Monday, 7 December 2020

Kogan to pay $350,000 for misleading tax time promotion

Mighty small fine for a company with an annual turnover $497 million, which did not admit the conduct, fought the case in court, and which has been fined previously for a breach of the ACL. Whilst maths is not my strong suite, I think that is about 0.07% of turnover! I understand the ACCC was only seeking a penalty of $2 million which is 0.4% of turnover!

This contrasts with another recent penalty hearing where the ACCC were seeking a penalty of $400,000 and consumer redress of $37,000 against a small business, with an annual turnover of $1 million, which was a first time offender and which admitted its conduct at the earliest opportunity. I didn't need a calculator to work that the proposed penalty was 40% of turnover.

Criminal cartel charges laid against pharmaceutical ingredient company and its former export manager

 It is very concerning that the ACCC Chairman has chosen to make the following comments in the media about the ALLEGED criminal cartel conduct by Alkaloids of Australia Pty Ltd and its former export manager

“Those who are in pain and need these drugs are paying more. How much more is very hard to tell, but they’re not putting [the price] up by a small amount.”

“These things are really hard to detect, because people doing this know they’re doing something wrong and so usually go to great lengths to hide it,” Mr Sims said.

“So when it does happen you not only take the company to court and hope you get high penalties, but as you can see here we’re bringing criminal charges against Mr Joyce and if found guilty he could go to jail.

“It’s to send the message to people that while you can make money out of cartels, if you’re caught, the penalties are huge.”

The ACCC really need to read up on the concept of sub judice contempt.

Deckers v Australian Leather (Ugg case)

Unfortunately, we went down hard in our US ugg case - a jury verdict of $US450,000 for the trademark violation and legal costs $US2m.

Just to give you an idea of how crazy the verdicts were, Eddie sold 13 pairs of ugg boots into the US and two pairs of socks at a total value of $A2123. Given that $907 of those purchases were made by Deckers the actual damage suffered was only $A1216. That means the damages award was 500 times the damage actually suffered. We filed a post trial motion asking the judge to reduce the jury verdict as unreasonable which was rejected.

In relation to legal costs, in the US costs do not follow the event. A successful party only gets back their legal costs if they can show it was an exceptional case- eg a case with absolutely no merit which has been pursued in spite of prior warnings. In this case, Deckers never sent a cease and desist but commenced legal proceedings without notice. We also survived a summary dismissal and made it to trial. The judge decided the case was exceptional because it was wilful. Hard to understand how wilfulness makes a trademark case exceptional!

Anyway, given the verdicts were so outrageous we have appealed the case to the US Court of Appeals.

Enhancements to the Unfair Contract Terms Provisions

 The Government's report on amendments to the UCT laws for small business came out late last week. Good to see the Government has proposed a number of significant changes, which are in line with the arguments made by the SME Committee of the Law Council in its submissions to the review. The arguments made by our SME Committee in its submission were also cited with approval numerous times in the report.

The main proposed changes are to:
* make UCT's unlawful and introduce civil penalties for breaches
* increase the small business threshold to less than 100 employees or $10 million tunover; and
* remove the contract value thresholds entirely.

Tackling market power in the COVID-19 era

Interesting speech by Sims at the National Press Club. Not only did he seem to write off the new s46 as being useless, calling for a new unfair practices prohibition but he also called for changes to merger laws because the ACCC "hasn't won outright in a contested merger case since the current substantial lessening of competition test was introduced in 1992".

I think he may be writing off the new s46 provision a bit too soon, as it is not impossible to establish a substantial lessening competition (SLC) case. For example my team at the ACCC was able to establish SLC cases against spirited opposition from both Liquorland and Woolworths in the liquor cases back in 2006.

Also in relation to merger cases, the reality is that the merger parties generally abandon clearly anti-competitive mergers in the face of ACCC opposition with only marginal cases going to court. The ACCC should expect to lose a high number of the marginal cases. The more significant issues are whether the ACCC (1) are opposing the right mergers (eg Vodaphone / TPG and PN Aurizon which were very weak cases) and (2) are running their merger litigation effectively (eg Metcash which was poorly run).

Woolworths 2, ACCC 0 (or should that be Woolworths 2, ACCC 12)

 I think this article overlooks the ACCC's previous 12 wins against Woolworths:

Big W re Dyson appliances (2019) - undertaking
Laundry detergent case (2016) - $9 million fine
Unsafe products case (2016) - $3 million fine
Informed Sources price fix (2015) - undertaking
Breach undertaking fuel shopper docket (2014) - declaration
Big W children's nightwear (2010) - $400,000 donation
Anticompetitive liquor deals (2006) - $7 million fine
Unsafe swimming vests (2006) - undertaking
Safeway price fix (2006) - $8.9 million
NT Price fixing (2004) - undertaking + $150,000 donation
Misleading beef ads (2002) - declarations, injunctions
Flammable Children's Nightwear (1996) - injunctions

13th Annual Performance Report of the National Pro Bono Target

 Some interesting reading in this Report.

