A number of Australian regulators and agencies are empowered to investigate and bring proceedings in relation to corporate conduct, although criminal prosecutions are in most cases exclusively dealt with by the Commonwealth (federal) and state directors of public prosecution (usually aided by the investigating authority). The three federal regulators with the most far-reaching and general application to all corporations are the Australian Competition and Consumer Commission (ACCC), the Australian Securities and Investments Commission (ASIC) and the Australian Tax Office (ATO).
Australia’s competition law is contained within the Competition and Consumer Act 2010 (Cth) (CCA). The ACCC is responsible for investigating and enforcing the conduct regulated under the CCA. The ACCC is a federally funded body but acts independently of the government.2
The ACCC has a range of special investigative powers at its disposal for use in enforcing the CCA, including the following:
- a Section 155 notices: Section 155 of the CCA enables the ACCC to issue a notice to any corporation or person if it has reason to believe that the person is capable of furnishing information, producing documents or giving evidence in person in relation to a breach or potential breach of the CCA.3 The ACCC can require the recipient to furnish that information, produce the documents or appear in person before it to provide evidence, either orally or in writing. The ACCC also has powers to investigate claims or representations made in relation to the supply of goods or services by way of a substantiation notice under Section 219 of the CCA.
- b Dawn raids: the ACCC has the power to obtain warrants to enter premises and inspect documents upon application to a magistrate who is satisfied that there are reasonable grounds to suspect that there is evidential material on the premises in question.4 The ACCC may enter premises by consent or under warrant.5 Once entry has been made, ACCC inspectors and assistants are able to search the premises, make copies of evidential material, operate electronic equipment to determine if evidential material is accessible, and remove such material.6
- c Phone tapping and surveillance powers: the ACCC is able to seek a range of telecommunication warrants to assist in gathering evidence in investigations relating to alleged cartel conduct. These warrants enable the ACCC itself to gather evidence, or authorise the federal police to do so in assisting an ACCC investigation. They do not extend to investigating alleged civil contraventions of the CCA.
In the area of securities, ASIC is the government body that administers and enforces company, capital market, securities and financial service laws to protect consumers, investors and creditors. ASIC also investigates complaints about companies or individuals who may have breached the laws it administers, including the Corporations Act 2001 (Cth) (the Corporations Act).7 ASIC is an independent body, so its investigatory and litigious priorities are not subject to direct political influence; however, it has both generalised and specific annual priorities that influence the decisions it makes about the matters it will investigate and the enforcement actions it will take.
During the course of a formal investigation, ASIC may exercise compulsory powers to require the production of documents and explanation of their contents.8 If necessary, ASIC can seize documents under a search warrant.9 It can also conduct oral examinations of relevant persons by issuing a notice if it, ‘on reasonable grounds, suspects or believes’ that a person can give information relevant to a matter that it is investigating, or is to investigate.10 Non-compliance with notices to produce documents or give oral evidence is an offence. Compliance does not represent any concession of wrongdoing or contravention.
The ATO is the Commonwealth government’s principal revenue collection agency, ultimately reporting to the Treasurer. It sets out its regulatory objectives and priorities in regular strategic statements, annual corporate plans and compliance programmes, including in the area of enforcement. For example, in recent years, one focus of the ATO has been to identify, deter and prosecute crimes against the tax and superannuation systems, including refund fraud and abusive use of tax secrecy havens.
Like the ACCC and ASIC, the ATO has very broad investigative powers (or access powers). The ATO’s access powers are derived from statute11 and guidelines, which ATO officers must follow when invoking them. These powers permit the ATO to access buildings and places, books, documents and other papers, and require the production of documents and require persons to give evidence. This extends to the provision of login details and encryption keys in relation to electronically stored records. In very general terms, criminal prosecutions will not be pursued unless there is sufficient admissible evidence to prove that an offence has been committed, and that a prosecution would be consistent with the prosecutions policy of the Commonwealth and in the public interest.12
There is no obligation under the CCA for businesses to self-report potential breaches or wrongdoing to the ACCC. However, like many other corresponding agencies around the world, the ACCC has developed an immunity and cooperation policy that is designed to detect and deter cartel conduct.13
While the policy operates only in relation to whistle-blowing for cartel conduct, the ACCC also maintains a general cooperation policy for enforcement matters, which applies to conduct that does not meet the criteria for immunity under the immunity and cooperation policy. This may be where the ACCC has already commenced proceedings for cartel conduct,14 or where a corporation has engaged in other types of anticompetitive conduct (such as agreements that substantially lessen competition or resale price maintenance).15 In these circumstances, an applicant may still receive credit for cooperating with the investigation under the cooperation policy. Although applicants are generally not afforded full immunity, the cooperation policy is flexible enough that the ACCC is able to confer leniency, such as imposing reduced penalties.16
Under the CCA, cartel conduct may constitute both a civil contravention and a criminal offence. To prosecute conduct on a criminal basis requires the establishment of the mental element, namely knowledge or belief.17 Under its immunity policy, the ACCC may only grant immunity for civil contraventions.
The application for immunity by a corporation must be made before the ACCC receives written legal advice that it has sufficient evidence to file proceedings.18 Eligibility is determined by reference to various conditions, with the main criteria being that the applicant (in the case of a corporation):
- a is or was a party to a cartel, whether as a primary contravener or in an ancillary capacity;
- b admits that its conduct (as a corporation, not merely of isolated individual employees) in respect of the cartel may constitute a contravention or contraventions of the CCA;
- c is the first person to apply for immunity in respect of the cartel under this policy;
- d has not coerced others to participate in the cartel;
- e has either ceased its involvement in the cartel or indicates to the ACCC that it will cease its involvement in the cartel;
- f the corporation’s admissions are a truly corporate act (as opposed to isolated confessions of individual representatives); and
- g the corporation has provided full, frank and truthful disclosure, and has cooperated fully and expeditiously while making the application, and undertakes to continue to do so, throughout the ACCC’s investigation and any ensuing court proceedings.
In addition, at the time the ACCC receives the application, the ACCC may not have received written legal advice that it has reasonable grounds to institute proceedings in relation to at least one contravention of the CCA arising from the conduct in respect of the cartel.19
Derivative immunity is available to individuals who are listed employees and officers of the corporate applicant, or those who used to work for them. To qualify for immunity, they must adhere to the same preconditions of immunity and cooperate fully with the ACCC’s investigation as required of the corporation in question.20
In relation to criminal offences, the ACCC and the Commonwealth Department of Public Prosecutions (CDPP) have a memorandum of understanding (MoU) that provides that where the ACCC determines that the conduct in question is sufficiently serious to be referred to the CDPP for potential criminal prosecution, it will also make a recommendation to the CDPP as to whether the immunity applicant should be granted immunity from prosecution; however, the ultimate decision falls to the CDPP alone.21
Until the ACCC’s investigation and prosecution in relation to the conduct subject of the immunity application is closed or finalised, the grant of immunity is generally conditional, subject to the immunity applicant’s ongoing cooperation. However, immunity, conditional or otherwise, does not necessarily guarantee anonymity. The court will weigh the public interest immunity privilege against the respondents’ right to a fair trial. In ACCC v. Prysmian Cavi e Sistemi Energia Srl,22 the ACCC sought to keep the identity of the derivative immunity applicant confidential, on grounds of public interest immunity privilege, based on concerns that the derivative immunity applicant would be exposed to prosecution in other jurisdictions. While the court rejected that concern as irrelevant to its consideration, the court did acknowledge that there was a public interest in encouraging immunity applicants to come forward, which could be undermined by disclosure, depending on the circumstances. Here, the derivative immunity applicant’s identity had already been disclosed in other contexts and accordingly, the interest in protecting the applicant’s identity was outweighed when balanced against the respondents’ right to a fair trial.
Subsequently, the CCA has been amended to regulate the factors that a court must take into account in ordering disclosure of ‘protected cartel information’ (information provided to the ACCC in confidence relating to a breach of the cartel conduct prohibitions).23 The court must take into account the following factors when considering whether to order disclosure of protected cartel information:
- a the information was provided to the ACCC in confidence;
- b Australia’s relations with other countries;
- c the need to avoid disrupting national and international efforts relating to law enforcement, criminal intelligence and criminal investigations;
- d if an informant provided the information, the safety of the informant, and the fact that disclosure may discourage informants from giving information in the future; and
- e the administration of justice.24
At the time of writing, no criminal prosecutions for cartel conduct have yet been commenced.
Neither the ASIC Act nor the Corporations Act contains any general obligation for businesses to self-report potential breaches of law or wrongdoing to ASIC. The position is different, however, for holders of certain licences under the Corporations Act such as financial services licensees, who have obligations to promptly report certain significant breaches or likely breaches to ASIC,25 and to provide details of the breach, how it was identified, why it is significant, the persons involved and how it was or is being remedied.
Currently, ASIC can in some cases grant relief from provisions of the Corporations Act (and other legislation it administers).26 Generally, ASIC cannot give relief for contraventions that have already taken place; however, it may give relief in circumstances where no mischief has yet occurred and the regulatory detriment of the breach is minimal and outweighed by the commercial benefit that would result from the proposed relief. The court has some powers to grant retrospective relief. For example, upon the application of any interested person, it may make orders about general irregularities (i.e., validating acts and relieving persons of civil liability).27 The court also has power to grant relief from liability to certain persons in specific types of civil proceedings.28
Taxpayers must accurately provide the ATO with all information relevant to their tax positions, as this determines their tax liabilities (if any); the fundamental characteristic of Australia’s current income tax regime is self-assessment. The ATO places the onus on taxpayers to interpret and apply the law in preparing their returns; a corollary of this is an expectation (although not a legal obligation) to disclose any internal wrongdoing. The ATO relies on audits and other investigative powers to check and verify assessments, and is empowered to impose penalties and interest charges for non-compliance with tax laws,29 and reduce those penalties and charges at its discretion for voluntary disclosure.
The ATO has no power to grant immunity from criminal prosecution for breach of tax laws; that is the sole preserve of the CDPP.
ii Internal investigations
Businesses are free to conduct their own internal investigations into any behaviour considered to be at risk of breaching antitrust, securities or taxation legislation.
The ACCC encourages businesses to design and implement appropriate corporate compliance policies that contain mechanisms for undertaking such investigations, and the existence of such programmes is viewed favourably by the ACCC and the federal courts if the matter in question gets to the point of administrative or court resolution.
There is no requirement to share the results of an internal investigation with the ACCC, nor even the fact that an investigation has taken place. Where a business believes it is at risk of uncovering cartel conduct, it is able to apply for a ‘marker’ with the ACCC on an anonymous basis.30 This is essentially a ‘first-in’ placeholder for an immunity application, which allows the applicant a limited time (usually 28 days) to investigate and gather relevant material, and to decide whether to make a formal application for immunity, or allow the marker to lapse.
With regard to securities, there is no general requirement to disclose to ASIC the fact an internal investigation has been undertaken, or the results of such investigation. Again, the position is different for licence holders under the Corporations Act such as financial services licensees, who have heightened obligations to have in place compliance and supervisory systems, including robust mechanisms for identifying breaches and making appropriate enquiries where breaches are suspected.31 These obligations may dovetail with reporting obligations such that the results of an internal investigation should be reported to ASIC.
A typical internal investigation will involve identifying the employees at risk, acquiring and ‘locking down’ their hard copy and electronic files, conducting face-to-face interviews with relevant employees and carrying out forensic electronic investigations. Employees are free to, and should be advised that they are able to, retain their own legal representation if their conduct is being reviewed during the investigation. The corporation’s legal representatives, in conducting the interviews and investigation, should make it clear that they represent the interests of the company.
Legal professional privilege (also known as client legal privilege) can be asserted over the conduct of an investigation in accordance with the usual principles of privilege. However, in making an application to the ACCC under either the immunity and cooperation policy or the general cooperation policy, the ACCC will expect full and frank disclosure to meet the requirements of a grant of conditional immunity.32 Documents are not required to be produced to ASIC (even where ASIC is exercising its coercive powers) if such production may involve a breach of legal professional privilege.33 ASIC is required to treat information provided to it in accordance with the law and it will treat documents as confidential if such a claim is made. The position is similar for investigations conducted by the ATO. In addition, the ATO is increasingly data matching information obtained from taxpayers with information obtained under legislated data matching sources, and MoUs with other governmental agencies such as the various State Revenue Offices, the Australian Prudential Regulation Authority, the CDPP and the Australian Federal Police, as well as the US and UK governments.
The immunity and cooperation policy and the general cooperation policy set out the circumstances in which the ACCC may confer immunity or leniency upon whistle-blowers and operate as an incentive to self-report potentially illegal conduct. Other than this, the CCA contains no specific whistle-blower protection mechanisms for employees. The ATO, at the time of writing, does not follow any specific guidelines or provisions dealing with whistle-blowers (although it encourages the provision of information to it about suspected tax evasion, even on an anonymous basis).34 As part of the 2016–2017 Federal Budget handed down in May 2016, new whistle-blower protection arrangements will be introduced to protect individuals who disclose information to the ATO on tax avoidance behaviour and other tax issues. These measures are set to include protection of the whistle-blower’s identity, as well as protection from victimisation and civil and criminal action for disclosing information to the ATO. These measures are expected to apply from 1 July 2018.
