Wednesday, 27 August 2014

Trial by Media – the ACCC and the sub-judice rule


Introduction
Over the last 18 months, there has been a noticeable shift in the Australian Competition and Consumer Commission’s (ACCC) approach in relation to the content of their media releases when commencing legal proceedings. Prior to that time and for as long as most practitioners in the competition and consumer law area can remember, the ACCC had a policy of limiting the content of their media releases to the bare facts when commencing legal proceedings.  The ACCC was also very careful not to include any quotes or commentary about the case in their media releases.

This earlier practice appears to have changed over the last 18 months. Most ACCC media releases now include extensive and quite unnecessary commentary on various issues, for example the major issues likely to arise in the case, the merits of the ACCC case and the impacts of the respondent’s “illegal” conduct on consumers and competitors. The ACCC’s new approach to the content of its media releases is compounded by the practice of some senior ACCC representatives of giving further interviews about their cases to various media organisations.

While the ACCC’s actions may be unlikely to prevent the respondent from getting a fair trial in the traditional sense (given that ACCC cases are not currently heard by a jury) this does not mean that the ACCC’s actions are not interfering with the administration of justice and unfairly prejudicing respondents. It is quite clear that ACCC’s comments are resulting in the media and the community prejudging issues which are properly the domain of the court. Both the media and consumers are assuming, based on the ACCC’s sub judice comments, that respondents are guilty of illegal conduct, long before any such finding has been made by the Court.  It is essential that the ACCC stop engaging in this practice so that the integrity of the legal system and the rights of respondents can be protected.

Sub Judice rule
Sub judice contempt has been defined by the Victorian Government Solicitors Office in their guide entitled “Managing the Risk of Sub Judice Contempt” as follows:[1]

Sub judice contempt is the common law offence of publishing material which has a tendency to interfere with the administration of justice while proceedings are sub judice; that is, ‘under a judge’.  The rationale for the offence is to avoid a ‘trial by media’ by prohibiting the publication of material which might prejudge issues at stake in particular proceedings, or which might influence or place pressure on persons involved in the proceedings, including jurors, witnesses or potential witnesses, and parties to the proceedings. In deciding whether material is prejudicial, the court will attempt to balance the public interest in free speech with the public interest in ensuring a fair trial.

As is apparent, sub judice contempt may occur when a relevant party's comments prejudge the issues in a case.

The three elements of sub judice contempt are:

  1. the material is published;
  2. publication occurs while proceedings are sub judice; and
  3. the publication has the requisite tendency to interfere with the administration of justice in those proceedings.
 It is also well established that information provided by a public official to a journalist, reporter or media agency in a media interview or media release would be regarded as having been published. Publication will occur at the moment the information is provided to the media.[2]

Sub judice contempt can also arise in relation to civil proceedings, not solely in relation to criminal proceedings.  The sub judice period in civil proceedings begins when the statement of claim or other initiating process is issued.

In their guide, the VGSO makes particular mention of the possibility of sub judice contempt being engaged in by public officials:[3]

Comments made by prominent figures such as Ministers, senior public officials and members of the police force will be seen to have more impact. This was the case in Director of Public Prosecutions v Wran (1987) 86 FLR 92, where the former Premier of NSW, Mr Wran, publicly stated that his friend Justice Murphy was innocent of the charges laid against him while standing outside the court where a retrial had just been ordered. This comment was later published in The Daily Telegraph. Both Mr Wran and the publisher were found guilty of contempt and fined on the basis that the comments could influence potential future jurors to acquit Justice Murphy in his retrial.

Statements by senior ACCC officials about ACCC cases before the courts are also likely to have a greater impact on community perceptions about the case than comments made by other parties, including comments made by the respondents in these cases.

Examples
In the following, I will identify a number of examples where it is arguable that the ACCC may have breached the sub judice rule.

Luv-A-Duck
On 15 March 2013, the ACCC commenced legal proceedings against Luv-a-Duck Pty Ltd alleging false, misleading and deceptive conduct in relation to the promotion and supply of its duck meat products. The ACCC’s media release commenced with an explanation of the allegations raised by the ACCC in its case. 

The ACCC then added the following commentary:[4]

Consumers must be able to trust that what is on the label is true and accurate. Businesses need to make sure they are not misleading consumers into paying a premium for products that don’t match the claims made on the label.

In this example, the ACCC has commented on the case in a way which suggested that the respondent had in fact engaged in illegal conduct – ie “businesses need to make sure they are not misleading consumers…” The ACCC then suggested that Luv a Duck had engaged in conduct which resulted in consumers paying more than they should have for the products.

