Thursday, 12 September 2019

Australian Business Law Review Vol 47 Pt 3

Volume 47, Part 3 of the ABLR has just come out. Four excellent articles and a timely section note: * Utmost Good Faith and Accountability in the Spotlight of the Banking Royal Commission – Time to Revisit the Scope, Applicability and Enforcement of the Duty by Julie-Anne Tarr, Jeanette Van Akkeren, Amanda-Jane George and Sue Taylor * Blowing the Whistle: A Critical Analysis of the Treasury Laws Amendment (Enhancing Whistleblowing Protections) Act (Cth) 2019 by David A Chaikin * A Game-changer or a Routine Drill? Cooperation in the Indo-Pacific Securities Markets by Sonia Khosa * The “National Interest” and Australian Agriculture by Leopold Oscar Bailey * Australian Competition and Consumer Commission v Pacific National Pty Ltd (No 2) [2019] FCA 669: Access Undertaking Derails ACCC Case Under S 50 by Brent Fisse

Medibank in court for alleged misrepresentations to members about benefits

I wonder how big a penalty the ACCC is hoping to get out of Medibank Private given they self-reported the conduct and are in the process of compensating affected members. Having said that the absence of fighting words from Medibank Private in the media may suggest that a deal has already been done and a penalty figure provisionally agreed. One concerning aspect is the significant commentary about the case by the ACCC. It all comes back to the issue of sub judice contempt - government regulators should not be holding press conferences to discuss the factual and legal issues to be determined in the case. It is frustrating to see the ACCC continually doing this. I wonder when a presiding judge is going to pull the ACCC up on this issue?

Travel sickness: Consumers overpay millions on foreign money, says ACCC

I think the ACCC may have missed the boat on this one. A few years ago, the banks started effectively closing down most of the small ethnically based FX dealers. It was common in many ethnic communities for there to have been between 10 - 20 FX brokers running their businesses at very low margins. They saw the provision of FX services as more of a community service rather than a money making venture.
The banks started closing down these operations under the guise of anti-money laundering and anti-terrorism laws. I recall that virtually all Nepalese FX dealers in Australia had to close down because the banks refused to deal with them. It was particularly problematic as Nepal was at that time trying to rebuild after the Gorkha earthquake. I was also puzzled by this as I have never associated Nepal with global terrorism! Having said that, maybe it isn't too late for the ACCC to go back and investigate the conduct of the big banks under section 46 the misuse of market power provisions.

'Walk away': ACCC finds franchisors failing to outline rent, wages

I've been thinking about the legal position of the former franchisee if a prospective franchisee approaches them to ask for what could be considered business and financial advice about a franchise system. Could the former franchisee be liable for their advice, even if given gratuitously? I think that is a definite possibility, which then raises the question of whether former franchisees should refuse to provide any assistance unless they get some form of waiver from the prospective franchisee. I am also wondering whether the ACCC is effectively encouraging franchisors to transfer risk from themselves to former franchisees. The ACCC needs to think through these legal issues before encouraging prospective franchisees to approach former franchisees for business advice.

Global shipping company Wallenius Wilhelmsen charged with criminal cartel conduct

Another shipping company has been charged over the alleged ro-ro cartel - Wallenius Wilhelmsen. Interesting to see if they decide to fight the case or settle. The main thing to avoid is that bizarre half way house between an immediate guilty plea and a fight to the end which inevitably results in a low cooperation discount and a very high criminal fine. Given that two companies have already tapped the mat on this cartel , you would think that a guilty plea is likely.

New watchdog, bigger fines floated for $182b franchise sector

Big changes ahead for the franchising sector, including potentially a new "single body to manage franchising disputes through mediation or mandatory arbitration which could be funded through a levy paid by the franchisors". I think that is a good idea, particularly as I suggested that idea in my own submission to the Franchising Enquiry (although admittedly I was not the only one to make that suggestion!)

'Begging for chairs': Grant competition reveals schools' funding struggle

I'm getting very tired of the SMH's cynical scare campaign against non-government schools in relation to capital funding. Their reporting is so far from the truth its not funny. The reality is that about 90% of capital funding for independent schools comes from fees, donations and loans - governments only contribute 10% of total capital funds - see In 2017, the total capital expenditure by independent schools was $1.98 billion of which $1.78 billion came from fees, donations an loans. In other words, government contributed about $200 million in capital funding to independent schools. By contrast governments paid $2 billion in capital funding to government schools in 2016-2017 financial year - There is inequity but it is the other way around - independent schools educate 35% of all students in Australia (41% of secondary school students) but receive 1/10th of the government funding for capital works!