For example, "The average hours per lawyer of small law firms (with fewer than 50 lawyers) increased significantly to 35.7 hours in FY2020, up from 32.9 hours in FY2019. Thirty-two small law firms met or exceeded the Target, up from 26 small law firms in FY2019."

On the other hand, "Unfortunately not all firms are capturing these benefits, as there are still some signatories with very low average hours per lawyer. For example there are six large firms with average per lawyer hours in single figures."

Friday, 4 September 2020

Australian Business Law Review, Vol 48, Part 4

 ABLR Vol 48, Part 4 has just come out. This time five excellent articles on a wide range of legal issues - the duties of superannuation trustees, tax reform, goodwill restraints of trade, copyright site-blocking and national security and foreign investment regulation. I really enjoyed putting this edition together.

* Might Superannuation Trustees Owe a Duty to Merge? – Scott Donald

* The Challenges of Industrial Revolutions: Luddism and Tax Reform – Kerrie Sadiq and Bronwyn McCredie

* The Frontiers of Restraint of Trade Litigation Protecting Goodwill: Policy, Principles and Practice – Michael Tamvakologos

* From Little Things Big Things Grow: Australia’s Evolving Copyright Site-Blocking Regime – Cheryl Foong and Joanne (Jo) Gray

* The Australian and United States Approaches to National Security and Foreign Investment Regulation – Nicholas Felstead

I am also pleased to announce a new ABLR Section to be entitled “Taxation Law and Practice” to be headed up by Prashanth Kainthaje, Tax Partner with John Winter & Slattery. I look forward to working with Prashanth in making the new Taxation Law and Practice Section a success.

Australian Business Law Review, Vol 48, Part 3

 Part 3 has just come out. Again, lots of excellent articles and Section Notes. The legal areas covered in this edition include the proposed mandatory repair scheme, franchising law, fair work bargaining, corporations law, and competition law.

* The Mandatory Repair Scheme for Motor Vehicles 2019: Australia’s First Response to the International Right to Repair Movement? – Leanne Wiseman, Kanchana Kariyawasam and Lucas Davey

* Working for the Brand: The Regulation of Employment in Franchise Systems in Australia – Tess Hardy

* Fair Work Bargaining for Police: A Proposal for Reform – Giuseppe Carabetta

* Are the “Efficiently, Honestly and Fairly” and Unconscionable Conduct Civil Penalty Provisions Equally as Effective in Combating Unfair Practices By Licensees? – Jessica Zarkovic

* Natural Meaning Equals Natural Monopoly: New Declaration Criteria for Access to Services under the Competition and Consumer Act – Michael Gvozdenovic

* ASIC v King – The High Court Clarifies Who Is an “Officer” of a Corporation Jennifer Chambers, Michael Legg and Lindsay Stankovic

Thanks to all the authors and referees for their hard work in getting this edition together pretty much on time.

Marketing fund statements: three things to get right

I was bit frustrated to get this email from the ACCC about the importance of franchisors making sure that they send out their marketing statements to franchisees on time, given my recent experiences with the ACCC.

I wrote to the ACCC on behalf of a whilstleblower in late 2018 to advise that a well known national franchisor had failed to send out any marketing statements to any franchisees for approximately 10 years. I provided the ACCC with some fairly compelling internal company documents to support the allegations.

After a 18 month investigation, the ACCC advised us that it had decided not to take any action against the franchisor in relation to approximately 10 years of contraventions because the franchisor had decided to start complying with the law from 2017.

I have to say that there is an appalling lack of consistency in some of the ACCC's enforcement decision making.

Thursday, 9 July 2020

Australian Business Law Review, Vol 48, Part 2

Very excited about the upcoming Special ABLR COVID-19 Edition. Thanks to Dr Victoria Lambropoulos for suggesting the idea of a Special Edition and for agreeing to be the Guest Editor. Also, thanks to all the authors for their exceptional articles:

* COVID-19, JobKeeper & Stand Down under the Fair Work Act 2009 (Cth): A Review of the Law – Victoria Lambropoulos

* The Contractual Impact of COVID-19 on Corporate & Financial Transactions – Andrew Godwin

* The Challenges of Navigating the COVID-19 Pandemic for Australia’s Franchise Sector – Jenny Buchan & Rob Nicholls

* Courts, Mediation & COVID-19 – Tania Sourdin & John Zeleznikow

* Commercial Litigation and COVID-19 – the Role and Limits of Technology – Michael Legg & Anthony Song

* Frustratingly Unclear? The Interplay Between Common Law, Statute and the ACL in Assessing Consumer Rights in a Time of Crisis – Alex Jane & Jeannie Marie Paterson

* Prepayments, the ACL & the ASIC Act – Philip H Clarke

* COVID Collaboration & Competition Policy: Authorisation vs Forbearance as Crisis Responses – David Howarth & Harriet Alexander

* Transport, Drones and Regulatory Challenges: Risk Accountability Meets COVID Fast Tracking of a Critical Industry – J Tarr, A Tarr & K Paynter


Quantum Housing decision appealed over unconscionable conduct

The ACCC was right to appeal this decision. I think Justice Colvin has misinterpreted Kobelt. While a couple of the High Court judges in Kobelt seem to have endorsed special disadvantage, this was clearly not the decision of the court.