Both of these statements are sub judice comments which had the potential to cause third parties to prejudge relevant issues.

Coles Freshly Baked
On 12 June 2013, the ACCC commenced legal proceedings against Coles for alleged false, misleading and deceptive conduct in the supply of bread that was partially baked and frozen off site, transported to Coles stores and ‘finished’ in-store. 

In the ACCC’s media release, it outlined its case as follows:[5]

The ACCC alleges that labels on these par baked products stating ‘Baked Today, Sold Today’ and in some cases ‘Freshly Baked In-Store’, and nearby prominent signs stating ‘Freshly Baked’ or ‘Baked Fresh’, were likely to mislead consumers into thinking that the bread was prepared from scratch in Coles’ in-house bakeries on the day it was offered for sale and that it was entirely baked on the day it was offered for sale.

The ACCC’s comments in relation to this case up to this stage were entirely appropriate.  However, the ACCC then decided to include the following additional commentary about the case:

There are two important issues at stake. First, consumers must be able to make informed purchasing decisions. Bread is an important grocery basket staple and customers need to be confident in claims made about food they buy.

We believe consumers are likely to have been misled by Coles that the entire baking process, including preparation, occurred in-store, when in fact the bakery products were prepared and partially baked off site, frozen, transported and then ‘finished’ in store. Indeed, the Cuisine Royale products were partially baked overseas.

Second and just as important, is the detrimental impact on the businesses of competitors. Misleading credence claims can undermine the level playing field and disadvantage other suppliers. In this case those suppliers are the smaller, often franchised bakeries that compete with Coles.

As is apparent from the above, the ACCC went far beyond simply reporting the bare facts of the case. Rather, the ACCC decided to provide a detailed commentary on:

·        what it saw were the main issues at stake in the case;

·        its view that consumers had been misled by Coles’ representations; and

·        finally that Coles’ competitors had been detrimentally impacted by Coles misleading conduct.

Indeed, the ACCC paints a vivid picture of Coles apparently seeking to use these misrepresentations to tilt the playing field in its favour and to cause financial detriment to its smaller competitors.  In many respects, the ACCC media release appeared more like a preview of the ACCC’s submissions on penalty than a fair, balanced and factual summary of the allegations made in their case.

Titan Marketing
On 17 June 2013, the ACCC commenced legal proceedings against Titan Marketing Pty Ltd (Titan) and its sole director, Paul Giovanni Okumu.

In its media release, the ACCC alleged that Titan representatives engaged in misleading and unconscionable conduct when conducting door-to-door sales of first aid kits and water filters in Indigenous communities and other locations in Queensland, New South Wales and the Northern Territory.  

The ACCC also added the following commentary about the case in its media release:[6]

The allegations against Titan include alleged conduct which took place in Indigenous communities, where some consumers were particularly vulnerable and did not understand the contract documents.  The ACCC will continue to take action to protect consumers in their homes from misleading and unconscionable conduct, particularly where the conduct affects disadvantaged or vulnerable consumers.

As is apparent from the above, the ACCC did not restrict its comments to an outline of the relevant allegations. Rather, it decided to comment on the characteristics of the consumers which were the targets of Titan’s alleged conduct – namely that these consumers were vulnerable and did not understand the contract documents.  Importantly, the question of whether these consumers were vulnerable and could understand their contracts were issues of fact which the judge in the case was required to decide based on the admissible evidence.

The ACCC also added a further comment in its media release that it would continue to take action “to protect consumers from misleading and unconscionable conduct”.  It seems that Titan and Mr Okuma’s conduct was no longer “alleged” conduct but rather had become a clear example of “misleading and unconscionable conduct” which adversely affected “disadvantaged or vulnerable consumers”.

Alleged egg cartel
On 28 May 2014, the ACCC instituted proceedings in against the Australian Egg Corporation Limited, two egg producing companies and a number of individuals. In this case, the ACCC alleged that the various respondents had attempted to enter into a price fixing arrangement.

Here, the ACCC decided to add the following commentary:[7]

Detecting, stopping and deterring cartels operating in Australian markets remain an enduring priority for the ACCC, because of the ultimate impact of such anti-competitive conduct on Australian consumers who will pay more than they should for goods.

Industry associations need to be conscious of competition compliance issues when they bring competing firms together. Today’s action sends a clear message that attempts by industry associations to coordinate anti-competitive behaviour by competitors will not be tolerated.