For suspected breaches of the Corporations Act, Part 9.4AAA establishes a framework designed to encourage corporate employees, officers, subcontractors and the employees of subcontractors to report suspected breaches of the corporations law to ASIC or internally within the company, and to prohibit employers from victimising employees, officers, subcontractors or employees of subcontractors who do so in good faith and on reasonable grounds. The provisions give the relevant employee, officer or subcontractor qualified privilege in relation to a protected disclosure of information.35
Over the past few years there has been renewed criticism of this framework and calls for an improvement in the protections afforded to whistle-blowers in the private sector.36 Those calls have been made in the context of the implementation of enhanced protections for public sector whistle-blowers,37 and in the context of the Senate inquiry into ASIC’s performance, prompted in part by ASIC’s failure to promptly address information supplied by whistle-blowers.38 In 2014 (perhaps prompted in part by the negative media coverage of ASIC associated with that inquiry) ASIC released an information sheet explaining how it deals with whistle-blower information and the existing protections available to whistle-blowers,39 and also established the Office of the Whistle-blower to ensure that it gives appropriate consideration to the information it receives.40 More recently, ASIC has emphasised its focus on encouraging corporate employees to approach the regulator with information concerning dishonest or illegal activities occurring within organisations, with Chairman Greg Medcraft warning Australian businesses that they need to have whistle-blower policies in place that their employees can have trust and confidence in.41 Indeed, in April this year ASIC, in collaboration with Griffith University, sent letters to 30,000 companies in Australia inviting them to participate in a project designed to improve managerial responses to whistle-blowing in private sector organisations.42
In addition, the whistle-blower framework has been the subject of a Senate Economics References Committee Inquiry. On 21 April 2016, the Committee outlined a broad range of potential reforms to the framework including:
- a requiring companies to implement systems for internal disclosure;
- b mechanisms to provide financial rewards to corporate whistle-blowers;
- c the establishment of a role for ASIC or another body under the Act to act as an ‘advocate’ for whistle-blowers; and
- d improving eligibility for whistle-blower protection and the scope of protected disclosures.43
Although the extent of the Committee’s recommended reforms will not be known until its final report is published (in August 2016), it is clear that the Committee views the current whistle-blower framework as unacceptable: ‘[n]o-one should be forced to decide between exposing corporate fraud and misconduct and protecting their careers and broader wellbeing.’44
i Corporate liability
The CCA provides that the conduct of employees is deemed to have been engaged in also by the body corporate (including corporations) where the person acts:
- a within the scope of their actual or apparent authority; or
- b at the direction or with the consent or agreement (express or implied) of a director, employee or agent of the body corporate, where that direction, consent or agreement was given within the scope of that person’s actual or apparent authority.45
This applies to all conduct prohibited under the CCA. However, a corporate entity will not be liable if the person at whom the conduct was directed can be shown to have known that the director, employee or agent of the body corporate was acting in his or her own interests and not those of the corporate entity.
As a company is an abstract entity, the state of mind of the company must be determined by the conduct of its directors, employees and agents. For example, in the prosecution of an offence (criminal or civil) under the cartel conduct provisions, to establish the state of mind of the body corporate, it is sufficient to show that:
- a a director, employee or agent of the body corporate engaged in that conduct;
- b the director, employee or agent was, in engaging in that conduct, acting within the scope of his or her actual or apparent authority; and
- c the director, employee or agent had that state of mind (in this case, knowledge or belief).46
An individual may be found to be a person involved in a contravention of the CCA where the person has aided, abetted, counselled or procured, induced, been knowingly concerned in or a party to, or has conspired with others to effect the contravention.47
ASIC and the ATO may also bring civil proceedings against a corporation for contraventions of various laws and may recommend that the CDPP commence criminal prosecutions for contraventions. Corporate conduct can be subject to civil or criminal liability based on the actions of its directors and officers (and in some cases its employees) because conduct by those persons in the course of fulfilling their duties for the corporation is deemed to have been performed by the corporation itself. This rule applies regardless of whether the contravention carries a criminal or civil penalty. Individuals may also be found personally liable for contraventions by corporations in some circumstances.
It is possible for both the corporation and the individual to be represented by the same legal counsel where the litigation or prosecution stems from the same conduct. However, as individuals may also be found personally liable for contraventions by a corporation in relation to antitrust, securities or taxation legislation, there is the potential for conflicts of interest to arise and, if this occurs, the legal representative may need to cease acting for one or both of the respondents.
The ACCC may take court-based and certain non-court-based (administrative) action to seek sanctions against businesses. Court-based actions are divided into criminal and civil sanctions, while non-court-based actions are categorised as formal and less formal sanctions.
Criminal sanctions for serious cartel conduct, which can only be ordered by the Federal Court or State Supreme Courts, include criminal convictions, fines and imprisonment. Civil court-based sanctions include pecuniary penalties, disqualification orders, non-party redress, adverse publicity orders, declarations and injunctions. Penalties imposed by the court may be the greater of A$10 million, three times the value of the benefit gained from the conduct, or 10 per cent of the annual turnover of a body corporate during the period (per contravention).48
Non-court-based sanctions include court-enforceable undertakings, infringement notices, public warning notices, substantiation notices and administrative resolutions.
ASIC has wide powers to commence civil proceedings seeking a wide variety of penalties and restrictions on the freedom of corporations and individuals. It may seek pecuniary penalty and compensation orders, declarations, and banning orders preventing persons from being involved in managing corporations for specified periods. Penalties for contraventions of specified sections of the Corporations Act are set out in Schedule 3 of the Corporations Act.
ASIC is also empowered to seek injunctions to restrain contraventions of the Corporations Act, or to require a person to do or refrain from doing ‘any act or thing’.49 It can also, while an investigation, civil proceeding or prosecution for contravention is ongoing, seek orders freezing assets, prohibiting persons and assets from leaving the jurisdiction, appointing receivers and managers to the property of a body corporate to protect interests of persons who may have a claim against the body corporate, or requiring persons to surrender their passports to it.50
A corporation will also be subject to administrative or criminal penalties for contravening Australia’s taxation laws. The ATO may impose an administrative penalty on a business directly (for example, in relation to a shortfall, including shortfalls relating to ‘schemes’).51 In certain circumstances where a corporation has voluntarily disclosed the contravention, there will be a reduction in the penalty and interest charges applied. As part of the 2016–2017 Federal Budget, it was announced that for companies with a global revenue of A$1 billion or more, administrative penalties would be increased by a factor of 100 from 1 July 2017. This measure appears in the context of increasing ATO focus on profit shifting by large multinational groups.
The amount of the penalty imposed depends on the seriousness of the contravention and any past contravention or activities of the corporation. Where the corporation has committed several contraventions that would ordinarily result in a term of imprisonment for an individual, the corporation is liable to pay a penalty five times the maximum monetary penalty.52 Prosecutions against corporations under the Taxation Administration Act 1953 (Cth) (TAA) are pursued on a summary basis53 and in relation to ‘prescribed tax offences’; a penalty is imposed on a corporation where a contravention is found.54 Criminal sanctions may also be pursued against corporations by the provisions set out in the Criminal Code Act 1995 (Cth) (the Criminal Code)55 and the Crimes (Taxation Offences) Act 1980 (Cth). The sanctions imposed by these sections include penalties but do not include imprisonment in the case of corporations; however, individuals within the corporation may be held criminally liable for a contravention and can be imprisoned for such acts.
iii Compliance programmes
Section 76 of the CCA provides that the court may order any pecuniary penalty it determines appropriate having regard to all relevant matters, including the nature and extent of any loss or damage, the circumstances in which the conduct took place and whether the person has previously been found to have contravened the CCA. Over time these principles have been expanded to specifically include whether the corporate culture of the enterprise lends itself to compliance with the CCA, as evidenced by educational programmes and disciplinary or other corrective measures.56
Therefore, while the existence of a compliance programme is not a defence to a civil contravention, it will be considered as a mitigating factor; the extent of such consideration will depend upon the comprehensiveness of the programme, its practical effectiveness and the genuineness of the compliance culture that exists within the firm.57
There is currently no explicit, generalised legal duty on Australian companies or their directors to implement compliance systems in relation to the Corporations Act. The only situations in which such compliance systems are directly required are where they are a condition imposed by ASIC on a financial services licence issued under the Corporations Act.58 The law on corporate governance and directors’ duties makes internal compliance systems desirable to avoid or minimise the risk of liability; however, evidence of corporate compliance systems will not automatically result in mitigation of criminal and civil penalties for offences against the Corporations Act.
Due diligence defences may be successfully raised where company officers involved in an alleged contravention prove that they took all reasonable steps to ensure that the company had effective internal controls in place to prevent breaches, and in doing so, believed on reasonable grounds that the company had complied with all of its obligations under the Corporations Act.59 An effective compliance system can also be an important tool in preventing breaches of the Corporations Act. For example, the effectiveness of internal compliance programmes has been a factor that Australian courts have taken into account when considering alleged breaches of the insider trading provisions of the Corporations Act.60
At a broader level, many of the offences created by the Corporations Act are governed by the Criminal Code, which contains a defence of general due diligence.61 Lack of an effective compliance system may increase a company’s risk of liability for federal criminal offences committed by company officers.62
While the existence of a compliance programme within a corporation does not in and of itself serve as a defence to a criminal charge or penalty sanction with regard to a ‘prescribed taxation offence’, the attitude of the corporation to compliance is taken into account by the ATO in making its decision as to whether to prosecute the corporation.63 Generally, where a taxpayer has a good compliance history, it will not be referred for prosecution action at first instance, particularly where the ATO and prosecuting authorities have the discretion to elect whether to prosecute or impose a penalty tax upon the corporation.
iv Prosecution of individuals
Under the CCA, the way in which a company deals with an employee who is the subject of an investigation, in a practical sense, will depend upon the company’s risk management and compliance policies and the terms of the employee’s contract. Ideally, internal policies will clearly set out how a corporation should proceed in such a situation. It is neither a requirement nor necessary that a company terminate the employee’s contract in such a situation. Termination will be governed by the terms of the employee’s contract and any applicable internal policies of the corporation. The same generally applies where an employee is subject to investigation or prosecution by ASIC or the ATO.
In certain cases, taking such steps may be consistent with other obligations of the company. For example, financial services licensees are required to take reasonable steps to ensure their representatives comply with relevant laws.64 Where an employee or representative is involved in a suspect transaction, it may be appropriate, consistent with that obligation, to caution or otherwise discipline that employee or representative, or to impose restrictions or additional supervision requirements on the employee’s or representative’s trading activity.
Where a corporation under investigation is represented by legal counsel who attends a formal interview or examination of the employee conducted by the ACCC, ASIC or the ATO, the corporation should make it clear that the legal counsel represents the firm, not the individuals. If individuals engage their own legal counsel, the two sets of legal representatives are allowed to confer, taking into account any issues of client legal privilege and confidentiality.
Section 77A of the CCA prevents bodies corporate from indemnifying a person (whether by agreement or by making payment) against liabilities incurred as an officer of that body corporate, where the liability is a civil liability65 or the legal costs incurred in defending or resisting proceedings establishing that liability; this applies to both first-instance proceedings and appeals. If a corporation breaches this provision, it may be liable for a pecuniary penalty of 25 penalty units.66
There are likewise limits on a company’s ability to assist employees that are the subject of claims by ASIC. Section 199A(3) of the Corporations Act provides that a company must not indemnify a person against legal costs incurred in defending an action for liability, criminal proceedings or proceedings by ASIC for a court order if the costs are incurred in defending or resisting such proceedings, and if the person is found liable or guilty, or grounds for making the order are found by the court to be established.67 However, Section 199A(3) will not apply in relation to costs incurred in responding to ASIC actions as part of an investigation, before commencing court proceedings. The company may nevertheless be able to give the person subject to an investigation or proceedings by ASIC a loan or advance in respect of legal costs, provided that any such loan or advance be repaid if the conditions in Section 199A(3) become applicable. Additionally, arrangements to indemnify a person for penalties for contraventions of the law may be void at common law as a matter of public policy.68
The position in relation to ATO investigations and litigation is similar to that described for ASIC. Additionally, in the Commissioner of Taxation’s view, tax deductions are ordinarily not allowed for fines incurred for breaches of the law, or for legal expenses incurred by a taxpayer in defending itself or its employees from prosecution.69
i Extraterritorial jurisdiction
The government does not intend that all provisions of the CCA be extended to extraterritorial conduct. Relevantly, the prohibitions on anticompetitive conduct in Part IV (cartels, anticompetitive agreements, misuse of market power, exclusive dealing and mergers that substantially lessen competition) extend to conduct occurring outside Australia that is engaged in by bodies corporate incorporated in or carrying on business in Australia, Australian citizens and persons who are ordinarily resident in Australia.70 However, before being able to rely upon extraterritorial conduct as the basis for a damages claim or a claim for compensation, an applicant must first gain ministerial consent.71 The Minister is obliged to give consent unless, in his or her opinion, the conduct was required or specifically authorised by a law of the country in which it occurred, or it is not in the Australian national interest to give that consent.72
The issue of whether anticompetitive conduct occurring wholly outside Australia can be subject to the operation of the CCA as conduct occurring in a market in Australia has been raised by a number of airlines that are parties to proceedings brought by the ACCC in relation to an alleged global price-fixing cartel for air cargo services. The issue was also agitated by the respondent airlines in a private representative or ‘class action’ against various airlines relating to similar alleged global conduct.73 The ACCC has settled with 13 of the 15 airlines against which it commenced proceedings, resulting in the imposition of almost A$100 million in penalties. On 31 October 2014, the Federal Court dismissed the ACCC’s allegations against Air New Zealand and Garuda Indonesia, the two airlines who chose to defend the allegations that they had colluded with other airlines to fix surcharges for air cargo in contravention of the (then in force) Trade Practices Act 1974 (Cth) (TPA).74 Relevantly, until the cartel provisions came into effect in July 2009, the price fixing provisions under the TPA applied to arrangements that fixed prices between parties in competition in any ‘market in Australia’. Central to the Court’s decision in this case was its finding that the ACCC failed to establish that the alleged conduct occurred in a ‘market in Australia’, and that accordingly, the conduct did not fall within the ambit of the Australian Act.
