the Minister may seek an order from the Federal Court directing the acquirer to dispose of its shares or assets to ensure that it does not carry on business in the market while the declaration of the Tribunal remains in effect.⁴⁷

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(3) & (4) Damages and Representative Actions:

At first blush, it would seem unlikely that the ACCC would have standing to sue for damages to consumers or businesses. To seek the remedy of damages under § 82 of the Act, a plaintiff must have suffered loss or damage by reason of a contravention of Parts IV, IVB or V of the Act. This would exclude the ACCC.

In certain circumstances,⁴⁸ §87(1B) of the Act empowers the ACCC to bring suit for damages, in the form of a representative action, on behalf of those who suffered or were likely to suffer loss or damage by reason of contraventions of certain parts of the Act. Contraventions of the restrictive trade practices provisions of Part IV of the Act, however, are not included among those for which § 87(1B) authorizes the ACCC to bring representative actions.⁴⁹

Despite these obstacles, the ACCC may still be able to bring representative actions for breaches of the restrictive trade practices provisions of the Act. While the matter is unclear, the potential apparently exists under Part IVA of the Federal Court Act for the ACCC to bring representative actions for any contravention of the Act. The ALRC discussed this potential as follows:

In DP (Discussion Paper) 56 the Commission invited comment on whether PtIVA of the Federal Court Act needs to be amended to make it clear that the TPC is able to bring representative actions for contraventions of any provision of the TPA. ... (A) fundamental question exists as to whether the TPC has a "claim" within PtIVA such that it has standing to bring a representative proceeding.... The Commission considers that the TPC's access to representative proceedings under PtIVA of the Federal Court Act should be clarified. The Commission recommends that the TPA be amended to give the TPC standing to bring representative proceedings under PtIVA of the Federal Court Act on behalf of persons who suffered loss or damage from a contravention of the TPA regardless of whether the TPC has a claim in its own right. ...⁵⁰

The ALRC recognized that, depending upon whether the then TPC were held to have a "claim" within the meaning of Part IVA of the Federal Court Act, it might already have standing to bring a representative action in the court. It proposed an amendment to make it clear that the TPC had standing under the Federal Court Act to bring a representative action for contravention of any provision of the Trade Practices Act.

This proposal was consistent with the discussion paper that preceded the ALRC's report on compliance with the Trade Practices Act. In the discussion paper, the ALRC suggested that § 87(1B) be repealed and replaced with a provision allowing the then TPC to bring representative actions for contraventions of any part of the Act under Part IVA of the Federal Court Act. The suggestion met with some resistance, even from the TPC, which claimed that due to cost and efficiency considerations it preferred to retain § 87(1B) in a modified form.

Thereafter, the ALRC made the following recommendation:

(T)he Commission recommends that §87(1B) of the TPA be amended to:

• remove the restriction that a representative action may only be brought where the TPC has brought a prosecution under §79 or proceedings for an injunction under § 80
• allow a representative action to be brought for a contravention of any provision of the TPA in relation to which the TPC has an enforcement role. ⁵¹

Pursuant to this recommendation, the ACCC would be expressly empowered to commence a representative action on behalf of those who suffered loss or damage from a contravention of any provision of the Act. The recommendation also disposed of the requirement of §87(1B) that to be entitled to bring a representative action, the ACCC must first have brought a prosecution or proceedings for an injunction under the Act.⁵²

As of the time of writing, this proposed amendment has yet to be made; however, the ACCC recently initiated and concluded an action in Federal Court that had all the earmarks of an action designed to represent small businesses that were injured in a contravention of the restrictive trade practices provisions of Part IV of the Act.

On May 22, 1998, the ACCC instituted proceedings alleging breaches of the boycott provisions of the Act. The ACCC's application sought injunctive relief, a declaration of breach of the Act and findings of fact that would enable businesses that suffered loss or damage to seek compensation.⁵³ Interim injunctions were issued and periodically renewed in response to the ACCC's application. On September 3, 1998, the ACCC settled the matter. The settlement provided for a damages fund of up to $7.5 million to compensate small businesses damaged by the contravention.⁵⁴

On October 8, 1998, the Chairman of the ACCC, Professor Allan Fels, announced that a trust fund had been set up with this money. He said, in pertinent part:

The establishment of the Trust Fund today is an excellent result for those small businesses which suffered loss during the recent waterfront dispute. Throughout the waterfront dispute, the ACCC was determined to protect the interests of these small businesses without taking sides in the broader dispute. ... ⁵⁵

There seems to be little doubt that this settlement was similar to that which would have been reached by the ACCC in a representative action on behalf of the small businesses that were injured. Professor Fels indicated that this similarity was no accident, that the settlement, in fact, resulted from a determination on the part of the ACCC to protect the interests of the small businesses in question.