This statement suggests that the alleged attempted cartel was in fact an actual cartel which had a demonstrable anti-competitive effect. 

Interestingly, the ACCC also decided to state that the case sends a clear warning to other industry associations which may attempt to coordinate anticompetitive behaviour amongst their members.  In reality, the case could only sound as a warning to industry associations once the case had been successfully litigated by the ACCC, which has not yet occurred.

Coles alleged unconscionable conduct case
On 5 May 2015, the ACCC commenced legal proceedings against Coles in relation to alleged unconscionable conduct.  The following extensive additional commentary was included in the ACCC’s media release:[8]

The conduct of Coles alleged by the ACCC in these proceedings was capable of causing significant detriment to small suppliers’ businesses. This could have resulted in these businesses becoming less able to plan and less able to innovate in the market, with resulting reduced economic efficiency and consumer detriment.

The ACCC alleges that Coles used undue pressure and unfair tactics in negotiating with suppliers, provided misleading information and took advantage of its superior bargaining position, so that its overall conduct was in all the circumstances unconscionable.  If this conduct is established in court, the ACCC expects that the community will share the ACCC’s view that business should not be conducted in this way in Australia.

In this example, the ACCC speculates about the detriment which Coles’ alleged conduct could have caused to small suppliers. This speculation seems somewhat premature given that the ACCC was (and is) still to prove that Coles’ conduct was in fact unconscionable. 

The ACCC then speculates that Coles’ conduct could have resulted in less innovation, reduced economic efficiency and consumer detriment.  This is yet another example of the ACCC jumping the gun by some considerable margin, given these types of arguments are only relevant to the imposition of penalties at the end of the case.

Finally, the ACCC claims that the community would be equally unimpressed with Coles’ conduct, subject to one important qualification – namely that the ACCC is actually able to establish its case to the satisfaction of the court.

The prejudicial nature of the comments made by the ACCC in its media release were further compounded by statements made by senior ACCC officials about the case in number of subsequent of media interviews. 

Coverall Manufacturing
On 21 July 2014, the ACCC commenced legal proceedings against Coverall Cleaning Concepts South East Melbourne Pty Ltd and two individuals involved in the management of the company. 

The ACCC included in its media release the following statement:[9]

The ACCC will not hesitate to take court action to enforce compliance with laws that are specifically designed to protect small business from unfair practices.

Micro-sized firms, franchisees and self-employed individuals should not be treated in a manner which goes beyond the bounds of commercially-acceptable practice, or which is more than just hard bargaining.

It appears from the above, that Coverall’s actions were no longer “alleged” unfair practices but rather clear examples of actual “unfair practices”.

Furthermore, the ACCC decided to include the gratuitous suggestion into its media release that Coverall had in fact engaged in conduct which went “beyond the bounds of commercially-acceptable practice”, and was “more than just hard bargaining”.

Omni Blend
On 14 August 2014, the ACCC commenced legal proceedings against OmniBlend Australia Pty Ltd (OmniBlend) and its sole director, Mr Neal Bowhay, for an alleged attempt to enter into in a price fixing agreement with a competitor.

After outlining its allegations, the ACCC included the following commentary about the case in its media release:[10]

Price fixing and resale price maintenance affect consumers by increasing prices, reducing consumer choice and distorting the competitive process.

The ACCC views these types of anticompetitive conduct very seriously and will not hesitate to investigate and where appropriate take enforcement action against businesses who engage in this behaviour.

In one fell swoop, the ACCC transformed OmniBlend’s alleged attempt to enter into a price fixing arrangement into an actual price fixing arrangement which apparently had the effect of “reducing consumer choice and distorting the competitive process”.  Not only is this is a clearly sub judice statement but it is also a wildly inaccurate statement. As is apparent, an attempted price fix can have neither of the two claimed effects of reducing consumer choice or distorting the competitive process.

Finally, any lingering doubt that OmniBlend’s conduct was an allegation which still had to be proved by the ACCC is dispelled in the ACCC’s second paragraph where is states that it views OmniBlend’s “anticompetitive” conduct “very seriously”.

Informed Sources
On 20 August 2014, the ACCC commenced legal proceedings against Informed Sources and five separate petrol retailers for alleged anticompetitive conduct.  After outlining the various allegations in its media release, the ACCC included the following background about the case:[11]

A key priority for the ACCC is anti-competitive conduct in the fuel sector. The ACCC is concerned about any possible impact on competition in the fuel market because of the potential impact on consumers of even a small increase in price.

