Wednesday, 28 November 2018

Australian Business Law Review

Needless to say, I am very excited to be taking over the role as the General Editor of the Australian Business Law Review (ABLR). My aim as General Editor will not be to attempt to fill Bob Baxt’s shoes (which would be impossible!) but rather to continue the high standards which Bob set for the ABLR.

Thomson Reuters is very pleased to welcome Michael Terceiro to his new role as General Editor of the Australian Business Law Review (ABLR), taking over from the late Professor Robert “Bob” Baxt, who was the Founding Editor of the Journal. Michael is a competition and consumer lawyer who has run his own legal practice Terceiro Legal Consulting for over 10 years.  Michael is also the Deputy Chair of Small and Medium Enterprise Committee (SME Committee) of the Law Council of Australia and the Deputy Chair of the Mortgage and Finance Association of Australia (MFAA) Disciplinary Tribunal. 
Michael earned his Bachelor of Arts and Bachelor of Laws (Hons) at Macquarie University, and completed his Master of Laws at the University of Sydney, a Professional Certificate in Arbitration at the University of Adelaide and a Master of Dispute Resolution (With Excellence) at the University of New South Wales.  Michael will also be commencing a PhD in Law through the University of NSW in 2019. 
Prior to setting up his own practice, Michael worked at the Australian Competition and Consumer Commission (ACCC) for 15 years in a number of senior positions including as a Director of Enforcement and Compliance, the Director in charge of the Sydney Mergers and Asset Sale Branch, the National GST Enforcement Coordinator and the Director in charge of the ACCC’s Waterfront Team during the Waterfront Dispute. 
Michael authored the Anticompetitive Agreements and Secondary Boycotts chapters of the CCH Australian Competition and Consumer Law Reporter. He has also written numerous articles for Lexis Nexis, CCH’s Australian Competition & Consumer Law Reporter and Tracker, the NSW Law Society Journal, Impact! A National Journal of Environmental Law, and the Keeping Good Companies publication. 
We look forward to working with Michael on future issues of the ABLR and wish him all possible success as General Editor.

Massive fines for property spruiker Rick Otton

Property spruiker Rick Otton and We Buy Houses fined record $18 million While I haven't read the judgment yet, $18 million sounds like a mighty high penalty under the ACL, particularly the $6 million against Rick Otton personally. It will be interesting to see how Judge Gleeson arrived at that number.

My Oh My - can it get any worse?

Judge tears up $35m settlement between ASIC and Westpac in lending case It just doesn't seem to be getting any better for ASIC at the moment, with Justice Perram refusing to sign off on the proposed $35m settlement with Westpac for breaches of the National Consumer Credit Protection Act (NCCPA). Perram has rejected the settlement on the basis that ASIC did not particularise the nature and number of Westpac's alleged contraventions. However, it is not too clear whether Perram thinks the penalty is too low or too high. On the one hand, ASIC proposed a total penalty of $35m which would be twice as much as the previous largest penalty under the legislation. However, ASIC then described Westpac's conduct as being due to an innocent mistake, which is never a good way of getting a big penalty. On the other hand, there were a total of 5041 alleged contraventions of section 128 of the NCPAA at $420,000 each which means a maximum penalty of about $2.1 billion. This makes $35m sound very much on the low side. It seems to me that Perram's concern is that he thinks that the proposed penalty of $35m was just plucked out of thin air and there was no principled basis for arriving at that number.

Milking it?

Murray Goulburn: Gary Helou likely to face fines following ACCC settlement Cases like this one drive me nuts. The ACCC takes legal proceedings against Murray Goulburn (MG) in April 2017. In their action the ACCC decides not to seek any pecuniary penalties against MG. Now here we are 18 months, four case management hearings and seven administrative listings later, and it looks like the case will be settled with MG consenting to declarations and agreeing to make a contribution to the ACCC's costs. Why didn't MG and more importantly its Directors make the call to settle this case 18 month ago? If they had made that decision 18 months ago MG would have saved at least $500,000 in legal costs which they paid to their top tier legal firm, as well as a couple hundred thousand to the ACCC for their costs.