On 21 March 2016, in a 2:1 decision, the Full Federal Court overturned the decision, finding that the relevant air cargo services from Hong Kong, Singapore and Indonesia were supplied in a ‘market in Australia’ and therefore contravened the TPA.75 The majority held that a market is a ‘field of transactions’ that includes both the agreement to buy and sell, and the performance of the transaction. It is the ‘space’ in which the competitive process occurs, and in that sense, includes all the economic activities embodied in the concept of competition. As such, while the geographic dimension of a market may determine whether a market is in Australia, regard must be had to all dimensions of the market, namely its product, geographic, functional and time dimensions.76
By contrast, the dissenting judge found that none of the relevant markets were located in Australia, adopting a principled approach to identifying the relevant market by looking to the ‘field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution’.77 The dissenting view ultimately held that the market is located where the opportunities for substitution and switching are to be found.78
In any event, any application to future cartel cases may be limited. This is because, under the CCA, price fixing may be pursued under the new cartel provisions which are not subject to the restriction that the conduct involve a market in Australia. Thus in Norcast v. Bradken,79 a case decided under the new cartel provisions introduced in 2009, the Court held that the law applied to an arrangement concerning a tender for the sale of a Canadian corporation, which had business operations outside Australia, where the seller was based outside Australia and the tender was conducted outside Australia.
However, the Competition Policy Review Panel, which has recently undertaken an extensive review of the operation of the CCA and made a number of significant recommendations in its Final Report (released on 31 March 2015), has recommended that the cartel provisions should only apply where there is some effect on commerce in, to or from Australia. Influenced by the New Zealand Cartel Bill, the Panel recommends that the cartel prohibitions should only apply to conduct involving persons who compete to supply goods or services to, or acquire goods or services from, persons resident in or carrying on business within Australia.80 That has received broad support from the Australian government, which released its response to the Competition Review Panel’s review on 24 November 2015 and which has indicated it will develop exposure draft legislation for consultation with the public and Australian states and territories to reflect this.81
In relation to Australia’s consumer protection laws, a recent decision of the Federal Court82 has clarified the reach of the Australian Consumer Law (ACL), Schedule 2 to the CCA, in finding that even if a company is based outside Australia, if it supplies goods to Australian consumers it is likely to be engaging in conduct in Australia and therefore required to comply with the ACL. Specifically, on 24 March 2016, the Federal Court held that Valve Corporation – a company based in the United States that operates an online game distribution network known as Steam – had engaged in misleading or deceptive conduct and made false or misleading representations to Australian consumers about the operation of the consumer guarantee regime under the ACL. The decision clarifies that cross-border transactions over the internet to Australian consumers are subject to the consumer guarantee regime under the ACL. This means that Australian consumers are able to enforce their rights under the ACL even if the business is in a foreign jurisdiction, and even if the proper law of the contract is a foreign jurisdiction.
The operation of the Corporations Act outside Australia is based upon the legislative powers of the Commonwealth under the external affairs power in Section 51(xxix) of the Australian Constitution.83
The chapters of the Corporations Act are declared to apply, according to their tenor, in relation to acts and omissions outside Australia.84 However, the extraterritorial application of the Corporations Act is limited in practice by the use of terms that are defined in a manner so as to have a nexus with Australia (most notably ‘company’ is defined to be any company registered under the Corporations Act).85 For example, the statutory duties of directors and other officers contained in Sections 180 to 184 of the Corporations Act have been found to apply to acts or omissions of directors or other officers of Australian corporations registered in Australia where those acts or omissions occur outside Australia. This has been justified on the basis that breaches by directors of their duties under the Corporations Act that occur outside Australia may have an adverse effect within Australia.86
Section 51 of the Constitution restricts the Commonwealth’s powers of taxation to making legislation for the ‘peace, order, and good government of the Commonwealth’. This suggests that there must be some nexus with Australia before Australian tax legislation can have an extraterritorial effect. Accordingly, jurisdiction to tax will depend on residence and source. A company is an Australian resident if it is incorporated in Australia, or carries on business in Australia and has either its voting power controlled by resident shareholders or its central management and control in Australia.87
Subject to certain exceptions, Australia will generally not tax the profits of a company that is resident in a country with which it has a tax treaty unless it carries on its business through a ‘permanent establishment’ in Australia, which may occur where a non-resident carries on business in Australia. Australia, however, has a comprehensive withholding tax regime that imposes tax at source on various payments and credits (including, subject to certain limited exceptions, in respect of unfranked dividends, interest and royalties).
As Australian residents are taxed on their worldwide income, they must report all relevant foreign income in their Australian income tax return (although some types of foreign income and gains are non-taxable in certain circumstances). Australia’s tax law has specific provisions for international dealings, including anti-tax deferral, anti-avoidance and dealings with tax havens. The ATO conducts joint investigations with other Australian agencies, including the Australian Federal Police, the Australian Crime Commission, the Australian Transaction Reports and Analysis Centre and ASIC, as well as foreign agencies, to counter tax evasion and fraud. The high-profile Project Wickenby (focusing on the investigation of internationally promoted tax arrangements that involve tax avoidance or evasion) is one example of this joint task force approach.
ii International cooperation
The ACCC, as a federal regulator, is a member of a number of global associations relevant to competition and consumer protection issues and is a party to bilateral and tripartite cooperation arrangements and treaties with counterpart agencies globally, including the US Department of Justice and Fair Trade Commission, the Fair Trade Commission of Japan (JFTC), the Ministry of Commerce of the People’s Republic of China (MOFCOM), the Chinese State Administration for Industry and Commerce (SAIC), the National Development and Reform Commission of the People’s Republic of China (NDRC), the New Zealand Commerce Commission, the UK Office of Fair Trading, the Canadian Competition Bureau, the European Commission, and the Korea and Taiwan fair trade commissions.88
Each agreement is specific to the relationship and the legislation enforced by the agencies, but generally they recognise that cooperation and coordination may result in more effective resolution of each’s enforcement issues. The extent and type of cooperation can include notification obligations, coordination of enforcement activities and agreements to advise of potential conflicts.
In recent years, the ACCC has adopted a strategy of increasing its engagement with Asian competition regulators and developing long-term relationships with those regulators. Notably, on 5 November 2015 the ACCC signed a memorandum of understanding with the NDRC, one of three bodies administering China’s Anti-Monopoly Law, the agency responsible for price supervision and related enforcement action. The ACCC now has cooperation agreements in place with all three of China’s competition agencies. The agreement allows increased engagement between the ACCC and NDRC on international cartel investigations affecting Australian and Chinese markets.89
Further, on 30 April 2015 the ACCC signed a cooperation arrangement with the JFTC, which administers and enforces Japan’s Anti-Monopoly Law. The arrangement builds upon the Japan-Australia Economic Partnership Agreement, which commenced on 15 January 2015, and allows the two agencies to assist each other in enforcement activities and exchange information, including confidential details obtained during an investigation. That was the first time the JFTC has concluded an agreement that has enabled it to share confidential information with the ACCC without the ACCC first having to obtain a waiver.90
ASIC has entered into MoUs with more than 50 foreign regulators.91 ASIC may release information to a foreign regulator if such release will assist the foreign regulator to exercise a power conferred by the domestic law of that country.92 However, ASIC is only permitted to release information gathered from an investigation that is authorised under Australian legislation. Provisions in the Mutual Assistance in Business Regulation Act 1992 (Cth) (the MABR Act) also give ASIC the power to obtain evidence for foreign regulators through the exercise of compulsory powers and ASIC may require a person to produce documents or to give oral evidence for that purpose.93 However, these powers can only be exercised by ASIC with the Attorney-General’s approval and are limited to circumstances in which the foreign regulator intends to use the information in civil or administrative proceedings.94 In criminal proceedings, the Attorney-General may provide assistance to foreign regulators in relation to the taking of evidence, the production of documents and search and seizure in Australia.95
ASIC can also request investigative assistance from foreign regulators under its MoUs with them, which requires the use of compulsory powers in the foreign country. For example, under the MoU dated 24 June 2002 between ASIC and the UK Financial Services Authority (now the FCA) (which replaces the previous 1992 MOU), the regulators agree to use reasonable efforts to provide mutual assistance including obtaining information from and questioning or taking testimony of persons designated by the requesting authority (Section 1(d) and(e)). ASIC may also request that its staff are present in interviews (Appendix 2, Section 1(e)).
Outside of these, ASIC must rely on the Mutual Assistance in Criminal Matters Act 1987 (Cth) (the MACM Act) or the foreign equivalent of the MABR Act if it requires compulsory powers to be used in a foreign country.
In the context of criminal matters, if ASIC wants compulsory powers exercised in a foreign country, the request for such assistance must be made through the Attorney-General. The Attorney-General may then request that a foreign country provide investigative assistance to Australia in relation to the taking of evidence, the production of documents and search and seizure in that foreign country.96
Australia has signed tax treaties with more than 40 countries, including its major trade and investment partners,97 providing for an exchange of information about income Australian residents earn overseas and income foreign residents earn in Australia. It has also entered into a number of tax information exchange agreements (TIEAs), which outline the obligations of Australia and its various partners to aid each other by exchanging tax information relevant to the administration and enforcement of domestic tax laws. In contrast with tax treaties (which deal with income tax), TIEAs cover all taxes administered by the ATO as well as all criminal and civil tax matters.98 More recently, following the enactment by the United States of the Foreign Account Tax Compliance Act (FATCA), Australia and the United States signed an intergovernmental agreement (IGA) to assist in the facilitation of FATCA for Australian financial institutions. The IGA is intended to assist in Australian compliance with FATCA. This includes reporting the information via the ATO under current Australia–US tax treaty arrangements. Further, as part of the effort to tackle multinational tax avoidance, and its participation in the Base Erosion and Profit Shifting (BEPS) initiative headed by the OECD, Australia has signed a multilateral agreement for the automatic exchange of country-by-country reports (which include details of multinationals’ international transactions and the location of their income and taxes paid) between tax authorities of the signatory countries.
Under Australian law, an extradition request by a foreign country concerning acts committed outside that country’s jurisdiction may be granted in circumstances in which Australian law would punish such conduct committed outside Australian territory in similar circumstances. However, in some instances, an extradition request may be granted at the discretion of the Australian government regardless of the existence of an equivalent Australian law, as is the case with the extradition treaty between Australia and the United States.99
iii Local law considerations
The Foreign Judgments Act 1991 (Cth) (FJA) establishes a statutory scheme under which judgments of foreign courts can be enforced in Australia. However, the scheme is restricted to specific countries and courts.100 Common law prerequisites apply to the recognition and enforcement of foreign judgments that fall outside the scope of the FJA. These prerequisites are that the foreign court has exercised a jurisdiction that the Australian courts recognise; the judgment is final and conclusive; the parties to the judgment and application to enforce it are identical; and the judgment is for a fixed or readily calculable debt.101
As a general principle, Australian courts are unlikely to give effect to administrative or judicial rulings of foreign countries where those rulings are contrary to public policy considerations in Australia. There may also be legislative restrictions on giving effect to foreign laws or rulings. For example, the Foreign Proceedings (Excess of Jurisdiction) Act 1984 (Cth) provides that the Attorney-General may prohibit performance of an obligation imposed by a foreign law or the giving of evidence or information to a foreign court or authority. The ability to share information may also be restricted by applicable privacy and secrecy laws.
V YEAR IN REVIEW
The past year has seen important decisions and developments in a number of areas affecting investigations and enforcement action taken by each of the ACCC, ASIC and the ATO.
A recent decision of the High Court has restored certainty to the practice of respondents agreeing facts and penalties with a regulator in civil penalty proceedings,102 overturning a decision of the Full Federal Court that would have had substantial implications for all three regulators by stifling the long-standing practice of agreeing pecuniary penalties in civil penalty cases.
In Director, Fair Work Building Industry Inspectorate v. Construction, Forestry, Mining and Energy Union,103 (the Fair Work case), the Full Court of the Federal Court had held that it could not receive, or act upon, an agreement as to penalties or on submissions by a regulator as to the appropriate amount or range of penalties. Applying the 2014 decision of the High Court in Babaro v. The Queen,104 which related to criminal sentencing hearings, the Court declined to approve pecuniary penalties against two respondent unions in terms that had been agreed with the applicant regulator in an action brought under the Building and Construction Industry Improvement Act 2005 (Cth).