(5) Pecuniary Penalties:

Those who violate the consumer protection provisions of Part V of the Act may be subjected to criminal prosecution; however, under § 78 of the Act, criminal proceedings may not be instituted against those who contravene the restrictive trade practices provisions of Part IV of the Act.⁵⁶ Instead, the ACCC is empowered to bring civil actions for the recovery of pecuniary penalties. Section 77 of the Act provides as follows:

77 Civil action for recovery of pecuniary penalties

(1) The Commission may institute a proceeding in the Court for the recovery on behalf of the Commonwealth of a pecuniary penalty referred to in section 76.

(2) A proceeding under subsection (1) may be commenced within 6 years after the contravention.

There is a six-year statute of limitations within which the ACCC must act. Under § 76 of the Act, it can recover from corporate defendants up to $10 million for each contravention, and from individual defendants, up to $500,000 per contravention.(57)

As the Act now stands, only a monetary penalty may be recovered by the ACCC. The ALRC, however, recommended that, in addition, certain non-pecuniary civil penalties should also be recoverable by the ACCC. These would include such penalties as community service orders, adverse publicity orders, and even a form of corporate probation called a corporate supervisory order.⁵⁸

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(6) Orders Prohibiting Individuals from Managing Corporations:

At the moment, the Act does not provide for the issuance of orders prohibiting certain individuals from managing corporations. The ALRC, however, regarded such prohibition orders as "one, if not the best, way of preventing further contraventions of the TPA."⁵⁹ It said:

While a prohibition will undoubtedly be a penalty for the individual concerned, the principal consideration in making a prohibition order should be whether it is likely to prevent further contraventions of the TPA. ... The Commission acknowledges that such a prohibition will not prevent an individual from carrying on business as an individual or in a partnership but the Commonwealth's constitutional limits prevent it from prohibiting a wider range of activities. (Under the Australian constitution, § 51( xx), the Commonwealth can only make laws with respect to corporations.) ... The Commission recommends that § 230 of the Corporations Law be amended to enable the Federal Court, on application by the TPC, to prohibit a person who has been found, in a prosecution or civil penalty proceeding, to have contravened the TPA from managing a corporation for such period as is specified in the order. ...⁶⁰

The ALRC recommended that the Federal Court be empowered to issue prohibition orders against individuals who were found to have contravened the TPA in a prosecution or civil penalty proceeding under the Act.

(7) Administrative Enforcement:

The powers of the ACCC to enforce the Act through administrative action have been described as follows:

The TPC (as the ACCC then was) has power to investigate complaints and alleged breaches of the TPA and to take appropriate administrative or court action. The administrative enforcement mechanisms used by the TPC range from simple resolution, where the matter is resolved by informing the parties of their rights and obligations under the TPA, to formal undertakings under § 87B of the TPA, which are enforceable in the courts. Administrative decisions by the TPC are subject to review by the Federal Court under the Administrative Decisions (Judicial Review) Act 1977 (Cth) or the TPA. The TPC also has administrative powers to grant and revoke authorisations and notifications. These powers are subject to review by the Trade Practices Tribunal. ...⁶¹

An alleged contravention of the Act may be resolved through negotiations with alleged contravenors, some of which may result in the execution of § 87B undertakings, which are enforceable by the Federal Court.⁶²

According to a guideline published by the TPC before it was merged into the new ACCC,⁶³§ 87B undertakings are only used where there is sufficient evidence to prove a contravention of the TPA. According to the ALRC, "undertakings and associated reports will be placed on a public register unless there are compelling reasons to treat all or part of these documents as confidential. Over 20 § 87B undertakings have been accepted by the TPC."⁶⁴

The ALRC recommended that those who were brought before the court for breaching their undertakings be required to lodge security with the court. The security would be liable to be forfeited if the party were brought back before the court for a subsequent breach.⁶⁵ To date, however, this recommendation has not been implemented.