Rather the test identified by the High Court in Kobelt seems to be that conduct which is seen as well outside the bounds of moral, right or acceptable commercial behaviour according to prevailing norms and standards will be found to be unconscionable.

The other significant issue coming out of Kobelt is the long overdue rejection of "moral obloquy" as being in any way relevant to a finding that conduct is unconscionable.

Monday, 29 June 2020

Australian Business Law Review, Vol 48, Part 1

ABLR Vol 48, Part 1 has just come out. Plenty of excellent reading in relation to insolvent trading liability, class actions, whistleblowing laws, unfair contract terms, intellectual property and legal professional privilege.

* The “Safe Harbour” Reform of Directors’ Insolvent Trading Liability in Australia: Insolvency Professionals’ Views – Ian Ramsay and Stacey Steele

* To Bar Order, or Not to Bar Order: Facilitating Settlement in Australian Anti-Cartel Class Actions – Bethany Moore

* Reforming Private Whistleblower Protections – What Next in Australia? – David A Chaikin

* Financial Reporting and Disclosure of Intangible and Intellectual Property Assets by Australian Listed Entities Between 2004 and 2018 – Tony Ciro and B├╝lend Terzioglu

* Making Liars of Us All! – Ian Tonking SC

* In-house Counsel, the Requirement of Independence and Legal Professional Privilege – Martin v Norton Rose Fulbright Australia (No 2) [2019] FCA 96 – Michael Legg

I hope you enjoy the edition!

ACCC applies to the High Court for special leave to appeal Pacific National merger decision

It is a good idea for the ACCC to seek Special Leave to appeal this decision to the High Court. Although I think the ACCC are unlikely to win in the High Court, we really need some guidance from the High Court on the appropriate tests to apply to merger evaluation. The mess created by Emmett J in the "Messcash" case (as I like to call it) really needs to be sorted out.

See also my article on the Metcash case -

Australian Business Law Review, Vol 47, Part 6

The Special Personal Property Security Act (PPSA) edition of the ABLR has just come out with Guest Editor The Hon Emeritus Professor Ralph Simmonds.

We are celebrating the 10th Anniversary of the enactment of the PPSA with four articles from specialists in the area:

* Function, Form, Fixed, Floating and Forge: Filtering Out Pre-PPSA Concepts in a Post-PPSA World – Linda Widdup

* The Floating Charge under the PPSA: The Current State of Play – Sheelagh McCracken

* Registration Errors under the PPSA: A Case Law Inventory and Analysis – Martin Lovell and Oliver Radan

* The Use of Overseas Case Law in the Australian PPSA – David Brown

Special Children's Christmas Party

Happy to be supporting the Special Children's Christmas Party for the ninth year.

The impact of COVID-19 on the ACCC's 2020 Enforcement and Compliance Priorities

Learn about the Australian Competition and Consumer Commission (ACCC) 2020 compliance and enforcement priorities, and how Australia’s consumer watchdog plans to navigate the economic disruption caused by COVID-19.

Hear from ACCC Commissioner, Sarah Court and Competition and Consumer legal expert, Michael Terceiro on the impact of COVID-19 on the ACCC's 2020 priorities.

Join our complimentary webinar on 12 May from 1.30-2.30pm AEST. Register here

text and logo along with a picture of people

Australian Business Law Review vol 47, Part 5

ABLR Vol 47, Part 5 is out.

Four excellent articles and one timely Section Note:

* Finding the Balance between Profit and Purpose: Should Australia Create a Legal Structure for Social Enterprise? by Alice Klettner

* Sponsor Pressure to Discipline Employees Who Have Expressed Unwelcome Views and Reform of the Business Torts in Australia by Anthony Gray

* Proof of Collusion: The Evidentiary Options When There Is No “Smoking Gun” by Genevieve Rahman and Tina Sun

* “Fair in All the Circumstances”: AFCA’s Discretion to Resolve Disputes by Nick Beaumont SC

* Australia’s Franchising Code of Conduct Review – a Continuation Down the Path of Jamming a Square Peg into a Round Hole? by Jenny Buchan.

I hope you enjoy the articles.

Enhancements to Unfair Contract Term Protections

Attended the Sydney consultation in relation to the proposed enhancements to Unfair Control Term Protections run by Treasury today representing the SME Committee of the Law Council of Australia.

ACCC will not appeal Federal Court’s decision to allow TPG-Vodafone merger

I was wrong about this one - I thought the ACCC would appeal the decision.

Apparently the ACCC could not identify any errors of law in Middleton's judgment which would have changed the outcome. I guess the fact that Middleton based the key aspects of his decision on evidence from the ACCC's expert witness, Mike Wright made it pretty difficult for the ACCC to appeal.

I really can't understand the ACCC putting forward an expert witness who does not support its case theory. If your expert does not support your case theory you shouldn't be taking the case to court in the first place.