Hiring the best

ASIC says it’s now free to hire the best I can't believe the Government fell for the line that ASIC's woes arise from having to hire staff under the Public Service Act (PSA) and as such they could not hire "the best"! Not only is that claim wrong but very insulting to all the hardworking ASIC staff who are doing their best. If that were problem, how is it that the ACCC has had such incredible success in enforcing their legislation, whilst having to hire staff under the PSA? When I worked at the ACCC we attracted the best by selling the advantages of working at he ACCC - ie great training, a wide variety of different types of work and significantly more responsibility than they would get elsewhere. We were also content to get 4 or 5 years out of many new starters who we could see were just passing through. We certainly got value for money out of these people in the 4 to 5 years they were with us! The problem at ASIC is not that they are unable to hire the best but rather a failure of ASIC leadership to instil the right culture. One of ASIC's major failures has been settling cases which it should have litigated which has nothing to do with hiring the best but everything to do with an ineffective, risk averse leadership.

Recent work - Airbnb

Just completed the third and final independent review of Airbnb’s Australian Compliance Program. It has been fantastic working with Airbnb over the last three years - a highly professional and switched on compliance team and organisation with a very strong culture of compliance.

PhD in Law 2019

Very excited to be starting a PhD in Law through UNSW in 2019 under the supervision of Professor Deborah Healey and Professor Alex Steel. My topic is Criminal cartel investigation and enforcement- a comparative analysis of US and Australian approaches. I’ll be looking at the significant differences between the two approaches particularly in relation to criminal cartel investigation, which may mean that the ACCC will struggle to replicate the highly successful criminal prosecution record achieved by the Antitrust Division of the Department of Justice in the US. Also, glad to see the ACCC has ramped up its own criminal cartel enforcement in recent times as that will give me a lot more to go on in terms of my research.

Labor's plans for ACCC

Labor outlines plans to tighten competition policy and boost regulator Apart from giving the ACCC more money, I am not too sure what Labor could do boost the ACCC's powers. The ACCC recently secured the highest maximum penalties anywhere in the world for breaches of consumer protection laws. The ACCC can already fine companies 10% of their annual turnover for competition law breaches and put individuals in jail for 10 years for cartel conduct.

Ugg outcome falls short of mark

Ugg boot retailer pays penalties for alleged false Australian-made representations I share Australian Leather's concerns about the very low penalty ($25,200) imposed on Ozwear Connection by the ACCC for making misleading representations about the origin of their ugg boots. The use of a swing tag in the shape of Australia with green and gold writing was highly likely to mislead consumers into believing that Ozwear's ugg boots were being made in Australian rather than entirely in China. While the ACCC gets it right most of the time, occasionally they drop the ball - this is one case where the ACCC has let down the Australian ugg boot manufacturing industry by not taking more aggressive enforcement action against Ozwear.

SME Annual Conference

Had a great time attending the SME Committee of the Law Council of Australia's Annual Conference at the Monash University Law Chambers in Melbourne yesterday and chairing the session with the ACCC. Thanks to Mick Keogh, David Salisbury and Kristie Pinuita for their excellent presentation.

RFG executives summoned to appear

Former Retail Food executives called to Canberra for grilling Apparently the Senate Committee looking into the effectiveness of the Franchising Code of Conduct has issued summonses to three former RFG executives to force them to appear before the Committee and give evidence. I will have to make a point of turning on the Parliament live feed for that evidence.

Samuel slams Federal Court judges

Banking royal commission lessons likely to be short-lived, warns former ACCC boss I saw this article quoting Graeme Samuel in relation to the Banking Royal Commission. I still find it hard to believe he made the following comment about Federal Court judges: "Professor Samuel believes a specialised group of judges with expertise in complex corporate and securities law needs to be established and maintained to rule on cases. "He says the Federal Court currently does this, but questions whether those Federal Court judges "have an expert knowledge of highly complex notions of corporations and securities law"." Apart from these comments being highly offensive to the Federal Court judges, they are also completely wrong. There is absolutely no evidence that Federal Court judges are out of their depth in relation to corporations and securities law cases.