There also were submissions to the ALRC upon whether the TPC should be empowered to make administrative cease and desist orders. The ALRC said:

In general terms, a cease and desist order would be a formal, administrative injunction to cease conduct allegedly in contravention of the TPA. Failure to comply with the order would be punishable by the Federal Court. Compensation may be payable if failure to comply with the order caused loss or damage. The exercise of any power to issue such orders would have to comply with the principles of natural justice and be subject to administrative and judicial review. ...⁶⁶

While the then TPC saw this power as a useful enforcement tool, the ALRC declined to recommend it because of constitutional difficulties in designing it as a non-judicial power and the ALRC's perception that the TPC already possessed several other effective enforcement tools.⁶⁷

3( c) Interim Remedies:

As indicated earlier in this study, interim injunctive relief is readily available to the ACCC and private parties in actions under, inter alia, Part IV of the Act.⁶⁸A brief review of the case reports in the Federal Decisions data base(69) indicates that interim relief is often sought in restrictive trade practices cases.

3(d) Are Damages Awarded:

Damages are available to private litigants under the Act. There is little information on how often they are awarded. Certainly, the ACCC recently was able to extract in a settlement a $7.5 million fund to compensate small businesses who were injured by alleged contraventions of the restrictive trade practices provisions of the Act.⁷⁰According to the Brunt study, however, the prospect of receiving a damages award is not regarded in Australia as nearly as important a factor as an injunction in motivating plaintiffs to file private actions under the Act.⁷¹

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3(e) Cost Awards in Private Actions:

The ACCC and all private litigants in proceedings brought under the Act are liable to pay the costs of the prevailing party. The practice of awarding costs against the unsuccessful party has become known as the costs indemnity rule. According to a recent report of the ALRC:

The costs indemnity rule is also the basic cost allocation rule for civil proceedings in the United Kingdom, Canada, Japan and most European countries. The principal exception is the United States where the general rule is that each party must pay his or her own costs except where the litigation is vexatious or an abuse of process. ... The discretion to order an unsuccessful party to proceedings to pay the successful party's costs evolved in the equity jurisdiction, apparently in response to the concern that a person should not suffer loss as a result of having to assert or defend his or her rights. ... The most common reasons given for the rule are that it

• compensates successful litigants for at least some of the costs they incur in litigating
• allows people without means to litigate
• deters vexatious or frivolous or unmeritorious claims or defences
• encourages settlement of disputes by adding to the amount at stake in the litigation
• deters delay and misconduct by making the responsible party pay for the costs his or her opponent incurs as a result of that delay or misconduct .... ⁷²

The costs indemnity rule evolved on the equity side of the courts. The most common reasons that have been given for employing the rule are to minimize losses incurred through asserting or defending rights, deter vexatious or frivolous litigation,⁷³ encourage settlement, and deter misconduct or delay in the course of the legal proceedings.

Application of the costs indemnity rule, however, does not recover for the prevailing party all of its actual costs. According to the ALRC, "The amount that can be claimed pursuant to a costs order may ... be as little as 40 per cent of the real costs expended."⁷⁴ There are two main reasons for this. First, the costs of investigation cannot be recovered.⁷⁵ Secondly, the courts, including the Federal Court, have adopted detailed schedules establishing maximum fee and disbursement levels that may be allowed in a claim for costs. Usually, these levels are far below those actually paid by the party.

The schedule of the Federal Court,⁷⁶ for example, only allows for counsel fees ranging from $120 to $177 per hour, depending upon whether counsel advised in his or her office or attended court.⁷⁷ The allowance for expert witnesses ranges from $104 to $518 per day.⁷⁸Rule 12 of Order 62 of the court states that "higher fees shall not be allowed in any case except such as are by this Order otherwise provided for."⁷⁹The allowable rates obviously are far below what actually would be paid in a complex competition case under Part IV of the Act.