It is difficult to quantify the likely effect on petrol prices of the Informed Sources arrangements with petrol retailers or of shopper docket discounts above 4 cents. The ACCC has not quantified any effect but notes that even a small increase in petrol pricing can have a significant impact on consumers overall. For example, if net petrol prices increase by 1c per litre over a year, the loss to Australian consumers would be around $190 million for the year.

First, it is notable that the ACCC omitted the word “alleged” when referring to “anticompetitive” conduct.  This omission has the risk of leading readers to conclude that the respondent’s conduct has already been proven to be anti-competitive, when this is not the case.

Second, the ACCC sought to quantify the detriment which Australian consumers may have suffered as a result of the respondent’s alleged illegal conduct - namely, $190 million a year in the form of lower petrol prices.  This wild speculation by the ACCC about potential losses arising from the alleged illegal conduct was highly irresponsible, given that the statement was made at the commencement of the legal proceedings. 

It is also clear that this statement has caused and will continue to cause the respondents considerable detriment throughout the course of the litigation, as it suggests that the respondents have illegally deprived Australian consumers of annual savings of at least $190 million in the form of lower petrol prices.

Conclusions
As the above examples show, the ACCC is now regularly providing much more comment in its media releases about matters which it has before the courts. The ACCC’s comments are clearly going far beyond a bare statement of the facts. Rather the ACCC is commenting on a wide range of factual issues which should be the sole responsibility of the judge hearing the case to determine.  

The ACCC must rethink its current approach of making gratuitous sub judice comments about its cases.  Unless the ACCC changes this practice, the organisation and its senior officials are at risk of being pursued for sub judice contempt.

If the ACCC fails to change its approach to commenting on cases which are sub judice or “under a judge” there may be a need for third party intervention.  Given the ACCC is a Commonwealth Government agency, its seems that such third party intervention could be initiated by the Commonwealth Attorney General, as Australia’s first law officer. Indeed, there is a strong argument that it is well within the responsibilities of the Commonwealth Attorney General to intervene in relation to this matter to direct the ACCC to cease engaging in conduct which may constitute sub judice contempt. Such an intervention would be consistent with the Commonwealth Attorney General’s responsibilities to safeguard both the integrity of the legal system and the rights of respondents.




[1] Managing the Risk of Sub Judice Contempt, Victorian Government Solicitors Office at http://vgso.vic.gov.au/content/managing-risk-sub-judice-contempt
[2]  Attorney-General (NSW) v TCN Channel Nine Pty Ltd (1990) 20 NSWLR 368 at 378-379.
[3] VGSO, above n 1.

[4] ACCC institutes proceedings against Luv-a-Duck for false, misleading and deceptive conduct, ACCC media release, dated 15 March 2013 – at http://www.accc.gov.au/media-release/accc-institutes-proceedings-against-luv-a-duck-for-false-misleading-and-deceptive

[5] ACCC institutes proceedings against Coles for alleged false, misleading and deceptive bakery claims, ACCC media release, dated 12 June 2013 at https://www.accc.gov.au/media-release/accc-institutes-proceedings-against-coles-for-alleged-false-misleading-and-deceptive

[6] ACCC alleges misleading and unconscionable door-to-door sales conduct, ACCC media release, dated 17 June 2013 at http://www.accc.gov.au/media-release/accc-alleges-misleading-and-unconscionable-door-to-door-sales-conduct

[7] ACCC takes action following alleged egg cartel attempt, ACCC media release, dated 28 May 2014 at https://www.accc.gov.au/media-release/accc-takes-action-following-alleged-egg-cartel-attempt

[8] ACCC takes action against Coles for alleged unconscionable conduct towards its suppliers, ACCC media release, dated 5 May 2014 at http://www.accc.gov.au/media-release/accc-takes-action-against-coles-for-alleged-unconscionable-conduct-towards-its-suppliers

[9] ACCC takes action against cleaning franchisor alleging unconscionable conduct, ACCC media release, dated 21 July 2014 at https://www.accc.gov.au/media-release/accc-takes-action-against-cleaning-franchisor-alleging-unconscionable-conduct

[10] ACCC institutes proceedings against OmniBlend Australia, ACCC media release, 14 August 2014 at https://www.accc.gov.au/media-release/accc-institutes-proceedings-against-omniblend-australia

[11] ACCC takes action against Informed Sources and petrol retailers for price information sharing, ACCC media release, dated 20 August 2014 at http://accc.gov.au/media-release/accc-takes-action-against-informed-sources-and-petrol-retailers-for-price-information-sharing

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