Thursday, 19 July 2018

Alphabet in the soup...again!

The European Commission has fined Google €4.34 billion ($AUD6.86 billion) for illegal practices regarding Android mobile devices to strengthen dominance of Google's search engine. Sounds a bit like the Microsoft case all over again!

By the way, the EC is still to announce the sanctions it will be imposing against Google as a result of its Adsense investigation. In relation to Adsense, the EC has formed the preliminary view that Google abused its dominant position in order to prevented existing and potential competitors, including other search providers and online advertising platforms, from entering and growing in this commercially important area. 

Sounds like another multi-billion euro fine for Google is just around the corner!

Tuesday, 17 July 2018

Regulatory Returns on Investment

I was reading an article in the recent edition of the AICD's Company Director Magazine.  The article recorded the total civil penalties recovered by ASIC over the 2017-2018 financial year at $35.1m.  I thought I'd compare that figure to the amount recovered by the ACCC over the same period - here are the results: ASIC Annual budget 2017-2018    $550m Civil penalty recoveries         $35.1m ROI                                            6.3% ACCC Annual budget 2017-2018      $215m Civil penalty recoveries        $172.5m ROI                                            80.2% Looks to me like the ACCC is a much better financial investment for the Government that ASIC! However, neither the ACCC or ASIC can compete with AUSTRAC after their $700 million penalty against CBA: AUSTRAC Annual budget 2017-2018      $92m CBA penalty                            $700m ROI                                          760%

ACCC v Heinz - penalty case survives...just!

I was having a quick look at the ACCC's case against Heinz in relation to the Little Kids Shredz products.  I must admit, I was left scratching my head...again! The ACCC sues Heinz for contraventions of sections 18, 29 and 33 of the ACL. However, the ACCC then fails to make any evidentiary submissions to the Court in relation to either sections 29 and 33 - see para 271.

Rather the ACCC focuses entirely on section 18 which is a non-penalty provision. 

Did the ACCC forget that in order to get a penalty out of Heinz it needed to establish a contravention of either sections 29 or 33?   Strangely the ACCC then goes to great lengths to try to prove that Heinz had either actual or constructive knowledge of the misrepresentations, even though knowledge is not an element of any of the contraventions.   The only explanation I can see for spending so much time trying to prove knowledge is to get a bigger penalty. 

However, why bother making submissions on knowledge unless you have first established a contravention of a penalty provision? Luckily for the ACCC the Judge was able to find an evidentiary basis for a contravention of section 29(1)(g) (see para 278), so the ACCC should end up getting a penalty out of Heinz!

271    Although both the ACCC’s opening and closing submissions indicated that it pursued its allegations of contraventions of ss 29(1)(a), 29(1)(g) and 33 and its closing submissions identified in an distinct way the elements of contraventions of those provisions, it did not address any submissions relating the evidence in this case to those elements or seek to show how those contraventions were established. Its position seemed to be that the contraventions would be established by the same matters indicating that Heinz’s conduct was misleading or deceptive.
278    In summary, in the absence of submissions from the ACCC, I find that it has established only contraventions of s 29(1)(g) of the ACL. I do not think that conclusion involves unfairness to Heinz as the elements of the contraventions are the same as those it knew it had to confront in relation to s 18.

Servcorp cops a serve for unfair contract terms

Servcorp has consented to orders declaring a number of its contractual terms as unfair.  I always like going back and having a looking at the comments the company made when it got sued by the ACCC. Here is what Servcorp said in September 2017: "SRV is disappointed that the ACCC has decided to commence legal proceedings against it,"he (Pearce) said. "SRV maintains that its serviced office agreements are negotiable contracts and do not constitute standard-form contracts regulated by the unfair contract terms regime under the Australian Consumer Law." "In its 39 years of existence, Servcorp's agreements with its clients have never been challenged by any government authority as to their fairness or legitimacy, SRV currently operates in over 60 jurisdictions globally," he said. Servcorp executive director Taine Moufarrige told Fairfax Media that Servcorp has instructed its lawyers, PWC, to defend the proceedings. I really thought (particularly after reading the above fightin' words!) that this case may go the distance, all the way to a judgment. I guess we will have to wait a little bit longer for some meaningful case law in relation to the now not so new UCT laws.

ACCC v Click Energy - sub judice cart before the horse

It seems to me that the ACCC does not get the concept of sub judice comment when it commences legal proceedings.  Have a look at the recent media release re the Click Energy case filed yesterday. The title to the media release is "ACCC takes action against Click Energy for misleading savings claims"  Note that the ACCC has left out the word "alleged" in the title to the media release. In other words, Click is not facing an "allegation" but rather has been found, at least by the ACCC, to have engaged in misleading conduct. Then there is this comment in the body of the media release -  “We believe that Click Energy’s conduct is among the worst practices we see in retail electricity marketing". Therefore, not only has the ACCC declared that Click has engaged in misleading conduct but their conduct is amongst the worst misleading conduct that the ACCC has ever seen in retail electricity marketing.   It is just a matter of time before a judge gets very annoyed about the statements which the ACCC is making in its media releases on the commencement of legal proceedings.

ACCC v Cascade - another one bites the dust

Looks like the ACCC has gone down again - this time in relation to their case against the Obeids for the alleged Mount Penny cartel. Seems to me the ACCC has been losing many of their big cases over the last few years : 1 Cussons - alleged cartel  2 Pfizer - alleged misuse of market power 3 Woolworths - alleged unconscionable conduct (Mind the Gap) 4 Medibank Private - alleged misleading and deceptive 5 Egg Corporation - alleged attempted price fixing 6 Electrical Contractors - alleged cartel 7 ANZ - alleged price fixing The question is whether the ACCC is losing because it is pushing the boundaries of the law and thus taking bigger risks or rather whether its investigation and litigation skills are not up to the job.  Unfortunately, from my understanding of the above cases, I'd have to lean towards the latter explanation for the losses.   It seems to me that many ACCC cases are misconceived and poorly prepared.  Eg the ACCC must always cross examine the other sides' expert witness at trial, witnesses have to be locked in to give evidence prior to the ACCC instituting proceedings, don't run unconscionable conduct cases on the documents and is an attempt to induce a cartel really worth the time and effort to litigate. I could go on!

SME Committee Annual Conference - 26 October 2018

The SME Committee of the Law Council of Australia is holding its annual conference in Melbourne this year on Friday, 26 October 2018. 

We have an excellent lineup of top quality speakers, including:
* Judy O'Connell, Victoria Small Business Commissioner; * Kate Carnell AO, ASBFE Ombudsman; * Mick Keogh, ACCC Deputy Chair and Small Business Commissioner and * Peter Strong, COSBOA CEO. So, if you want to hear from speakers who genuinely "get" small business, make sure you come along.