There are also provisions in Order 62 either cutting down costs awards or disentitling prevailing parties from claiming costs. Some allowances for costs are discretionary, and may or may not be awarded depending upon, e.g., the fees and allowances already awarded; the importance of the proceeding; and the general conduct and cost of the proceeding.⁸⁰The court may order non- payment of costs "which have been improperly, unreasonably or negligently incurred"⁸¹ and even direct payment to the other parties of the costs they incurred as a result of this misconduct.⁸² When damage claimants receive judgment for less than $100,000, their allowable costs are reduced by one- third.⁸³The court may also cap the size of a potential costs award by issuing an order specifying "the maximum costs that may be recovered on a party and party basis."⁸⁴

There are other circumstances in which reduced costs awards may be entered. It has been noted that:

(O)ther orders may be made where

• a party only succeeds upon a portion of his or her claim, in which case it may be reasonable for the successful party to bear the expense of litigating that portion upon which he or she has failed: Forster v. Farquhar (1893) 1 QB 564; Hughes v. Western Australia Cricket Assoc (Inc) & Ors (1986) ATPR 40-748
• the costs of the matter have been increased significantly by one or more issues on which the successful party failed, in which case the successful party may not only be deprived of the costs of those issues but may also be ordered to pay the other party's costs of them: Cretazzo v. Lombardi (1975) 13 SASR 4
• the successful party has unnecessarily or unreasonably commenced, continued or encouraged the litigation or has acted improperly: Ritter v. Godfrey (1920), 2KB 47; Donald Campbell & Co. v. Pollak (1027 AC 732; Hughes v. Western Australia Cricket Assoc (Inc) & Ors (1986) ATPR 40-749.... ⁸⁵

Lack of success on all claims or issues in dispute, or even unnecessarily encouraging the litigation, may result in a significantly reduced award of costs.

The ALRC has recommended the following cost allocation rules for civil proceedings:

In civil proceedings - costs follow the event (i.e., indemnity costs are awarded)

• I pay my costs and your reasonable costs if I lose.
• You pay your costs and my reasonable costs if I win.
• However, if
• the litigation is a public interest case (or)
• one of us is unable to present his or her case properly or to negotiate a fair settlement then some other order may be made as to the shifting of costs or to the amount of costs that may be recovered.
• Notwithstanding any other orders as to costs
• I pay any costs incurred by another party as a result of my unmeritorious claims or defences or of any abuse by me of the court or tribunal process.
• I can recover any costs I incur as a result of another party's unmeritorious claims or defences or abuses of the court or tribunal process.
• Our ability to recover costs to each other (if any) may be limited by the imposition of cost caps and settlement rules.

The main difference between this recommendation and the costs rules that presently exist in the Federal Court would seem to be the suggestion that "reasonable costs" should be recoverable instead of the much lower costs currently allowable under the schedule of the court.

3(f) Comparison With Costs Awarded in Public Actions:

The ACCC is subject to the same costs indemnity rule as private parties. In fact, on one occasion an award of costs of over $4.5 million was made against the ACCC's predecessor, the TPC, when it lost an action under Part IV of the Act in which it sought pecuniary penalties and injunctive relief.⁸⁶

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IV. The Role of the ACCC in Private Actions:

As previously discussed, the ACCC may have the power to bring representative actions on behalf of consumers or businesses injured as a result of a contravention of the restrictive trade practices provisions of Part IV of the Act, and has already sought at least one settlement with the flavour of a settlement in a representative action. In addition, the ACCC has the right, though little used to date, to intervene in private actions. This could lead to a takeover of a private action by the ACCC in appropriate circumstances. The ACCC also has the power to confer immunity from legal proceedings, including private actions, under the notification and authorization provisions of the Act.

Private parties often seek to induce the ACCC to take action in competition matters that affect them rather than expend from their own resources the considerable investment required to commence and pursue proceedings under Part IV of the Act. In deciding whether to take up such cases, the ACCC takes into account certain policy and economic factors, as well as its own enforcement priorities.

The ACCC will not make available to private parties the information and evidence it collects in the course of its investigations. The information must be made the subject of a freedom of information request or a subpoena. Interestingly, however, the ALRC has recommended that this evidence be made available to private parties who are or are about to become involved in bona fide actions under Part IV of the Act.

4(a) Power to Bring Representative Actions:

As indicated in Part 3(b) of this study, above, a possibility exists that the ACCC might already have the power under Part IVA of the Federal Court Act to bring representative actions seeking, inter alia, damages on behalf of consumers and businesses injured as a result of contraventions of the provisions of the Act. The matter is not free from doubt, however, because a fundamental question exists whether the ACCC would have a "claim" within the meaning of Part IVA of the Federal Court Act to give it standing to bring a representative proceeding. This question has yet to be addressed by the court.⁸⁷