Prior to the Fair Work case, a common practice had developed in Australia whereby regulators would negotiate agreed sets of facts and penalties with parties, which would be presented to the Court in joint submissions. Courts have generally endorsed those agreed penalties provided they fell within the permissible range for the relevant contravention.105 In fact, the Commonwealth had put forward evidence in the Fair Work case that approximately 70 per cent of civil penalty cases brought by the ACCC, and decided since 1 January 2010, involved agreed penalties. In addition, approximately 20 per cent of civil penalty cases brought by ASIC106 and approximately 25 per cent of civil penalty cases brought by the ATO involve agreed penalties.
In the Fair Work case, however, the Full Federal Court highlighted that submissions as to agreed penalty figures, and the range within which the penalty should fall, are ‘equally as inappropriate’ in pecuniary penalty cases as in criminal sentencing,107 noting that any agreement on the appropriate penalty figure is no more than an expression of a shared opinion, and therefore inadmissible.108 The High Court, however, disagreed, finding that there are ‘basic differences’ between a criminal prosecution and a civil penalty proceeding which made the application of Barbaro to civil proceedings incorrect.109 The nature of criminal prosecutions and civil penalty proceedings are fundamentally different and the penalties imposed in each serve different public functions.110 The Court held that ‘there is an important public policy involved in promoting predictability of outcome in civil penalty proceedings and that the practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers.’111 The Court also emphasised that previous decisions make plain that ‘the court is not bound by the figure suggested by the parties’ and that the court ‘must satisfy itself that the submitted penalty is appropriate’.112
A discussion of further important decisions and other developments in relation to enforcement action taken by the ACCC, ASIC and the ATO follows below.
i Competition policy review
In December 2013, the federal government announced a comprehensive review of Australia’s competition laws on a scale that had not been undertaken for more than 20 years.113 The review was instituted in February 2014 and the Panel delivered its final report on 31 March 2015, recommending wide-reaching changes to competition laws, competition institutions and competition policy.114 The Panel’s recommendations have received widespread support from the government, and are expected to proceed to draft legislation later in 2016.115 If ultimately implemented, the recommendations will have significant implications for the ACCC in carrying out its enforcement activities.
Key recommendations to Australia’s competition laws include:
- a simplifying Australia’s cartel laws;116
- b significant amendments to the misuse of market power provisions;117
- c removing the prohibition against exclusive dealing such that vertical restraints will be treated in the same way as other potentially anticompetitive conduct;118 and
- d replacing the current banking-specific price signalling provisions with a new prohibition of ‘concerted practices’ that would cover all businesses that might privately or publicly disclose competitively significant information.119
In relation to the ACCC’s information gathering powers, the Panel has recommended that the obligation to search for documents be subject to a requirement of reasonableness. The government has expressed its support for that recommendation, which would serve to ease the regulatory burden of Section 155 for companies.120
In relation to Australia’s competition institutions, the Panel has recommended that competition and consumer regulatory functions be retained within the single agency of the ACCC. It further recommends establishing a separate, dedicated access and pricing regulator, and replacing the National Competition Council with a new national competition body, the Australian Council for Competition Policy. Both those recommendations have received government support.121
In the consumer law sphere, the Australian Government Productivity Commission has recently announced that it will be conducting a study into consumer law enforcement and administration. The terms of reference of the study state that:
The objective of this study is to examine the effectiveness of the ‘multiple regulator’ model in supporting a single national consumer policy framework and make findings on how this model can be strengthened drawing from the experience of regulators in the period since the ACL commenced in 2011, including the risk-based approach of regulators to enforcement.122
The Productivity Commission will be consulting with Commonwealth, state and territory governments, consumer representatives and the business community. The Final Report is due by March 2017.
ii ACCC enforcement focus and revision of policy and guideline documents
During his time as Chairman of the ACCC, Rod Sims has consistently articulated the strategic direction that the ACCC will take during his term. Mr Sims has reiterated the importance of working in the ‘real-world’ context to seek strong enforcement and achieve effective communication with consumers and business.
More specifically, in an address to the Committee for Economic Development of Australia in February 2016, Mr Sims released the ACCC’s Compliance and Enforcement Policy for 2016,123 announcing a bolstered commitment to enduring issues including cartels, anticompetitive agreements and practices, misuse of market power and product safety, in addition to plans to scrutinise several new forms of conduct, as well as more targeted research into certain industries.124
The ACCC has placed a major emphasis on communication and visible enforcement. It is clearly endeavouring to ensure business gets the message to comply by seeing competition law in action, being litigated and enforced. In this context, the ACCC continues its push for greater penalties, with Mr Sims revealing that ‘around 20’ cartel investigations were currently under way and that he expected there would be ‘one or two criminal prosecutions’ later this year.125 In addition, recent cases brought by the ACCC against high-profile international companies, for example Visa Inc (which has since settled) and Pfizer, show an increasing willingness to pursue its enforcement goals by litigation where required. Indeed, in his first speech as Chairman of the ACCC, Mr Sims expressed the view that the ACCC should litigate more frequently and take more cases where the outcome is unpredictable and ACCC success less assured.126
The ACCC has also commenced actively targeting certain problem areas it has identified. The ACCC 2016 Compliance and Enforcement Policy states that the ACCC assesses certain forms of conduct (such as cartel conduct, anticompetitive agreements and misuse of market power) as a priority because that conduct is ‘so detrimental to consumer welfare and the competitive process’.127 The ACCC’s strategy also has to be realistic: it has openly recognised that certain industries are more likely to experience areas of limited competition in Australia and in response has identified these areas as of particular interest, for example, retail supermarkets, the petrol sector, and the telecommunications and energy industries.
In recent years, the ACCC has also reviewed some of its key policy and guideline documents. In particular, following an extensive review of its immunity policy for cartel conduct, on 10 September 2014, the ACCC released an updated immunity and cooperation policy as well as a ‘frequently asked questions’ document.128 The updated policy is more reflective of the ACCC’s current practice. The consolidation of the relevant policy documents into a ‘one-stop shop’ by merging parts of the 2009 immunity policy, the 2009 guidelines and the relevant alleged cartel conduct component of the cooperation policy for enforcement matters is also a helpful improvement.
iii Cartel conduct and anticompetitive arrangements
As noted above, in its Final Report, the Competition Review Panel recommends that the prohibitions on cartel conduct be substantially simplified, which has received support from the government. The proposed reforms seek to remove some of the complexity in the law that was introduced with the 2009 amendments, and the Final Report includes model legislative provisions which outline how the simplification may be achieved. If implemented, those changes will significantly impact the ACCC in its prosecution of cartel conduct.
An important case in relation to cartel conduct involves the Australian Egg Corporation Limited (AECL) and a number of egg producers. The ACCC had instituted proceedings in May 2014129 alleging that the AECL and other egg producers had engaged in an attempt to form a cartel by taking steps to induce participants at an industry ‘crisis meeting’ to agree to limit the supply of eggs.130 The proceedings were dismissed at first instance despite findings that AECL had arranged a ‘crisis meeting’ with the aim of correcting a perceived oversupply of eggs.131 The Court held that while AECL’s conduct could be characterised as ‘affirmative action toward [the] inducement’, the evidence fell short of establishing that egg producers had the requisite intention to bring about an arrangement or understanding. The Court emphasised the absence of reciprocity and commitment among the egg producers.132
In March 2016, the ACCC filed a notice of appeal.133 While the appeal is ongoing, the Federal Court has issued a pecuniary penalty order of A$120,000 against Zelko Lendich (a former director of the AECL) following an admission by Mr Lendich that he had attempted to induce the egg producers to make a cartel arrangement.134
Another important ACCC enforcement action involves civil proceedings commenced in May 2015 against 11 respondents, including Moses and Paul Obeid for alleged bid rigging conduct in relation to a coal exploration licence.135 The proceedings follow a series of high-profile investigations conducted by the NSW Independent Commission Against Corruption (ICAC) into, among other things, the conduct of Eddie Obeid (former member of the New South Wales Legislative Council and NSW Minister), his sons Paul and Moses Obeid and the family’s business and political interests. ICAC’s ‘Operation Jasper’, in particular, examined the circumstances surrounding the award of coal exploration licences, and made findings of corrupt conduct against several individuals including Eddie Obeid, former NSW Minister Ian MacDonald and directors of Cascade Coal Pty Ltd (Cascade).136 The ACCC carried out its own investigations in 2014 and commenced proceedings against the alleged bid-rigging conduct in May 2015.137
The ACCC has achieved an early victory in the ongoing case with Loyal Coal Pty Ltd (Loyal), a company formerly controlled by the Obeid family, admitting to contraventions of the CCA by entering into and giving effect to an exclusionary provision.138 The settlement came one day into a four-week hearing in the Federal Court, with Loyal admitting that in early June 2009, the company:
- a entered into an understanding with Cascade providing that Loyal would withdraw from a tender process for mining exploration over Mount Penny and Glenden Brook coal tenements, and refrain from pursuing any competing bids. In exchange, Cascade would grant Loyal a 25 per cent stake in its mining project in the Mount Penny Coal release area to another Obeid company, Buffalo Resources Pty Ltd (Buffalo); and
- b gave effect to the understanding by withdrawing from the tender process (where Cascade was subsequently successful in the tender and granted a 25 per cent stake in the Mount Penny coal release to Buffalo).
The ACCC settled with Loyal on the basis that it had contravened the prohibitions against making or giving effect to an exclusionary provision, but not for any breach of the civil cartel prohibitions.139 The hearing against the other 10 respondents will continue.
A further important decision from the last 12 months on cartel conduct was the Federal Court’s decision in the Air Cargo case (discussed in Section IV, supra).140 The relevant cartel was the subject of an extensive, internationally coordinated investigation by multiple competition law enforcement agencies. As discussed above, in that case, the Full Federal Court held that Air New Zealand and Garuda Indonesia had colluded with other airlines to fix fees and surcharges for air cargo in contravention of the (then in force) TPA. The ACCC case identified arrangements to adopt fuel and other surcharges for the provision of air cargo services for inbound freight into Australia. The Court ultimately found that such conduct occurred in a ‘market in Australia’.
Although under the CCA price fixing may be pursued under the new cartel provisions, which are not subject to the restriction that the conduct involve a ‘market in Australia’, if the Panel’s recommendation to impose a territorial restriction on the cartel provisions is implemented, the decision will have implications for future cases involving similar conduct.
Another significant matter involves ACCC proceedings commenced against a number of laundry detergent suppliers which had arisen out of an industry-wide switch from standard domestic laundry detergents to ultra-concentrated products across popular Australian detergent brands. Specifically, in December 2013, the ACCC commenced proceedings against Colgate-Palmolive Pty Ltd (Colgate) PZ Cussons Australia Pty Ltd (Cussons) and Woolworths Ltd (Woolworths) alleging contraventions of the (then in force) TPA. Unilever Australia Limited (Unilever), also allegedly involved, was granted immunity under the ACCC’s Immunity Policy as it was the first member of the alleged cartel to notify the ACCC of the conduct.
The ACCC had alleged that Cussons, Colgate and Unilever colluded to simultaneously move from selling standard concentrated detergents to ultra-concentrated detergents and to charge the same price per wash as the equivalent standard concentrated products instead of passing the cost savings onto consumers, and also alleged that Woolworths was knowingly concerned in this conduct.141
The Federal Court has recently ordered Colgate to pay penalties of A$18 million, following admissions made by Colgate. The Federal Court has recently ordered Colgate to pay penalties of A$18 million, and Woolworths to pay penalties of A$9 million, following admissions made by these parties. The case against Cussons commenced in June 2016 and is ongoing.
The hearing of another matter in which the ACCC had issued proceedings alleging cartel conduct was recently heard by the Federal Court. The ACCC had issued proceedings against five companies, six individuals and an industry association for alleged cartel and exclusionary conduct in the supply and acquisition of electrical cable throughout Australia. The conduct primarily involved low voltage electrical cables used within residential and commercial buildings.142 Judgment in the matter is pending as at the time of writing.
Another important case that was recently settled involved an allegation of anticompetitive price-sharing arrangements in the retail petrol industry. Following an extensive ACCC investigation, on 20 August 2014 the ACCC commenced proceedings against Informed Sources (Australia) Pty Ltd (Informed Sources) and several petrol retailers, namely BP Australia Pty Ltd, Caltex Australia Petroleum Pty Ltd, Eureka Operations Pty Ltd, Woolworths Ltd and Fa-Eleven Stores Pty Ltd, alleging that information-sharing arrangements between Informed Sources and those petrol retailers had the effect or likely effect of substantially lessening competition in markets for the sale of petrol in Melbourne. Relevantly, the ACCC alleged that subscribers to the Informed Sources service provided published pricing data to Informed Sources at frequent, regular intervals and, in return, received from it collated published data from the other subscribers, and various reports containing pricing information across particular regions. The ACCC alleged that those information-sharing arrangements allowed the petrol retailers to use the service to exchange information on the price they each offered at their petrol stations on a private and near real-time basis, and that the exchange of that information allowed retailers to monitor and respond to each other’s prices and observe and analyse the pricing behaviours and strategies of their competitors. It alleged that although the information is public, the Informed Sources service provided fuel retailers with data that is more uniform, frequent and contemporaneous than would be the case if each retailer obtained data on its own. The proceedings were settled on 23 December 2015 when Informed Sources and the petrol retailers (except one) decided to make the pricing information available to consumers at the same time it was received by the retailers.143 Coles Express undertook to withdraw from the Informed Sources service.
iv Misuse of market power as an ongoing priority
In its most far-reaching recommendation, the Competition Review Panel has called for sweeping changes to the CCA prohibition concerned with unilateral conduct by firms that misuse their market power. Historically, much criticism has been levelled at the misuse of market power prohibition and, in particular, at the perceived difficulties in establishing a contravention. Indeed, the ACCC’s most recent victory in a contested misuse of market power case was in 2008.144
The current provision prohibits firms with market power from taking advantage of that power for a proscribed anticompetitive purpose.145 That prohibition focuses on the purpose of the corporation engaging in the conduct, rather than effects on competition. The Panel, however, recommends the prohibition be re-framed to incorporate an effects test, and also to remove the ‘take advantage’ element. In line with the Panel’s recommendations,146 the government has indicated that it will remove the ‘take advantage’ element and implement an ‘effects test’ where conduct will be prohibited if it has the effect or likely effect of substantially lessening competition in the market.
