ACCC v Superfone

It is always a shame when regulatory action drives a genuine business out of business.

Here was a very small business which made some mistakes, admitted those mistakes and then sought to come to a settlement which would have allowed the business to continue trading and servicing its 1200 customers.

Unfortunately, that was not to be. The ACCC asked for a penalty of $400,000 plus redress which equated to 44% of the small business’s annual turnover and more than 80 times its net profit.

The ACCC ended up getting a penalty of $300,000 plus redress which equated to 34% of the small business’s annual turnover and more than 60 times its net profit. The ACCC was also awarded costs.

Definitely no winners here!

NB: I represented the company in the ACCC investigation and litigation. I did the litigation on a pro bono basis.

ACCC v Cussons

While I agree that the ACCC should not be deterred from running hard cases, they have to ensure that they run the hard cases better. As noted by Wigney J:

24 Regrettably, the Commission’s “hub and spoke” case also lacked clarity and particularity. As events transpired, it also lacked merit.

26 Somewhat peculiarly, though, the Commission elected not to cross-examine the rival expert witness called by Cussons.

44 There can be no doubt that the Commission’s loss at first instance in this case was emphatic. The Commission’s case failed at virtually every hurdle.

46 The apparent inability of the Commission to identify, let alone prove, precisely when and by whom the arrangement was made, or the understanding reached, may not have been fatal to the Commission’s case; but properly considered, it should have at least rung alarm bells.

48 It is difficult to avoid the conclusion that the Commission approached its case with a degree of tunnel vision; starting with the parallel conduct in March 2009 and then working backwards...

https://www.linkedin.com/feed/update/urn:li:activity:6787951642940723200/

Special Children's Christmas Party

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

Full Court dismisses Volkswagen $125m penalty appeal

Wow! I didn't see this coming. The Full Federal Court has dismissed what was effectively a joint appeal by Volkswagen and the ACCC to reduce Judge Foster's $125 million penalty to the agreed Volkswagen / ACCC penalty of $75 million. The Full Court held that the $125 million penalty was ‘was not excessive, let alone manifestly excessive’.

Given that there is $50 million at stake you would expect a Volkswagen appeal but it looks like a very strong Full Federal Court bench, consisting of Justices Wigney, Beach and O’Bryan so I doubt the High Court would grant leave.

It is also a pretty embarrassing outcome for the ACCC who appear to have been off the mark in terms of penalty by a cool $50 million!

https://www.accc.gov.au/media-release/full-court-dismisses-volkswagen-125m-penalty-appeal

Superfone to pay $300,000 for making unsolicited calls and misleading consumers

 Superfone fined $300,000 on a turnover of $1 million = 30%

Telstra likely to be fined $50 million on a turnover of $27 billion = 0.18%

I think the numbers speak for themselves.

https://www.accc.gov.au/media-release/superfone-to-pay-300000-for-making-unsolicited-calls-and-misleading-consumers

Full Federal Court's decision on the Quantum unconscionability case

As expected the Full Federal Court has overturned Colvin J's incorrect intepretation of unconscionability in the Quantum case.

The Full Federal Court found that Colvin J was in error by holding that the taking advantage or exploitation of some vulnerability, disability or disadvantage of the person or persons to whom the conduct was directed was a necessary aspect of unconscionability within s 21 of the ACL (para 93)

The Court held at para 96 that:

Conduct by a commercial entity which, as here, systematically misuses its superior bargaining position by dishonestly misleading its counterparties and pressuring them by unjustified and unnecessary commercial requirements in a way that reflects a dishonest lack of good faith in undermining bargains previously reached in order to extract surreptitious and undisclosed financial benefits is against and offends an Australian business conscience.

I wonder how Colvin J's other unconscionable conduct case in Geowash is going to fare under Allsop CJ?

http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCAFC//2021/40.html

ACCC authorises Queensland Dairyfarmers' Organisation to implement 'Fair Go Dairy' licensing scheme

Not too sure why the ACCC authorised this scheme - I can't see any public benefit. Given there are no public benefits and clearly some public detriment in terms of excluding non-Queensland dairy farmers from the market and setting a miniumum gate price for milk, I don't think the scheme should have been authorised.

I wonder if one of the milk processors may decide to challenge the scheme.

https://www.accc.gov.au/media-release/accc-authorises-queensland-dairyfarmers-organisation-to-implement-fair-go-dairy-licensing-scheme

Australian Business Law Review, Vol 48, Part 6

 ABLR Vol 48, Part 6 is out. Four excellent articles and two excellent Section Notes on a wide range of legal issues.