Currently, momentum seems to be gathering in favour of the ACCC. The ALRC has recommended that both § 87(1B) of the Trade Practices Act and Part IVA of the Federal Court Act be amended to make it clear that the ACCC may bring a representative action under either statute for, inter alia, contraventions of the restrictive trade practice provisions of Part IV of the Act. Moreover, less than six months ago, the ACCC won a settlement that was, in everything but name, a "representative action-type" settlement, with the ACCC acting as the de facto representative of small businesses injured by activity that contravened some of the provisions of Part IV of the Act.⁸⁸

4(b) Right of Intervention in Private Actions:

The ACCC has a statutory right to intervene in most private actions involving the restrictive trade practices provisions of Part IV of the Act. Oddly enough, this right is found in § 163A of the Act, which speaks to the jurisdiction of the Federal Court to make declarations, inter alia, concerning the operation or effect of most provisions of the Act. Subsection 163A(3) provides, in pertinent part:

(3) The Commission is not entitled to institute a proceeding in the Court under this section but may intervene in a proceeding instituted in the Court or in any other court, being a proceeding:

(a) That involves a matter arising under Part IV other than a matter arising under section 48; ....

According to this provision, in all but resale price maintenance actions under § 48, the ACCC may intervene in any proceeding brought by another person involving a restrictive trade practice falling under Part IV of the Act.

This right to intervene is not limited to the context of applications for declarations. A subsequent subsection, § 163A(3)(b), specifically addresses the power of the ACCC to intervene in declaration proceedings. It states that the ACCC may intervene in any proceeding "in which a party is seeking the making of a declaration of a kind mentioned in paragraph 1(a) or (aa)." The declarations mentioned in the latter paragraphs are those relating, inter alia, to the operation or effect of most provisions of the Act, including those in Part IV.

In light of this, subsection 163A(3)(a) must be read as granting the ACCC the right to intervene in proceedings involving restrictive trade practices under Part IV of the Act, regardless of how the proceedings were initiated. Otherwise, it would be redundant. The ALRC expressly recognized this. It said, "Although the TPC is not entitled to apply for a declaration under s 163A, it may intervene in proceedings brought by another person under § 163A(1)(a) and in proceedings involving a matter arising under Part IV."⁸⁹

As far as available information indicates, however, the power to intervene has been seldom used. This was confirmed by Commissioner Bhojani of the ACCC.⁹⁰

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4( c) Takeover of Private Actions:

While it seems that it would be theoretically possible for the ACCC to intervene in a private action under Part IV of the Act and then take over carriage of the action, this does not seem to have been done by the ACCC or its predecessor, the TPC. The Brunt study,⁹¹ however, tended to indicate otherwise. It stated, in pertinent part:

One celebrated §45 case, Tradestock (TPC v. T.N.T. Management Pty Ltd., (1985) A.T.P.R. 40-367)), initially brought by a small transport broker, was discontinued when the applicant ran out of funds but was taken over by the TPC ... One of the reasons for the initial applicant being forced to discontinue was that she or he had assumed a class burden, one with very demanding problems of proof besides. In fact the litigation ran from 1976, when initiated by Tradestock, was taken over by the Commission in 1978, and finally concluded in 1985. The Commission lost and was forced to rely upon a special appropriation in excess of $4,500,000 to fund the award of costs against it. .. ⁹²

According to Brunt, the then TPC took over a private action from the initial plaintiff, Tradestock, and litigated it to an unsuccessful conclusion. As a result, it was forced to satisfy an award of over $4.5 million in costs.

A review of the reported decisions in the case, however, shows that the then TPC did not take over Tradestock's private action against T.N.T. and the other defendants, in the sense of intervening in the action that Tradestock commenced in 1976. Instead, on May 25, 1978, shortly after Tradestock went into liquidation, the TPC commenced its own action against the same defendants, claiming pecuniary penalties and injunctive relief against them.

There is no doubt that in the subsequent trial on the merits, the events surrounding a boycott of Tradestock by the defendants formed the core of the TPC's case. The principals of Tradestock were the main witnesses for the TPC. One principal of Tradestock was on the witness stand for 49 days. All this took place, however, in the context of the TPC's own proceeding. Tradestock's private action was simply discontinued.