In an attempt to address concerns that the proposed changes will result in a chilling effect on the competitive conduct of larger firms, the Panel recommends including legislative guidance setting out factors that courts would be required to consider in applying the prohibition. Although those factors include the extent to which the conduct enhances efficiency and innovation, the proposed reforms contain no clear protection for conduct with a legitimate business justification.
It is clear that the Panel’s recommendation would significantly impact the ACCC in its enforcement activities and potentially lead to more investigations and legal action.
A recent decision of the Federal Court, which dismissed the ACCC’s proceedings against Pfizer Australia Pty Ltd (Pfizer) for misuse of market power, marks yet another failure by the ACCC to successfully prosecute a misuse of market power case under the current prohibition.147 On 25 February 2015, the Court dismissed the ACCC’s allegations that Pfizer had misused its market power (and engaged in exclusive dealing) by employing commercial strategies and practices in the lead-up to the expiry of its patent over Lipitor, its bestselling cholesterol drug, to counter the expected loss of revenue that would result from expiry of that patent. The Court held that steps taken by Pfizer in offering stock and making bundled offers were carried out for a purpose of defending Pfizer’s sales in response to strong competition from generic brands. The ACCC’s loss largely turned on its inability to establish a proscribed anticompetitive purpose. The ACCC appealed the case, which judgment is pending at the time of writing.148
Another case in which the ACCC failed to establish a misuse of market power contravention, which was handed down in 2013, involved proceedings against Cement Australia Pty Ltd (Cement Australia), alleging contraventions of Sections 45, 46 and 47 of the TPA (now CCA). The ACCC alleged that Cement Australia had a substantial degree of market power in the market for concrete grade fly ash, a cement replacement, in south-east Queensland, and had taken advantage of that market power for the purpose of locking out its competitors. The ACCC’s misuse of market power case alleged that Cement Australia used its market power during a fly ash tender process in order to win exclusive supply of a product and foreclose its competitors. Although the ACCC was successful in its anticompetitive arrangement claims, it failed in its misuse of market power claims.149 Indeed, earlier this year the Federal Court ordered penalties totalling A$18.6 million in relation to the anticompetitive arrangement claims.150
On 4 February 2013, the ACCC commenced further proceedings that involved misuse of market power allegations. Those proceedings were brought against Visa Inc, and a number of Visa affiliates (together, Visa) for both misuse of market power and exclusive dealing practices in relation to dynamic currency conversion services (DCC). The ACCC’s allegations included that Visa, the operator of the world’s largest retail electronic payments processing network, misused its market power for the purposes of preventing the expansion of DCC to new merchant outlets in Australia, such as retail stores, and preventing businesses in Australia from supplying DCC services on ATMs in competition with Visa’s own currency conversion service. The ACCC alleged that Visa earned less revenue when a cardholder selected DCC than when a cardholder used Visa’s own currency conversion service. In the publicity surrounding the application, Mr Sims noted that the pursuit of ‘companies who misuse their substantial market power, to the detriment of consumers and small businesses in particular, as is alleged against Visa […] is an enforcement priority for the ACCC’.151 However, in September 2015 the ACCC reached a settlement with Visa, with Mr Sims emphasising that the difficulties associated with establishing misuse of market power led to a settlement on the basis of a deemed contravention of the prohibition against exclusive dealing rather than a misuse of market power.152
Despite the ACCC’s lack of success to date in contested misuse of market power cases, Mr Sims has again confirmed in his address to the Committee for Economic Development when he launched the ACCC’s 2016 priorities that those cases continue to be an enforcement priority. According to that address, the ACCC currently has several in-depth investigations involving misuse of market power allegations under way.153
v Consideration of unconscionable conduct or misleading or deceptive conduct
The Federal Court has recently made orders against Reckitt Benckiser Pty Ltd (Reckitt) requiring Reckitt to pay a penalty of A$1.7 million for engaging in misleading conduct in relation to its ‘Nurofen’ branded pain relief products in proceedings brought by the ACCC. In December 2015, Reckitt had settled the proceedings commenced against it. Reckitt had advertised and sold four Nurofen branded pain relief products that were represented as being formulated to treat back pain, period pain, migraine and tension headaches. Each product contained the same active ingredient and was of the same formulation, none of which were any more or less effective than any other in treating any of the particular symptoms.154
In addition, over the course of the year the ACCC has instituted proceedings against four private colleges, following a joint investigation by it and the New South Wales Department of Fair Trading, alleging that the colleges made false or misleading representations and engaged in unconscionable conduct when marketing and selling various vocational and training courses to potential students.155
vi Consideration of vertical arrangements for distribution
The Full Federal Court has recently clarified the position in relation to the treatment of dual distribution models under the CCA (i.e., arrangements where a supplier both supplies its product directly and through a distributor)156 following inconsistent first instance decisions in ACCC v. Australian and New Zealand Banking Group Limited157 (the ANZ case) and ACCC v. Flight Centre Limited158 (the Flight Centre case). Both cases involved ACCC allegations that parties with a seemingly vertical relationship were competitors with each other and, as a result, were capable of engaging in unlawful price fixing, but had resulted in divergent conclusions.
The ANZ case concerned a major Australian bank, Australian and New Zealand Banking Group Limited (ANZ), and a third-party mortgage broker that distributed ANZ mortgages. The ACCC alleged that ANZ had, through in-house branches and other tied channels, provided loan arrangement services in competition with third-party mortgage brokers supplying ANZ mortgages. It also alleged that ANZ had engaged in price fixing by making and giving effect to an agreement requiring a third-party mortgage broker, Mortgage Refunds Pty Ltd, to agree to limit the amount of refund offered on the bank’s loans. At first instance, Dowsett J held no contravention was established because he found that ANZ and mortgage brokers were not relevantly competitors, and, therefore, were not capable of engaging in price fixing. The Flight Centre case concerned an established travel agent in Australia, Flight Centre Limited, and particular airlines for which it distributed airfares. The ACCC alleged that Flight Centre had competed with the relevant airlines for a retail or distribution margin on booking and distribution services. It also alleged that Flight Centre attempted to induce those airlines to enter into price fixing arrangements (in contravention of Section 45 of the CCA, through Section 45A of the TPA). Specifically, it alleged that Flight Centre attempted to induce the particular airlines to agree that any fare that the airlines offered directly to their customers would also be made available to Flight Centre, and that such a fare would be sold by the airline at a total price, including any charge for its booking services, of no less than the total of the net fare (the amount that Flight Centre must remit to the airline) plus the commission that Flight Centre would be entitled to be paid for its services. In the first instance decision, Logan J found that Flight Centre and the relevant airlines (for which Flight Centre was acting as agent) were relevantly competitive and that Flight Centre’s conduct did constitute an illegal attempt to engage in price fixing. The court imposed an A$11 million penalty on Flight Centre.
Both matters were appealed and resulted in losses to the ACCC. The Full Court’s decisions have served to clarify the position in relation to duel distributor relationships and the circumstances in which a supplier and a distributer would be considered competitors.
In each case, the Full Court criticised the definitions of ‘market’ employed at first instance as artificial and lacking in commercial reality, highlighting how those definitions led to the finding that a travel agent was in competition with an airline, and that a bank was in competition with a mortgage broker. The Full Court emphasised in each case that there was no real world substitutability between the businesses, and that therefore the agreements were not between true competitors.159 In the Flight Centre appeal, the Full Court highlighted that the mere existence of a relationship of agency between the parties will not preclude those parties from being considered competitors, and emphasised that much will depend on the degree of agency.160
Notably, the ACCC has recently been granted special leave to appeal the Flight Centre decision to the High Court, but has not pursued special leave in the ANZ case.161 Whichever way the High Court ultimately decides the Flight Centre case, the decision is likely to have significant ramifications for industries that use agency distribution models.
vii The Senate Economics References Committee Inquiry and the Financial System Inquiry
ASIC has recently been the subject of a Senate Economics References Committee inquiry, which delivered its final report in June 2014 and government response in October 2014).162 In addition, 2014 also saw the release of the federal government’s Financial System Inquiry’s (FSI) final report (in December) (and the government response in October 2015)163 as well as the federal government’s National Commission of Audit Report (March).164 Finally, a Capability Review of ASIC was announced in July 2015, in response to the recommendations of the FSI, with the final report released on 20 April 2016.165 Each of these recommend significant changes to ASIC’s functions in its enforcement activities.
The Senate Inquiry into AISC’s performance, noted as being a ‘wake-up call to ASIC’, followed criticism of ASIC’s handing of an investigation into activities of employees of a major Australian bank’s financial planning unit, including delays in addressing information supplied by whistle-blowers from the bank. The terms of reference for the inquiry were wide ranging and include an examination of ASIC’s enabling legislation and whether there are any necessary changes required; ASIC’s accountability framework and its complaints management policies and practices; and other related matters.166
The Inquiry’s final report identified the need for ASIC to become a more proactive regulator. Its wide reaching recommendations include developing a better internal management system which ensures misconduct reports receive due attention, and improving education standards for financial advisers. The report also acknowledges that ASIC is overburdened and charged with tasks that do not assist its other regulatory roles.167
The Senate Inquiry’s final report further recommends that the corporate whistle-blowing regime be strengthened, which received government support and led to the establishment of the Office of the Whistle-blower.168 As discussed above, the current whistle-blowing regime is also presently the subject of a Senate Economics References Committee Inquiry.
Further, and perhaps most importantly, the Senate Inquiry’s final report emphasises the importance of ASIC’s enforcement role, recommending that penalties for contraventions be increased. As ASIC itself has highlighted, penalties available to it are low, and more limited in scope in comparison to those of peers internationally, most notably lacking the ‘disgorgement’ feature of civil penalties available in other jurisdictions.169 In this context, the Financial System Inquiry’s final report has also heeded ASIC’s call for increased penalties, and for a power to seek disgorgement of profits. That report observes that regulators require an adequate set of powers to execute their mandates and foster credibility with the market, commenting that a stronger penalty regime could strengthen the impact of ASIC’s enforcement action and provide for a more effective deterrent to misconduct.170 In its response to the Financial System Inquiry’s final report (discussed further below), the government has committed to undertake a review of ASIC’s enforcement regime, including in relation to penalties in 2017.171
Further, the government has agreed to implement a number of recommendations of the Financial System Inquiry’s report aimed at strengthening regulator accountability and capability. Regulators will be subject to periodic capability reviews and their mandates made clearer in updated Statements of Expectations. However, the government has stopped short of creating a new Financial Regulator Assessment Board, which the Report had recommended.172
In addition, the Financial System Inquiry’s report supports an industry funding model for ASIC, a recommendation initially made in the 1987 Wallis Inquiry.173 The report comments that industry funding will give ASIC more predictable funding and serve to strengthen engagement between ASIC and industry on the costs of conduct and market regulation.174 ASIC itself had proposed such a system of funding in its April 2014 submission to the Inquiry,175 and ASIC Chairman Greg Medcraft told a Senates Estimates References Committee hearing on 4 June 2014 that he believed that a user-pays funding model, through an outcome-focused user-pays model, could drive economic efficiencies and resilience.176 In response to the Treasury’s release of the Capability Review of ASIC, the government announced a A$127.2 million reform package, including the introduction of a ‘user pays’ industry funding model for ASIC to commence in the second half of 2017.177 This reverses previous funding cuts to ASIC that had been announced in 2015.
viii ASIC’s Corporate Plan
ASIC has published its Corporate Plan 2015–2016 to 2018–2019, which outlines its priorities for responding to what it considers are the key risks for investors. The Corporate Plan highlights that ASIC will focus on balancing a free market-based system with investor and consumer protection, encouraging digital disruption, addressing the complexity associated with financial product and market innovation, and adapting to the globalisation of financial products and markets.178
ix Prosecution of directors’ conduct
The last year has seen ASIC continue its pursuit of insider traders and market manipulation.
In March 2015, the Victorian Supreme Court imposed a seven-year jail term on an individual, Mr Lukas Kamay, for insider trading, the longest term imposed in Australia to date.179 Mr Kamay had used confidential and price sensitive Australian Bureau of Statistics economic data provided by Mr Christopher Hill (an employee of the Australian Bureau of Statistics at the time) to trade in foreign exchange derivative contracts. Mr Kamay was sentenced to seven years’ imprisonment and Mr Hill to three years’ imprisonment after both pleaded guilty.
ASIC has also experienced some mixed results and challenges in recent years in its actions against directors’ conduct, which have involved some of Australia’s most public corporate failures following the global financial crisis – including Westpoint (2006), Fincorp (2007), Opes Prime and ABC Learning (2008), Storm Financial (2009), Banksia Securities Limited and Trio Capital (2012) and LM Investment Management (2013). Recent developments are discussed below.