Parliamentary Enquiry backs SME Committee proposals

Parliamentary Enquiry into the Operation and Effectiveness of the Franchising Code of Conduct Good to see both the Senate Committee and the Australian Small Business and Family Enterprise Ombudsman seem keen on the SME Committee of the Law Council's idea of establishing a new Code Ombudsman with jurisdiction to both mediate and determine disputes under all existing Mandatory Codes at p.48 "ACTING CHAIR: You might want to have a look at the evidence that we received from the Law Council of Australia, but there was a suggestion in the course of evidence today that it might be beneficial to have an ombudsman who oversees the codes and to have some core elements across codes, because there are multiple codes emerging. The idea is that there would be a standard element of codes that would set the parameters for the whole business sector, I suppose. Dr Latham: This is a really good idea. Ms Scott: Absolutely. At the moment they are all very ad hoc, so I think that's a very, very good idea.";query=Id:%22committees/commjnt/d0d1b8c0-7a6a-41de-be35-078aa5800910/0000%22

The Two that Got Away (or were given away?)

Optus misled customers over ‘Direct Carrier Billing’ charges ACCC has taken another case, this time against Optus, under a delegation from ASIC. The ACCC states in its media release that the action was taken pursuant to a standing delegation of ASIC powers to the ACCC: "The ACCC has a standing delegation of certain of ASIC powers and functions for the purposes of investigation and commencement and conduct of any proceedings in relation to matters involving financial products and services provided as part of, or in connection with, the supply or possible supply of telecommunications services." Why would ASIC delegate such powers to the ACCC? It is not like this is particularly hard work - major Australian corporations agreeing to give up and pay $10 million in penalties. Maybe ASIC has delegated this work to the ACCC because they don't see the work as particularly important? Interestingly, the ACCC is on the way to securing $20 million in penalties from these types of cases so far (ie $10 million from each of Telstra and Optus) which is equivalent to approximately 2/3 of the total amount of penalties secured by ASIC in the last financial year!

ACCC Franchising Try On

Stronger penalties required for franchising codes and UCT laws The ACCC is making a very strong play for increased penalties for contraventions of the Franchising Code of Conduct. I must admit I don't quite understand the ACCC's reasoning. Is the ACCC claiming they need bigger penalties because they have been taking lots of franchising cases to court and securing very small penalties which are failing to achieve general deterrence? Recent ACCC outcomes do not support this view: Fastway - $9000 paid pursuant to infringement notice Pastacup - $100,000 paid by consent Domino's - $18,000 pursuant to two infringement notices Ultratune and Geowash - still before the courts The more significant issue is that the ACCC has only pursued 26 franchising cases over the last 15 years, despite receiving 12,640 franchising complaints over the same period. The ACCC needs to ramp up the number of enforcement actions it is taking in the franchising sector and also to make sure that it is taking action against larger, national franchisors with high brand recognition. Having said that, I guess having access to bigger penalties may incentivise the ACCC to pick up its game in the area of Franchising Code enforcement.

Hayne gives ASIC F Grade

Excellent article summarising Kenneth Hayne’s preliminary views about ASIC's performance from his interim report. Hayne has really nailed the issues around ASIC's performance. Indeed, a lot of Hayne's views are very similar to the views which I have been expressing about ASIC's performance in LinkedIn posts over the last few months.

Australian Self Incrimination Commission?

ASIC review finds unacceptable delays by financial institutions in reporting, addressing and remediating significant breaches I was very surprised to read ASIC's report criticising financial institutions for not reporting their illegal conduct to ASIC. Isn't it incumbent on ASIC to uncover breaches of the law itself rather than relying on businesses to turn themselves in? I also wonder whether ASIC has considered the possibility that businesses are deciding not to turn themselves in because they are pretty confident that ASIC aren't going to catch them! During my 15 years at the ACCC I can recall maybe a half dozen cases where a business came in to admit its illegal conduct. A voluntary admission from a business was seen very much as the exception rather than the rule. It looks to me like ASIC may be sitting back just waiting for "mea culpas", rather than going out and doing the hard investigatory yards needed to establish a contravention.

Coat tailing

ASIC joins ACCC in pursuing ANZ over $2.5b share placement ASIC has taken legal proceedings against ANZ Bank over the $2.5bn share placement which led to the ACCC's criminal cartel prosecutions. Interesting that ASIC has decided to purse a civil penalty case rather than a criminal prosecution. Also, the maximum fine for a breach of section 674 is only $1 million, so we are not talking big dollars here.