* Doing Wrong for the Right Reasons: ASIC and Foreign Language Business Names by Timothy Magarry

* Off-duty Misconduct and the Employment Relationship: A Review of the Case Law by Dr Giuseppe Carabetta

* Criminalising Wage Theft – Some Observations on Deterrence, Enforcement and Compliance by Mark Lewis

* Carrying on Business in Australia: A Study of Court Judgments by Ian Ramsay and Mihika Upadhyaya

* A More Assertive Approach by ASIC to Using Information-Gathering Powers and Challenging Privilege Claims? by Michael Legg and Daniel Faber

I am very pleased to say that despite the challenges presented by COVID-19 the ABLR has been able to continue publishing high-quality editions throughout 2020, largely on time. I am very thankful to both the Section Editors and Editorial Board who contributed so much in writing and refereeing articles and also to Haydee de Guzman, Senior Portfolio Editor, Thomson Reuters for all her hard work and diligence.

Commonwealth Director of Public Prosecutions v Wallenius Wilhelmsen Ocean AS [2021] FCA 52

 Justice Wigney's decision has just come down - Wallenius Wilhelmsen Ocean AS convicted of cartel conduct and ordered to pay a fine of $24 million, after receiving a 20% discount for an early guilty plea.

The fines seems a bit on the low side to me particularly given the following observation by Wigney J:

296 Despite the somewhat puzzling absence of any direct or clear evidence of contrition or remorse, WWO should be sentenced on the basis that its prospects of rehabilitation are reasonable and that the prospect of it re-offending is low.

I can't see how Wigney J could conclude that the prospects of rehabilitation were reasonable in the absence of any evidence to that effect.

https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2021/2021fca0052

Australian Business Law Review, Vol 48, Part 5

 ABLR Vol 48, Part 5 has come out. This time four excellent articles and two excellent Section Notes on a wide range of legal issues - free speech, secondary boycotts, statutory unconscionable conduct, privacy and data protection regimes, social enterprise, equity crowdfunding, misuse of market power and blockchain technology.

* Free Speech and Secondary Boycott Activity in Australia by Anthony Gray

* An Examination of Legal Values in Statutory Unconscionable Conduct by Peter Toy

* The Illusion of Control by Radha M Pull ter Gunne (Radha Pull ter Gunne)

* Social Enterprise and Equity Crowdfunding - A Proposal to Share Legal Infrastructure by Dr Akshaya Kamalnath

* Misuse of Market Power: Improving the Australian SLC Model by Brent Fisse

* A Modern Approach to Regulation: Integrating Law, System Architecture and Blockchain Technology in Australia by Marcus Smith Marcus Smith

I hope you enjoy this edition of the ABLR.

Kogan to pay $350,000 for misleading tax time promotion (2)

 I had a closer look at this penalty judgment and it is clear the ACCC has to appeal. The judgment is wrong on many fronts particularly its conclusion that a penalty of $350,000 will achieve any level of general deterrence. That is simply a laughable conclusion.

The judge also seems to have found that the conduct was not deliberate despite Kogan clearly raising prices by 10% prior to the sale, offering a 10% Tax Time discount and then reducing prices after the sale.

Finally, the judge effectively ignored two previous ACCC matters against Kogan and related entities in 2009 and 2016 where they had been caught engaging in the pretty much the same conduct. The judge’s conclusion was "...I do not take these prior incidences as indicative of a culture of disregard for compliance with Australian law."

However, the worst aspects of the case are that the ACCC only asked for $2 million penalty in the first place and did not even seek any consumer redress, despite the fact that consumers bought products thinking they were 10% cheaper. At the very least, consumers should have received consumer redress equal to their expectation

https://www.accc.gov.au/media-release/kogan-to-pay-350000-for-misleading-tax-time-promotion

ANZ, Citigroup and Deutsche Bank committed for trial in Federal Court on criminal cartel charges

Whilst ANZ, Citibank and Deutsche threw a lot at this committal, and raised many valid concerns, it was always going to be a tough ask to stop the matter from being committed to trial. Interesting to see which Federal Court judge is allocated the matter - most likely Justice Wigney.

https://www.accc.gov.au/media-release/anz-citigroup-and-deutsche-bank-committed-for-trial-in-federal-court-on-criminal-cartel-charges