ABC Learning Centres Limited was one of the largest providers of early childhood education services in the world, and it collapsed in 2008. ASIC has come under criticism that many of the key players appear to have avoided prosecution for the collapse. In 2013, however, the former ABC Learning chief financial officer was charged with authorising false or misleading information in relation to information made available to auditors conducting a review of the company’s accounts in 2006.180 After pleading guilty, he received a suspended sentence in March 2015.181
Storm Financial Limited (Storm) was a financial planning company involved with providing a ‘one-size-fits-all’ approach to their financial advice. Generally, Storm clients were advised to take out a mortgage over their properties to invest in indexed funds recommended by Storm, and subsequently, to take out a margin loan on these securities to invest further. When the stock market experienced a prolonged downturn in 2008, many of these clients fell into negative equity positions and were subject to margin calls by their lenders, which was poorly managed by both Storm and the lenders. Due to these factors, Storm clients lost significant amounts of money. ASIC commenced investigations into Storm on 12 December 2008, however, Storm was wound up in early 2009. Following this, ASIC brought proceedings in late December 2009 against the directors of Storm,182 proceedings on behalf of two investors (this was to act as an example for further investor proceedings)183 and directly against the lenders for being knowingly involved with Storm’s contraventions.184 The proceedings against the lenders were case managed together with class action proceedings brought by the Storm investors. On 29 May 2013, the ASIC investor representative proceedings were settled for A$1.1 million. In respect of the proceedings against the lenders, ASIC entered settlement with Commonwealth Bank of Australia for A$136 million in September 2012, with Macquarie Bank for A$82.5 million in May 2013 (but after appeal, final settlement occurred in December 2013) and with Bank of Queensland for A$19.7 million in September 2014. This concluded both the ASIC and the class action proceedings against the lenders. The proceedings against the Storm directors have been ongoing for over five years, however a trial commenced on 30 May 2016. This was adjourned until 6 June 2016 and is ongoing. Storm have since been the subject of a parliamentary inquiry into financial products and services in Australia,185 which recommended many of the changes that have made up the Future of Financial Advice reforms.186
x Other proceedings commenced by ASIC
Following a longstanding investigation into the banking sector, ASIC commenced proceedings in the Federal Court against ANZ, and later against the Westpac Banking Group (Westpac) in relation to allegations of unconscionable conduct, misleading or deceptive conduct, market manipulation and breaches of supervisory duties under Section 912A of the Corporations Act. ASIC alleges this conduct has occurred in relation to the setting of the bank bill swap reference rate (BBSW), the primary interest rate benchmark used in the Australian financial market. ASIC continues to investigate National Australia Bank and the Commonwealth Bank over the alleged conduct, however, the regulator has not launched legal action against either bank at the time of writing.187
xi ASIC treatment of anti-bribery allegations
In March 2012, ASIC announced that the Australian Federal Police (AFP) had provided it with material relating to foreign bribery allegations concerning two Australian companies, Securency International Pty Ltd and Note Printing Australia Limited. ASIC noted at that time that it had reviewed this material from the AFP for possible director’s duty breaches but had decided not to take enforcement action.188
ASIC’s decision not to take such action received significant negative media attention and led to questions being asked about ASIC’s commitment to enforcing breaches of the Corporations Act generally.189 ASIC defended its position on the basis that it was the AFP that was primarily responsible for the investigation of the bribery of foreign officials under the Criminal Code Act 1995 (Cth). ASIC argued that the AFP was better equipped to run such investigations, having dedicated staff and access to resources not available to ASIC; and that while ASIC could have initiated a parallel civil investigation into any potential directors duties breaches, any potential criminal proceedings may have been compromised by such activity.
Nevertheless – and seemingly in response to the media criticism it received – in October 2013 ASIC entered into an MoU with the AFP, defining the role of each agency in respect of foreign bribery investigations.190 ASIC has also arranged to second staff to the AFP to assist with foreign bribery investigations.
More recently, legislation introduced to Parliament in late 2015 will create a new false accounting offence and clarify the elements needed to be proved in a foreign bribery claim.191 These changes are a direct response to the recommendations made by the OECD in its recent report card into Australia’s enforcement of bribery laws and ensure that Australia satisfies its obligations under the OECD Foreign Bribery Convention.
xii Changes and developments at the ATO
Since his appointment as Commissioner of Taxation in 2013, Chris Jordan, a former tax partner at KPMG, has overseen a dramatic structural, procedural and cultural change in the ATO.192 This change in leadership has seen a shift in the ATO’s enforcement policy, with an increased willingness to settle disputes with taxpayers. This is evident from the number of settlements increasing by approximately one-third.193
The new leadership has also seen the ATO change the way it manages its compliance activities, with an overall goal of pursuing a more open, transparent and earlier engagement approach in dealing with taxpayers. This has translated to various initiatives including Project DO IT (disclosure offshore income today), which was a voluntary disclosure initiative that enabled eligible taxpayers with previously unreported offshore financial activities to access a number of benefits if they voluntarily disclose any income and assets by 19 December 2014. Other examples reflecting the new approach include the Pre-lodgement Compliance Review (PCR) programme that allows the ATO to identify and assess tax risks for certain large businesses prior to the lodgement of their income tax return.
The ATO has also changed the way it is communicating with taxpayers, by moving away from its traditional annual document outlining identified risk areas in favour of a continuous and timely disclosure of what it sees as the new and emerging areas of compliance risk.194
The trend towards new enforcement policy and compliance process has been coupled with the introduction of independent reviews for income tax audits for large businesses. This process involves a review of the technical merits of an audit case prior to finalisation of the ATO’s position. Following on from this, an open and direct discussion with the taxpayer is facilitated with the use of third parties, such as former Federal Court and High Court judges, focused on early neutral evaluation and mediation.195 The aim of this new process is to have the third-party reviewer take a fresh look at the application of the law to the facts and issues in dispute. The reviewer will act as a neutral evaluator of the dispute. The impact of this process is expected to result in a reduction in litigation and a move to settle disputes through alternative means.
As in other parts of the world, the ATO is also having to deal with the complexities of BEPS. This is an area of significant media coverage and focus for the government, which has overseen the development of a coordinated approach by the ATO, Foreign Investment Review Board (FIRB) and the Treasury, in dealing with the myriad issues associated with multinational profit shifting.
The Treasury announced on 22 February 2016 that FIRB approvals would be subject to additional conditions aimed at tax compliance.196 While these conditions have since been revised to be less onerous on the taxpayer (compared to those from the initial announcement), they nevertheless increase the burden on investors including ensuring compliance by related parties.
Following the initial announcement in the last federal budget, the Multinational Anti-Avoidance Law (MAAL) was enacted as law on 11 December 2015. The MAAL targets global groups with an annual turnover of A$1 billion or more which, in broad terms, structure their affairs such that revenue from sales to Australian customers are recorded substantially offshore in low or no-tax jurisdictions, but where the activities of an Australian entity are instrumental to the sale transaction with the Australian customer.
More recently, as part of the latest 2016–2017 federal budget handed down on 3 May 2016, the Australian government announced a ‘diverted profits tax’ (DPT), which is broadly based on the second limb of the UK’s DPT. The proposed Australian DPT will impose a tax rate of 40 per cent (i.e., an additional 10 per cent on top of the existing corporate tax rate) on profits transferred offshore through related party transactions, where the transaction has given rise to an ‘effective tax mismatch’ and where the transaction has ‘insufficient economic substance’. The proposed measure will apply to large companies with a global revenue of A$1 billion or more (however, certain de minimis rules will apply to exempt entities with Australian turnover of less than A$25 million).
In general terms, an ‘effective tax mismatch’ will exist in circumstances where an Australian taxpayer has a cross-border transaction with a related party, and as a result, the increased tax liability of the related party attributable to the transaction is less than 80 per cent of the corresponding reduction in the Australian company’s tax liability. The determination of whether there is ‘insufficient economic substance’ will be based on whether it is reasonable to conclude based on information at the time to the ATO that the transactions was designed to secure the tax reduction.
From an administrative process perspective, taxpayers that are issued with an assessment under the proposed DPT rules will be required to make an upfront payment of any DPT liability, which can only be adjusted following a successful review of the assessment. This places the onus on the taxpayer to provide relevant and timely information to prove why the DPT should not apply.
The Treasury has released a discussion paper outlining how the DPT would apply in the Australian context, and exposure draft legislation and explanatory memorandum on the proposed DPT rules is expected to be released following public consultation (the due date for submission on the discussion paper is 17 June 2016).
On 26 April 2016, the ATO also published four Taxpayer Alerts dealing with emerging profit-shifting arrangements that may lead to tax avoidance, being arrangements where companies have been:
- a inappropriately recognising (or over valuing) internally generated intangible assets in order to raise their maximum allowable debt levels under Australia’s thin capitalisation rules (TA 2016/1);
- b implementing arrangements to avoid the operation of the MAAL (TA 2016/2);
- c using related party financing arrangements to create an alleged need to swap currencies and periodical payments designed to increase the cost of borrowing or avoid interest withholding tax in Australia, or both (TA 2016/3); and
- d using cross-border leasing arrangements involving mobile assets to gain favourable tax treaty outcomes (TA 2016/4).
In addition to the new measures available to the ATO to target multinational tax avoidance, the Australian government has announced that it will provide A$678.9 million to the ATO over four years to establish a new Tax Avoidance Taskforce, with the expectation that the Taskforce will generate A$3.7 billion of additional revenue over the same period.
VI CONCLUSIONS AND OUTLOOK
The ACCC remains a vigorous enforcer, continuing to use its wide-ranging investigative powers. It has had mixed success this past year in the cases it has brought before the courts. In addition, the past year has seen the release of the Competition Review Panel’s final report and government response lending its support to the vast majority of the Panel’s wide-reaching recommendations. If implemented, those recommendations will have significant implications for the ACCC in carrying out its enforcement activities.
ASIC has also had mixed results over the past year in its enforcement action, and has suffered intense public scrutiny of its performance under the Senate Economics Committee inquiry. With the government announcement of a A$127.2 million reform package, including the introduction of a ‘user pays’ industry funding model set to commence in the second half of 2017, significant changes are anticipated for ASIC in its functioning and activities.
The ATO is currently dealing with continuing legislative change while increasingly shifting its focus to alternative dispute resolution. Like all revenue authorities, the ATO is also trying to deal with complex questions of BEPS and this promises to be an area of continuing activity and focus for the ATO.
1 Elizabeth Avery and Peter Feros are partners at Gilbert + Tobin. They would like to thank Rani John for her work as co-author of previous editions of this chapter, and Petria Lewis, Andrew Sharp and Mack Wan, lawyers at Gilbert + Tobin, for their assistance in preparing this edition of this chapter.
2 The ACCC is a statutory authority, formed in 1995 to administer the then Trade Practices Act 1974 (Cth) (previously the TPA, now the CCA) and other legislation.
3 Section 155(1)(a)–(c) of the CCA.
4 Section 154X of the CCA. Note that prior to 1 January 2007, the ACCC had the power to enter and inspect under Section 155(2); however, this was not under warrant but rather subject to the requirement that the chairman had reason to believe that there were documents on the premises that might relate to a breach or potential breach of the then-in-force TPA.
5 Divisions 3 and 4 of Part XID of the CCA.
6 See Sections 154D–154H of the CCA.
7 ASIC’s powers also derive from the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act).
8 See generally Part 3 Division 3 of the ASIC Act, in particular Section 28(d).
9 Sections 35 and 36 of the ASIC Act.
10 Section 19(1) of the ASIC Act; see also Little River Goldfields NL v. Moulds (1991) 32 FCR 456; Commissioner for Corporate Affairs v. Guardian Investments Pty Ltd (1984) 9 ACLR 162; Parker v. Churchill (1985) 9 FCR 316; George v. Rockett (1990) 170 CLR 104.
11 See Sections 263 and 264 of the Income Tax Assessment Act 1936 (Cth) (ITAA).
12 See ATO Fraud Control and the Prosecution Process Corporate Management Practice Statement PS CM 2007/02.
13 ACCC Immunity and Cooperation Policy for Cartel Conduct (2014), available online at www.accc.gov.au/publications/accc-immunity-cooperation-policy-for-cartel-conduct.
14 Sometimes referred to as ‘amnesty plus’.
15 Sections 45 and 48 of the CCA.
16 ACCC Cooperation Policy for Enforcement Matters (2002), available online at www.accc.gov.au/publications/accc-cooperation-policy-for-enforcement-matters.
17 Section 44ZZRG(2) of the CCA.
18 Paragraph 16(b) of the ACCC Immunity and Cooperation Policy for Cartel Conduct.
19 Paragraph 16 of the ACCC Immunity and Cooperation Policy for Cartel Conduct.
20 Paragraph 24 of the ACCC Immunity and Cooperation Policy for Cartel Conduct.
21 See ‘MoU Between the CDPP and the ACCC Regarding Serious Cartel Conduct’ (2008), available online at www.cdpp.gov.au/Media/Releases/20081201-ACCC-and-CDPP-Cartel-Conduct-Immunity-MoU.pdf. For the CDPP’s policy on immunity, see Annexure B to the CDPP’s ‘Prosecution Policy of the Commonwealth’, ‘Immunity from Prosecution in Serious Cartel Offences’, available online at www.cdpp.gov.au/wp-content/uploads/Prosecution-Policy-of-the-Commonwealth.pdf.