4(d)Power to Confer Immunity via Notifications Re Exclusive Dealing:

Under sections 93 - 95 of the Act, a person who engages or proposes to engage in exclusive dealing may file a formal notice with the ACCC describing its conduct or proposed conduct. For all but third line forcing -- or tying -- arrangements, immunity from legal proceedings is granted from the time of filing and remains in force unless and until the ACCC responds with its own formal notice that after making an assessment, it considers the conduct to involve a substantial lessening of competition that is not outweighed by public benefit. Review of the ACCC's actions regarding notifications may be sought before the Competition Tribunal, formerly known as the Trade Practices Tribunal, an expert body comprised of both lay and judicial members.⁹³

In a recent paper, Commissioner Sitesh Bhojani of the ACCC described the circumstances in which many such notifications are received. He said:

The Commission receives many notifications for franchise and distribution agreements that would otherwise breach § 47. A typical situation is where a supplier appoints a retailer in a particular area and provides that retailer with exclusive rights over that area. In general there is no effect on competition from such an arrangement. However, the agreement can be anti-competitive if the supplier has a powerful position in the market. An exclusive franchising and distribution agreement may provide the opportunity to tie up entry to other levels of the market. This is where the Commission becomes interested in such an arrangement. ... ⁹⁴

Those who commonly employ franchising and distribution agreements form the majority of entities that file notifications under the Act.

Notifications of third line forcing arrangements do not result in automatic immunity. The period of immunity does not commence until after the expiration of 14 days from the filing of the notification. According to Commissioner Bhojani, "To deny immunity in respect of notified third line forcing the Commission must be satisfied that the likely benefit to the public will not outweigh the likely detriment to the public."⁹⁵

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4(e) Power to Confer Immunity via Authorizations:

Upon receipt of an application under § 88 of the Act, the ACCC is empowered to grant authorizations for anti-competitive agreements, price fixing agreements, covenants affecting competition, anti-competitive exclusive dealing, anti-competitive third line forcing, resale price maintenance, and mergers substantially lessening competition. Once an authorization issues, it confers immunity from legal proceedings alleging that the conduct in question contravenes the applicable provisions of Part IV of the Act. All applications for authorization are kept on a public register, which may be inspected by any person.⁹⁶Authorizations can later be revoked in light of changed conditions. The determination of the ACCC may be appealed to the Competition Tribunal.

The test to be applied in determining applications for authorizations has been held to be the same, regardless of the type of conduct under review. In Re Media Council of Australia No. 2,⁹⁷ Lockhart J. said:

The Tribunal shall not make a determination affirming, setting aside or varying the Commission's determination unless it is satisfied in all the circumstances that the provision of the proposed conduct would result, or be likely to result, in a benefit to the public and that the benefit would outweigh the detriment to the public constituted by any lessening of competition that would result, or be likely to result, if the conduct were engaged in. ... The test is the same whether or not the provisions of the arrangement are governed by sub-section 96 or constitute "exclusionary provisions". ... In identifying the relevant public benefit the Tribunal must compare the position which would apply in the future were the proposed arrangement not entered into ... with the position in the future which would arise in the future if the arrangement were entered into. ... ⁹⁸

The test seeks to compare the future public benefit that would result if the conduct were prohibited with that which would result if the conduct were permitted. If the public benefit from permitting the conduct outweighs that to be gained from prohibiting it, an authorization will issue.

While it would be theoretically possible for a defendant in a private action under Part IV of the Act to stay the action and make an application for an authorization conferring immunity from the legal proceedings, this has seldom happened. When interviewed about this possibility, Commissioner Bhojani could only recall one instance. It involved a merger in the paste industry against which the ACCC had already commenced proceedings in the Federal Court. The respondents sought a stay and filed an application for an authorization. In light of the fact that the ACCC had already commenced legal proceedings against the merger, it seemed clear that the ACCC would not grant the authorization; however, the respondents apparently thought that they had a good chance of having the ACCC's determination overturned by the Competition Tribunal. In the end, the respondents were unsuccessful.⁹⁹

4(f) Policy of the ACCC Re Taking up Cases or Leaving Them to Private Action:

The ACCC does not have a formally published policy governing whether it will take up a case or leave it to private action. In its 1997-98 Annual Report, however, the ACCC said, "When selecting matters (to pursue) the Commission is influenced by the potential for action to have significant deterrent effect, promote compliance with the Act and/or achieve redress for interests adversely affected by the conduct in question."¹⁰⁰

These considerations appear to be reflected in the enforcement priorities that the ACCC set out in a recent paper on unconscionable conduct in business transactions. The ACCC said:

The Commission will continue to select its (enforcement) priorities by having regard to key issues in its operating environment and whether or not:

• the conduct involves significant small business detriment;
• Commission involvement has the potential to have a worthwhile educative or deterrent effect;
• the conduct involves a situation where the party complained about has not been diligent in implementing effective compliance systems ...;
• the conduct involves a significant new market such as one arising from economic or technological change;
• the conduct involves an opportunity to test the law in appropriate circumstances. ...

