Thursday, 12 September 2019
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)  FCA 669: Access Undertaking Derails ACCC Case Under S 50 by Brent Fisse
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.
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.
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.
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!)
I recently had a look at the penalty decision in the Birubi Art case. While Birubi Art Pty Ltd was in liquidation and will not pay one cent of the $2.3 million penalty, the penalty figure arrived at was an absolute nonsense. Birubi's turnover in the 2018 financial year was measly $223,976 (para 95). That means the penalty imposed in the case was 10 times Birubi's annual turnover! Cases like this do not help anybody, particularly legal practitioners, in trying to make sense of the appropriate penalties which should be imposed in Australian Consumer Law matters.
This has to go down as one of the most embarrassing court losses by an Australian regulator. ASIC and Westpac go to the Federal Court with a done deal - Westpac admits to breaches of the responsible lending laws and agrees to pay a penalty of $35 million. Justice Perram throws out the settlement because the agreed facts were not specific enough. He asks two fairly pertinent questions - (1) How did Westpac break the law? and (2) How many times did Westpac break the law? It appears that ASIC could not answer either of these questions to Justice Perram's satisfaction. ASIC is then forced to run the case and loses the case. Not too sure who should be more embarrassed - ASIC or the lawyers who advised Westpac to settle the case in the first place. Regardless of the above, ASIC should appeal. Not too sure Federal Court judges should be rejecting settlements and appointing an amicus curiae to act as a contradictor.
The penalty judgment in the K-Line criminal cartel case has come down. K-Line was fined $34.5 million after receiving a discount of 28%. It seems that the discount would have been substantially higher had K-Line provided a higher level of cooperation and not fought the matter through the committal stage . Given that NYK received a 50% discount for cooperating at the earliest opportunity, it looks like K-Line's decision not to provide a high level of cooperation and to fight the committal may have cost it an additional $10.5 million in penalties.
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Samsung has been taken to court by the ACCC for allegedly falsely claiming that their Galaxy phones were water resistant. There is little doubt that if the ACCC are successful in establishing liability in this case they will be going for a huge penalty. Most likely the ACCC will make a play for the 10% of turnover penalty which could be a very big number, given that Samsung Australia generated an annual turnover of $2.67 billion in 2018. Could this be the first multi-million dollar penalty under the Australian Consumer Law?
Volume 47, Part 2 of the ABLR has just come out. A bunch of excellent articles and section notes: • Selling Printed Goods or Facilitating Printing Gigs: The Redbubble Puzzle – David J Brennan • The 2018 Review of the Franchising Code of Conduct: Epicentre of a Year of Scrutiny for Australian Franchising – Jenny Buchan • Confessions of an Earnest Regulator – Michael T Schaper • Harper Report Implementation Breakdown: Repeal of Section 51(3) of Competition and Consumer Act 2010 (Cth) and Lack of Proposed Supply/Acquisition Agreement Cartel Exception – Brent Fisse • The Privileges against Self-incrimination and Self-exposure to Penalties in Commercial Litigation: Sadie Ville v Deloitte – Michael Legg and Stephanie Crosbie I suspect folk at the ACCC will be particularly interested in and entertained by the third article "Confessions of an Earnest Regulator" by the former Deputy Chair and Small Business Commissioner of the ACCC, Dr Michael Schaper.
While the alleged conduct of the three CFMMEU officials is very serious, of further concern is the Commonwealth Attorney General weighing in with sub judice comments about a pending criminal case for the purpose of scoring some political points. This conduct is entirely inappropriate and ill befitting the role of the Commonwealth's First Law Officer.