22  FCA 938.
23 See Section 157B of the CCA.
24 See Section 157B(2) of the CCA; see also Sections 157B(4) and 157B(5) (requiring the ACCC to take into account similar factors in determining whether to disclose protected cartel information to a Court or tribunal); and Section 157C (restricting disclosure of protected cartel information pursuant to orders for discovery).
25 See Section 912D of the Corporations Act; ASIC Regulatory Guide 78: Breach reporting by AFS licensees (reissued February 2014, see http://download.asic.gov.au/media/1239857/rg78-published-26-february-2014.pdf).
26 See ASIC Regulatory Guide 51 ‘Applications for Relief’; Regulatory Guide 108 ‘No Action Letters’.
27 Section 1322 of the Corporations Act; see also Elkington v. Vockbay Pty Ltd (1993) 10 ACSR 785.
28 Section 1318 of the Corporations Act.
29 See the Taxation Administration Act 1953 (Cth) (TAA).
30 Paragraphs 38–43 of the ACCC Immunity and Cooperation Policy for Cartel Conduct.
31 See Section 912A of the Corporations Act.
32 Paragraphs 16(vii), 21(h) and 28(vi) 77 of the ACCC Immunity and Cooperation Policy.
33 Section 69 of the ASIC Act.
34 See the ATO’s website page covering general information about tax evasion at www.ato.gov.au/General/The-fight-against-tax-crime/.
35 Paragraph 5.381 of the Explanatory Memorandum to the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Bill 2003 (the CLERP9 Bill); Sections 1317AA, 1317AB of the Corporations Act.
36 See, for example, Adele Ferguson, ‘Blow the whistle, face the music’, Sydney Morning
Herald (online), 4 June 2013, www.smh.com.au/business/blow-the-whistle-face-the-music-
37 See the Public Interest Disclosure Act 2013 (Cth), which came into effect in January 2014.
38 Senate Standing Committees on Economics, Terms of Reference (2013) Parliament of Australia, available at www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASIC.
39 ASIC, ‘Whistleblowers and whistleblower protection’, Information Sheet 0052, reissued July 2014.
40 Australian Securities and Investments Commission, Information Sheet 52: Guidance for whistleblowers (August 2015), available at http://asic.gov.au/about-asic/asic-investigations-'>http://asic.gov.au/about-asic/asic-investigations-
41 ABC Radio, ‘CommInsure probe now a priority for corporate watchdog’ (21 March 2016)
(I Medcraft and M Brissenden) available at www.abc.net.au/am/content/2016/s4428615.htm.
42 Australian Financial Review, ASIC backs project aimed at encouraging corporate whistleblowers (15 April 2016) available at www.afr.com/brand/chanticleer/asic-backs-
43 Senate Standing Committees on Economics, Issues Paper Corporate whistleblowing in Australia: ending corporate Australia’s cultures of silence (21 April 2016), at 3–5.
44 Senate Standing Committees on Economics, Issues Paper Corporate whistleblowing in Australia: ending corporate Australia’s cultures of silence (21 April 2016), at 2.
45 Section 84(2) of the CCA.
46 Section 84 of the CCA.
47 Section 75B of the CCA.
48 Section 76 (1A)(b) of the CCA.
49 Section 1324 of the Corporations Act.
50 Section 1323 of the Corporations Act.
51 See Schedule 1, Part 4-25 of the TAA, in particular Subdivisions 284-A to 284-D, and Divisions 286 to 298.
52 Sections 8E and 8ZF of the TAA – where the corporation has committed other taxation offences the penalty is increased.
53 Section 8ZA(4) of the TAA.
54 Section 8A of the TAA.
55 Division 12 of the Criminal Code, in particular Sections 136 and 137, attributes the fault elements of intention, knowledge or recklessness to a body corporate where it expressly, tacitly or implicitly permits the commission of a prescribed taxation offence.
56 Trade Practices Commission v. CSR Ltd (1991) ATPR 41-076 at 52152–52153 per French J (as he then was).
57 For examples of cases in which the existence of a compliance programme mitigated penalty, see ACCC v. Australian Safeway Stores Pty Ltd (1997) 75 FCR 238, ACCC v. George Weston Foods Ltd (2000) FCA 690.
58 Section 914A of the Corporations Act. See also ASIC Regulatory Guide 104: Licensing: Meeting the general obligations (July 2015).
59 For example, see Section 674(2B) of the Corporations Act.
60 See ASIC v. Citigroup Global Markets Australia Pty Ltd (No. 4) (2007) 160 FCR 35.
61 See Part 2.5, Division 12 of the Criminal Code.
63 See ATO Fraud Control and the Prosecution Process Corporate Management Practice Statement, PS CM 2007/02.
64 Section 912A of the Corporations Act.
65 Civil liability refers to a liability to pay a pecuniary penalty under Section 76 of the CCA for a contravention of Part IV of the CCA.
66 ‘Penalty unit’ under Commonwealth legislation is defined in Section 4AA of the Crimes Act 1914 and describes the amount payable for fines under Commonwealth laws. Fines are calculated by multiplying the value of one penalty unit by the number of penalty units prescribed by the offence. Penalty units are reviewed every three years. With effect from 31 July 2015, one penalty unit will be $180.
67 This provision applies including in relation to proceedings by ASIC for banning orders (Sections 206C, 206D, 206E or 206EAA), oppressive conduct of affairs (Section 232), civil penalties (Section 1317E, 1317G, 1317H, 1317HA or 1317HB) or injunctions (Section 1324).
68 See Section 199C of the Corporations Act.
69 Commissioner of Taxation’s view is expressed in Taxation Ruling No. IT 149. However, see later Full Federal Court’s decision in Magna Alloys & Research Pty Ltd v. FC of T 80 ATC 4542 regarding deductibility of legal costs incurred in defending prosecution proceedings.
70 Section 5(1) of the CCA.
71 Sections 5(3) and (4) of the CCA.
72 Section 5(5) of the CCA.
73 Settlement of the class action received court approval in June 2014.
74 Australian Competition and Consumer Commission v. Air New Zealand Limited  FCA 1157.
75 Australian Competition and Consumer Commission v. P T Garuda Indonesia Ltd  FCAFC 42.
76 Australian Competition and Consumer Commission v. P T Garuda Indonesia Ltd  FCAFC 42, at .
77 Australian Competition and Consumer Commission v. P T Garuda Indonesia Ltd  FCAFC 42, at .
78 Australian Competition and Consumer Commission v. P T Garuda Indonesia Ltd  FCAFC 42, at .
79 Norcast S.ár.L v. Bradken Limited (No. 2) (2013) FCA 235.
80 Competition Policy Review Final Report, 31 March 2015, available online at http://competitionpolicyreview.gov.au/final-report/.
81 Government response to the Competition Policy Review at 22, available online at http://treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Competition%20Policy%20Review/Downloads/PDF/Govt_response_CPR.ashx'>http://treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Competition%20Policy%20Review/Downloads/PDF/Govt_response_CPR.ashx.
82 ACCC v. Valve Corporation (No. 3)  FCA 196.
83 Section 3(3) of the Corporations Act.
84 Section 5(4) of the Corporations Act; see also Waller v. Freehills (2009) 258 ALR 67.
85 Section 9 of the Corporations Act.
86 PCH Offshore Pty Ltd v. Dunn (2009) 72 ACSR 99.
87 See Section 6(1) of the ITAA for the definition of ‘resident’; ATO ID 2002/46; Malayan Shipping Co v. Federal Commissioner of Taxation (1946) 71 CLR 156.
88 A list of current agreements can be found at the ACCC’s website, at www.accc.gov.au/about-us/international-relations/treaties-agreements.
89 ACCC Media Release ‘Australia and China to cooperate on cartel investigations’, 5 November 2015, available online at www.accc.gov.au/media-release/australia-and-china-
90 ACCC Media Release ‘Australia and Japan to increase cooperation on competition matters’, 30 April 2015, available online at www.accc.gov.au/media-release/australia-and-japan-
91 Copies of current MoUs are available at the ASIC website, at http://asic.gov.au/about-asic/what-we-do/international-activities/international-regulatory-and-enforcement-cooperation/memoranda-of-understanding-and-other-international-agreements/.
92 Most recently, in 2015, ASIC entered into an MoU with the Financial Services Commission of the Republic of Korea and the Financial Supervisory Service of the Republic of Korea in relation to consultation, cooperation and the exchange of information related to the supervision of regulated entities.
93 Section 10 of the MABR Act.
94 Section 6(2) of the MABR Act.
95 Sections 13 and 15 of the MACM Act.
96 Sections 10, 12 and 14 of the MACM Act.
97 See the list of countries that currently have tax treaties with Australia at the website of the Australian Treasury at www.treasury.gov.au/Policy-Topics/Taxation/Tax-Treaties/HTML.
98 A list of countries that have TIEAs with Australia can be found at the ATO website, at www.treasury.gov.au/Policy-Topics/Taxation/Tax-Treaties/HTML/TIEA.
99 For general information on extradition law in Australia, see the website of the Attorney-General’s Department at www.ag.gov.au/Internationalrelations/Internationalcrimecooperationarrangements/Pages/default.aspx.
100 See Schedule to the Foreign Judgments Regulations 1992 (Cth) for relevant courts and countries.
101 See generally, Lawrence Collins (ed), Dicey, Morris and Collins on the Conflict of Laws (Sweet & Maxwell, 14th ed, 2006) vol 1, 574–87.
102 Commonwealth of Australia v. Director, Fair work Building Industry Inspectorate  HCA 46.
103  FCAFC 59.
104 (2014) 305 ALR 323. In Babaro v. The Queen the High Court held that the prosecution should not be permitted to nominate a sentencing range or outcome, because to do so impinges on the judicial discretion to impose penalties based on findings of fact and the weighing of those facts by the judge.
105 NW Frozen Foods Pty Ltd v. ACCC (1996) FCA 1134.
106 59 of 85 civil penalty cases brought and now decided involved agreements with at least a significant number of respondents as to relief including pecuniary penalties.
107 Director, Fair Work Building Industry Inspectorate v. Construction, Forestry, Mining and Energy Union (2015) FCAFC 59, Dowsett, Greenwood and Wigney JJ at p. 240.
108 Director, Fair Work Building Industry Inspectorate v. Construction, Forestry, Mining and Energy Union (2015) FCAFC 59, Dowsett, Greenwood and Wigney JJ at p. 241.
109 Commonwealth of Australia v. Director, Fair work Building Industry Inspectorate  HCA 46, at .
110 Commonwealth of Australia v. Director, Fair work Building Industry Inspectorate  HCA 46, at  and .
111 Commonwealth of Australia v. Director, Fair work Building Industry Inspectorate  HCA 46, at , referring to the decisions of ACCC v. Energy Australia Pty Ltd (2014) ATPR paragraph 42–469 and ACCC v. Mandurvit Pty Ltd (2014) ATPR paragraph 42–471.
112 Commonwealth of Australia v. Director, Fair work Building Industry Inspectorate  HCA 46, at , referring to NW Frozen Foods Pty Ltd v. ACCC  FCA 1134 and Minister for Industry, Tourism & Resources v. Mobil Oil Australia Pty Ltd (2004) ATPR paragraph 41–993.
113 The last comprehensive review of competition policy – the Hilmer Review – was carried out in 1993.
114 Further information in relation to the review is available at www.competitionpolicyreview.gov.au/. The final report is available at www.treasury.gov.au/ConsultationsandReviews/Consultations/2015/Competition-Policy-Review-Final-Report.
115 The government released its response on 25 November 2015, ‘Government Response to the Competition Policy Review’, see Australian government, Treasury website, available at http://treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Competition%20Policy%20Review/Downloads/PDF/Govt_response_CPR.ashx'>http://treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Competition%20Policy%20Review/Downloads/PDF/Govt_response_CPR.ashx. Following further consultation on the Panel’s recommendations in relation to misuse of market power, specifically, the government announced on 16 March 2015 that it would also adopt those recommendations. However, an election has recently been called for 2 July 2016. The timing and nature of what amendments are proposed will be subject to the new government formed after the election.
116 The government has expressed support for this recommendation in principle, pending further consultation with the states and territories: see Government Response, p. 20.
117 The government noted this recommendation (see Government Response, p. 25) and, following further consultation, announced on 16 March 2015 that it would also adopt those recommendations.
118 The government noted this recommendation and will be considering it further as part of the proposal to further simplify the competition law: see Government Response, p. 27.
119 The government has expressed support for this recommendation: see Government Response, p. 24.
120 See Government Response, p. 32.
121 See Government Response, p. 37 and p. 17.
122 Australian Government Productivity Commission, Terms of Reference available at www.pc.gov.au/inquiries/current/consumer-law/terms-of-reference.
123 Rod Sims, ‘ACCC Compliance and Enforcement priorities for 2016’ (speech delivered at the Committee for Economic Development of Australia (CEDA) conference, Australia, 23 February 2016), available at www.accc.gov.au/speech/accc-compliance-and-enforcement-
124 The ACCC’s new priority areas include targeting the agricultural sector with a market inquiry into the competitiveness of agriculture supply chains, continued emphasis on the health and medical sectors, refocusing on consumer guarantees, with the prioritisation of indigenous, elderly and other vulnerable consumers.