The Commission's enforcement efforts will be focussed on conduct affecting small businesses including misleading and deceptive conduct (§ 52), third line forcing (§ 47(6)), abuse of market power (§46), resale price maintenance (§ 48), and unconscionable conduct (§§51AA and 51AC). As the largest number of complaints which may fit under these sections (particularly § 51AC) are in the retail tenancy and franchising areas these will be the areas of highest priority for the Commission in the immediate future. ...¹⁰¹

In terms of its priorities under the restrictive trade practices provisions of Part IV of the Act, the ACCC said that it focussed upon significant misconduct affecting small businesses that contravened the third line forcing, abuse of market power, or resale price maintenance provisions of the Act. The "significance" of the misconduct is evaluated according to (1) the degree of impact upon small business; (2) the potential for a worthwhile educative or deterrent effect; (3) the diligence of the accused in implementing effective compliance systems; (4) the involvement of a new market; and, (5) the potential for an opportunity to test the law.¹⁰²

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4(g) Availability to Private Parties of Information Collected by the ACCC:

The investigative powers of the ACCC under the Act have been described as follows:

Sections 155 and 156, together with ancillary provisions, are designed to enable the TPC to carry out its functions with respect to the detection and prosecution of contraventions of the TPA. Section 155 gives the TPC power to require a person it believes is capable of providing information, documents or evidence relating to a contravention of the TPA to furnish information, produce documents or give evidence. It also allows an officer authorized by the TPC to enter any premises and inspect any documents in the possession or under the control of a person who the TPC believes has engaged in conduct that may constitute a contravention of the TPA. Section 156 allows the TPC to inspect, copy and take extracts from any documents it obtains pursuant to a s 155 notice. ... ¹⁰³

In an investigation, the ACCC has relatively broad powers to collect all forms of evidence relating to a suspected contravention of the Act.

The ACCC does not provide this evidence to private parties involved in or contemplating bringing proceedings under the Act. It "will only release information on a specific matter if it has received a request under the Freedom of Information Act 1982 (Cth) or been served with a subpoena."¹⁰⁴ Moreover, in 1995, the TPC opposed being empowered to give private litigants information collected in its investigations. It said that the power "could deter people from volunteering information to the TPC, lead to a drain on TPC resources by having to process requests for information and be used as a basis for challenges to s 155 notices with parties claiming the notice was only being used to obtain information for a third party."¹⁰⁵

Nevertheless, the ALRC recommended that "the TPA be amended to give the TPC power to give to a private litigant information the TPC has obtained from an investigation involving its powers under s 155 if it is satisfied that the person is carrying on, or contemplating in good faith, a proceeding in respect of a contravention of the TPA to which the information is relevant."¹⁰⁶ The ALRC said:

Allowing the TPC, in appropriate cases, to provide litigants with information, documents or other evidence it has obtained would be an effective use of its resources. It would assist private litigants and reduce the need for the TPC to commence litigation itself or to intervene in proceedings.

• Privacy only relates to personal information affecting individuals and can be protected by the use of guidelines and by the TPC imposing conditions on the release of information. The ASC (Australian Securities Commission) policy statement on confidentiality sets out the practices the ASC must follow when disclosing information obtained by the exercise of its compulsory powers ....
• There is little risk of fishing expeditions as the TPC must be satisfied that the information relates to proceedings commenced or contemplated by the private litigant before it can release it. From the perspective of litigants, the release of information by the TPC under this power would be more analogous to the release of information pursuant to a subpoena than to discovering documents.
• While administration of the power may require some additional resources, these could be minimised through the use of appropriate guidelines and procedures and should be offset by savings arising from not having to institute or intervene in as many court proceedings.
• The TPC already has comprehensive procedures for the use of s 155 to minimise the likelihood of challenges to its exercise. The introduction of this power should not alter the current situation. ...¹⁰⁷

To date, this power has not been introduced into the Act. Those seeking evidence from the ACCC still must file freedom of information requests or subpoenas.¹⁰⁸

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