Senate Inquiry into TPA amendments.

The Senate Inquiry into amendments to the Trade Practices Act has confirmed Agitate’s concern about the growing reach and power of the ACCC.

Regular readers know that Agitate! would prefer to see a thorough review of the ACCC and its operations before expanding its operations.

The current Senate Inquiry into amendments to the Trade Practices Act to allow criminal prosecutions for alleged cartel activity, reveals serious flaws into the approach undertaken by the ACCC and the government.

At Agitate! we have no difficulty with the concept of dual streams of enforcement – civil and criminal.

But the approach adopted into the proposed criminal stream as advocated by the ACCC has raised serious concerns by many who have made submissions and appeared before the Committee.

The Inquiry heard that because of the approach being adopted Joint Ventures may now be caught up in a web of alleged criminal cartel behaviour.

Mr Bob Baxt, the competition partner at Freehills made a private submission outlining concerns with the proposed changes.

After raising concerns about the impact on JVs Mr Baxt wrote:

“The major changes to the legislation that are contained in the Bill have been driven to a large extent, by what I perceive to be a misunderstanding by the regulator, the Australian Competition and Consumer Commission and Treasury….”

In evidence to the Inquiry Mr Peter Stuart of Speed and Stracey was also critical of the amendments. He said in his opening statements (page 14 of the Hansard here); that:

“It is my view and the firm’s view that the bill should be amended to ensure that the proposed provisions do not catch a number of innocuous transactions which occur in everyday commerce. At the present

it seems to be left to a number of defences which, for reasons pointed out in the submission, are inadequate. It should not be left for a person to have to rely on such defences to exculpate themselves from conduct which is everyday, commercial and innocuous. Ideally, the bills should be amended such that you have distinct criminal offences and leave the civil offences much as they are. The civil offences are largely operating effectively and the criminal offences need an additional level of scrutiny and additional requirements to prove an offence, much in the line of what the Dawson review has suggested. In our view it is inappropriate to leave such a wide discretion—what the ACCC talks about as ‘flexibility’, which is really just power and an incredibly wide discretion to choose whether doctors get prosecuted or whether they do not. They have a massive lever over these individuals, which is just inappropriate. The legislature should be defining the provisions more specifically such that it is clear what is criminal and what is civil.”

The Speed and Stracey submission succinctly sums up their concerns and supplements the evidence presented to the Inquiry.

Associate Professor Frank Zumbo of the School of Business Law and taxation at the University of New South Wales has also been critical of the proposed amendments. In his submission he says the Bill is “flawed in a number of key respects.” His evidence to the Inquiry commences at page 28 of the linked Hansard. In his evidence he says:

“My concern here is that there is too much discretion in the hands of the ACCC. I think in our system we would like our criminal offences to be as precisely defined as possible. I think where the draftsperson has got confused—if I can use that word with all due respect—is that they are trying to achieve too many things in one go. They are trying to deal with cartel behaviour that is civil and cartel behaviour that is criminal and in between they are defining cartel provisions very broadly.”

Still of concern is the abolition of the “dishonesty” provision of the Act where a prosecution would have to show that alleged cartel operatives entered intended to act dishonestly.

The ACCC also wants to narrow the kind of conduct that is caught by the term “understanding” in the TPA to make it easier to successfully prosecute a case of alleged cartel activity. At Agitate! we have already written about this.

That move come after the ACCC failed to win a case of alleged cartel activity by independent petrol retailers.  In May 2007 Justice Gray dismissed the case brought by the ACCC.

It would seem that the ACCC is hell bent on aggregating more power to prosecute while lessening the burden of proof required to win a case of alleged criminal cartel behaviour.

It wants more coercive powers such as phone tapping to prove collusion while lowering the legal bench mark to win a conviction.

And, further, in its rash behaviour may well jeopardise legitimate corporate activities. It seeks to justify its actions in relation to Joint Ventures in a submission to the Inquiry here.

Agitate! will be writing and posting an extensive feature on these issues shortly. Keep posted.