125 See ACCC compliance and enforcement priorities for 2016, 23 February 2016.
126 Rod Sims, The Law Council Competition and Consumer Workshop 2011, 27 August 2011, Gold Coast.
127 ACCC ‘2016 Compliance and Enforcement Policy’, available at www.accc.gov.au/about-us/australian-competition-consumer-commission/compliance-enforcement-policy.
128 ACCC Immunity and Cooperation Policy for Cartel Conduct (2014), available online at www.accc.gov.au/publications/accc-immunity-cooperation-policy-for-cartel-conduct.
129 ACCC Media Release, ‘ACCC takes action following alleged egg cartel attempt’, 28 May 2014, available at www.accc.gov.au/media-release/accc-takes-action-following-
130 Provisions with the purpose of preventing, limiting or restricting the production, or likely production and the supply, or likely supply of goods are specifically prohibited under Section 44ZZRD of the CCA.
131 ACCC v. Australian Egg Corporation Limited  FCA 69; ACCC Media Release, ‘Federal court finds Australian egg corporation and egg producers did not attempt to induce a cartel arrangement’, 10 February 2016, available at www.accc.gov.au/media-release/federal-court-
132 ACCC v. Australian Egg Corporation Limited  FCA 69, at .
133 ACCC, ‘ACCC appeals AECL decision’, 2 March 2016, available at: www.accc.gov.au/media-release/accc-appeals-aecl-decision.
134 ACCC v. Australian Egg Corporation Limited  FCA 447, at ; ACCC Media Release, ‘Federal court orders Zelko Lendich to pay $120,000 penalty for attempt to induce cartel arrangement between egg producers’, 2 May 2016, available at www.accc.gov.au/media-release/federal-court-orders-zelko-lendich-to-pay-120000-penalty-for-attempt-to-
135 ACCC Media Release, ‘ACCC takes action for alleged cartel conduct in the NSW government Mount Penny Coal Exploration Licence tender process’, 25 May 2015, available at www.accc.gov.au/media-release/accc-takes-action-for-alleged-cartel-conduct-in-the-nsw-government%E2%80%99s-mount-penny-coal-exploration-licence-tender-process.
136 See, Mining Amendment (ICAC Operations Jasper and Acacia) Act 2014 (NSW) (inserting Schedule 6A of the Mining Act 1992 (NSW)). That legislation, which also dealt with the cancellation of coal exploration licences at Doyles Creek, withstood a High Court challenge brought in April 2015: Duncan v. NSW; NuCoal Resources Limited v. NSW; Cascade Coal Pty Limited v. NSW  HCA 13.
137 In the course of the ACCC investigations, Paul and Moses Obeid sought to have two Section 155 notices declared invalid on the grounds that the right to apply for necessary approvals for mining activities were not ‘trade or commerce’ as required by the CCA. This was dismissed by at first instance and on appeal: see Obeid v. Australian Competition and Consumer Commission  FCAFC 155, at .
138 ACCC Media Release, ‘Loyal Coal Pty Ltd admits breaching competition law in relation
to Mount Perry coal exploration licence tender process’, 5 April 2016, available at www.accc.gov.au/media-release/loyal-coal-pty-ltd-admits-breaching-competition-law-in-relation-to-
139 Note that the Harper Review recommended removing sections of the CCA that prohibit exclusionary provisions and addressing any resulting gap in law via amending the definition of cartel conduct (Recommendation 28). This recommendation is supported by the federal government and draft legislation are due to be released later in 2016.
140 Australian Competition and Consumer Commission v. P T Garuda Indonesia Ltd  FCAFC 42.
141 ACCC Media Release, ‘Colgate ordered to pay $18 million penalty in laundry detergent cartel proceedings’, 28 April 2016, available at www.accc.gov.au/media-release/colgate-
142 ACCC Media Release, ‘ACCC takes action against electrical cable suppliers for alleged cartel’, 4 December 2014, available at www.accc.gov.au/media-release/accc-takes-action-against-
143 ACCC Media Release, ‘Petrol price information sharing proceedings resolved’, 23 December 20015, available at www.accc.gov.au/media-release/petrol-price-information-
144 ACCC v. Baxter Healthcare (2008) FCACF 141.
145 CCA, Section 46.
146 See Recommendation 30, p. 25, available at www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Competition%20Policy%20Review/Downloads/PDF/Govt_response_CPR.ashx.
147 Australian Competition and Consumer Commission v. Pfizer Australia Pty Ltd (2015) FCA 113.
148 ACCC Media Release, ‘ACCC appeals Pfizer decision’, 18 March 2015, available at www.accc.gov.au/media-release/accc-appeals-pfizer-decision.
149 Australian Competition and Consumer Commission v. Cement Australia Pty Ltd & Ors (2013) FCA 909.
150 ACCC Media Release, ‘$18.6 million penalties ordered against Cement Australia companies for anticompetitive fly ash agreements’, 29 April 2016, available at www.accc.gov.au/media-release/186-million-penalties-ordered-against-cement-australia-companies-for-
151 ACCC Media Release. 4 February 2013 ‘ACCC commences Federal Court proceedings against Visa Inc’, available at www.accc.gov.au/media-release/accc-commences-federal-court-
152 ‘Record Visa fine indicates laws must change, says ACCC chief’, The Australian, 5 September 2015.
153 Rod Sims, ‘ACCC Compliance and enforcement priorities for 2016’ (speech delivered at the Committee for Economic Development of Australia (CEDA) conference, Australia, 23 February 2016), available at www.accc.gov.au/speech/accc-compliance-and-enforcement-
154 ACCC Media Release, ‘Reckitt Benkiser ordered to pay $1.7 million in penalties for misleading conduct regarding Nurofen specific pain products’, available at www.accc.gov.au/media-release/reckitt-benckiser-ordered-to-pay-17-million-in-penalties-for-misleading-
155 ACCC Media Release, 27 October 2015, ‘ACCC takes action against Unique International College following joint investigation with NSW Fair Trading’, available at www.accc.gov.au/media-release/accc-takes-action-against-unique-international-college-following-joint-
investigation-with-nsw-fair-trading; ACCC Media Release, 24 November 2015, ‘ACCC takes action against Phoenix following joint investigation with NSW Fair Trading’, available at www.accc.gov.au/media-release/accc-takes-action-against-phoenix-following-joint-
investigation-with-nsw-fair-trading; ACCC Media Release, 9 December 2015 ‘ACCC takes action against Empower Institute following joint investigation with NSW Fair Trading’, available at www.accc.gov.au/media-release/accc-takes-action-against-empower-institute-
following-joint-investigation-with-nsw-fair-trading; ACCC Media Release, 31 March 2016, ‘ACCC takes action against AIPE following joint investigation with NSW Fair Trading’, available at www.accc.gov.au/media-release/accc-takes-action-against-aipe-following-a-joint-
156 Flight Centre Limited v. ACCC  FCAFC 104; ACCC v. Australia and New Zealand Banking Group Limited  FCAFC 103.
157  FCA 1206.
158 (No. 2)  FCA 1313.
159 Flight Centre Limited v. ACCC  FCAFC 104; ACCC v. Australia and New Zealand Banking Group Limited  FCAFC 103.
160 Flight Centre Limited v. ACCC  FCAFC 104 at .
161 ACCC Media Release, ‘ACCC granted special leave to appeal to the High Court from the Full Federal Court Flight Centre judgment’, 11 March 2016, available at www.accc.gov.au/media-release/accc-granted-special-leave-to-appeal-to-the-high-court-from-the-full-federal-
162 Economics References Committee, Performance of the Australian Securities and Investments Commission, Report to the Senate, June 2014, available at www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASIC/Final_Report/index; Government response to Senate Inquiry into the Performance of ASIC, 24 October 2014, available at http://mhc.ministers.treasury.gov.au/media-release/043-2014/#attachment.
163 Commonwealth of Australia 2014, Financial System Inquiry Final Report, available at www.fsi.gov.au/publications/final-report/; Government response to the Financial System Enquiry, 20 October 2015, available at www.pm.gov.au/media/2015-10-20/government-response-
164 Commonwealth of Australia 2014, The Report of the National Commission of Audit, www.ncoa.gov.au/report/index.html.
165 Australian Government Treasury, Fit for the Future: A Capability Review of the Australian Securities and Investments Commission – A Report to Government, 20 April 2016.
166 Senate Standing Committees on Economics, Terms of Reference (2013) Parliament of Australia, www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASIC.
167 Various commentators have also expressed concerns about the adequacy of ASIC to fulfil its regulatory functions in light of its ever-expanding mandate. See for example, V Comino, Company Law Watchdog – ASIC and Corporate Regulation, Thomson Reuters Australia 2015, Chapter 9. In this regard, the federal government’s National Commission of Audit Report has recommended that ASIC’s registry functions be transferred away from it: Commonwealth of Australia 2014, The Report of the National Commission of Audit – Phase One, available at www.ncoa.gov.au/report/docs/phase_one_report.pdf. The report also recommended that ASIC’s consumer protection functions be transferred to ACCC and that its financial literacy functions cease.
168 Australian Securities and Investments Commission, Information Sheet 52: Guidance for whistleblowers (August 2015), available at http://asic.gov.au/about-asic/asic-investigations-'>http://asic.gov.au/about-asic/asic-investigations-
169 ASIC, ‘Report 387 Penalties for corporate wrongdoing’, 20 March 2014, available at www.
170 Commonwealth of Australia 2014, Financial Systems Inquiry Final Report, p. 252.
171 Government Response to the Financial System Inquiry, ‘Improving Australia’s Financial System’, 20 October 2015, available at www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Financial%20System%20Inquiry/Downloads/PDF/Government_response_to_FSI_2015.ashx.
172 Government Response to the Financial System Inquiry, ‘Improving Australia’s Financial System’, 20 October 2015, available at www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/Government%20response%20to%20the%20Financial%20System%20Inquiry/Downloads/PDF/Government_response_to_FSI_2015.ashx.
173 Commonwealth of Australia 1997, Financial Systems Inquiry Final Report, Canberra.
174 Commonwealth of Australia 2014, Financial Systems Inquiry Final Report, pp. 253–254.
175 Financial System Inquiry: Submission by the Australian Securities and Investments Commission, April 2014.
176 Senate Estimates, June 2014, available at www.asic.gov.au/about-asic/media-centre/speeches/senate-estimates-opening-statement-4-june-2014/.
177 The Hon Scott Morrison MP, Media Release, ‘Turnbull Government bolsters ASIC to protect Australian consumers’, 20 April 2016, available at http://sjm.ministers.treasury.gov.au/media-release/042-2016/.
178 ASIC, Corporate Plan 2015–2016 to 2018–2019, August 2015, available at http://asic.gov.au/about-asic/what-we-do/our-role/asics-corporate-plan-2015-2016-to-2018-2019/.
179 The Commonwealth Director of Public Prosecutions v. Hill and Kamay (2015) VSC 86.
180 ASIC, ‘Former ABC Learning CFO charged’ (Media Release, 13-104MR, 10 May 2013) www.asic.gov.au/asic/asic.nsf/byheadline/13-104MR+Former+ABC+Learning+CFO+charged?openDocument.
181 ASIC, ‘MR Former Chief Financial Officer of ABC Learning Centres sentenced’ (Media Release, 15-073MR, 31 March 2015) http://asic.gov.au/about-asic/media-centre/find-a-media-release/2015-releases/15-073mr-former-chief-financial-officer-of-abc-learning-
182 Australian Securities and Investments Commission v. Cassimatis (QUD 574/2010).
183 Australian Securities and Investments Commission v. Bank of Queensland Limited (NSD 1797/2010).
184 Australian Securities and Investments Commission v. Storm Financial Limited (In Liq) (QUD 577/2010).
185 Parliamentary Joint Committee, Inquiry into financial products and services in Australia, November 2009.
186 Corporations Amendment (Future of Financial Advice) Act 2012 (Cth); Corporations Amendment (Further Future of Financial Advice Measures) Act 2012 (Cth).
187 See Sydney Morning Herald, ‘ASIC launches action against Westpac over BBSW’, 5 April 2016, available at www.smh.com.au/business/banking-and-finance/asic-launches-
188 ASIC, ‘Statement on Securency International and Note Printing Australia’ (Media Release, 12-47AD, 12 March 2012) www.asic.gov.au/asic/asic.nsf/byheadline/12-47AD+Statement+
189 See ASIC’s reaction in ASIC, ASIC response to ABC TV’s Four Corners’ questions (30 September 2013) www.asic.gov.au/asic/asic.nsf/byheadline/ASIC+response+to+ABC+
190 A copy of the MoU is available online at http://download.asic.gov.au/media/1310383/AFP-MOU-Oct%202013.pdf.
191 Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Bill 2015 (Cth).
192 See ATO Corporate Plan 2014–2018.
193 ATO, ‘Commissioner’s address to TIA’ (Speech, QC 39692, 27 March 2014), www.ato.gov.au/Media-centre/Speeches/Commissioner/Commissioner-s-address-to-TIA/.
194 See Building Confidence publication which is revised on an iterative basis to provide taxpayers with timely updated on new ATO compliance initiatives. Available online at www.ato.gov.au/General/Building-confidence.
195 Id. at p. 106.
196 A copy of the taxation conditions is available at https://firb.gov.au/files/2016/05/Tax_conditions.pdf.