Competition and Consumer Amendment (Competition Policy Review) Bill 2017 [2017] AUSStaCSBSD 124 (10 May 2017)

• Competition and Consumer Amendment (Competition Policy Review) Bill 2017
• Legal burden of proof 19
• Significant penalties22
• Retrospective commencement31

---

Competition and Consumer Amendment (Competition Policy Review) Bill 2017

Purpose	This bill seeks to amend the Competition and Consumer Act 2010 (the Act) to: • amend the definition of 'competition' in section 4 of the Act, to clarify that competition includes competition from goods and services that are capable of importation, in addition to those actually imported; • amend provisions relating to cartel conduct and anti-competitive conduct; • repeal price signalling provisions and separate prohibition on exclusionary provisions; • repeal the definition of 'exclusionary provision' and a defence to the prohibition on exclusionary provisions; • define 'contract' and 'party' to include covenants, and repeal redundant provisions which separately deal with covenants; • increase the maximum penalty applying to breaches of the secondary boycott provisions; • prohibit third line forcing only where it has the purpose, effect or likely effect of substantially lessening competition; • amend the resale price maintenance and notification provisions; • amend notification and authorisation provisions; • extend section 83 of the Act relating to admissions of fact and findings of fact made in certain proceedings; • extend the Commission's power to obtain information, documents and evidence in section 155; • introduce a 'reasonable search' defence to the offence of refusing or failing to comply and increase the penalties under section 155 of the Act; • amend Part IIIA of the Act relating to competition in markets for nationally significant infrastructure services; • insert a new Division 3 into Part XIII of the Act relating to transitional application of amendments made by the bill; • make various other minor amendments relating to the administration of the Act
Portfolio	Treasury
Introduced	House of Representatives on 30 March 2017

Legal burden of proof ^[19]

1.22 Section 155 of the Competition and Consumer Act 2010 provides the Australian Competition and Consumer Commission (ACCC) with compulsory evidence-gathering powers. In particular, it makes it an offence for a person to refuse or fail to comply with a notice to furnish or produce information or to appear before the ACCC. This is currently subject to a penalty of imprisonment for up to 12 months or 20 penalty units (although it is proposed to increase this penalty, see paragraphs [1.29] to [1.34] below).

1.23 Item 3 of Schedule 11 proposes introducing a defence to this offence, to provide that the offence of refusing or failing to comply with a notice does not apply in relation to producing documents if the person proves that, after a reasonable search, the person is not aware of the documents and provides a written response to the notice. A legal burden of proof is proposed to be placed on the defendant, ensuring that the defendant would need to prove, on the balance of probabilities, that they were not aware of the documents and that they undertook a reasonable search.

1.24 At common law, it is ordinarily the duty of the prosecution to prove all elements of an offence. This is an important aspect of the right to be presumed innocent until proven guilty. Provisions that reverse the burden of proof and require a defendant to disprove one or more elements of an offence, interferes with this common law right.

1.25 As the reversal of the burden of proof undermines the right to be presumed innocent until proven guilty, the committee expects there to be a full justification each time the burden is reversed, with the rights of people affected being the paramount consideration.

1.26 The explanatory memorandum notes that whether a person has made a reasonable search is an objective test,^[20] but that it is appropriate to place a legal burden on the defendant:

because the facts amounting to a reasonable search will be peculiarly within the knowledge of the defendant. For example, it is likely that only a defendant will possess information such as how many documents could possibly have been searched to find the documents the notice requested, and how many documents were actually searched. With this knowledge, the defendant could readily and cheaply provide evidence, on the balance of probabilities, that they conducted a reasonable search.
By contrast, it would be extremely difficult and costly for the prosecution to gather the same evidence through its own investigations.^[21]

1.27 The committee considers that the explanatory memorandum has provided a justification as to why the evidential burden of proof needs to be reversed, but has not established why it is necessary to reverse the legal burden of proof. It would appear that if the facts amounting to a reasonable search are peculiarly within the knowledge of the defendant, it would be sufficient to require the defendant to raise evidence that suggests a reasonable possibility that a reasonable search was undertaken (which is an objective fact) and that the defendant was not aware of the documents, and the prosecution could then be required, as usual, to disprove the matters that had been raised, beyond reasonable doubt.

1.28 As the explanatory materials do not adequately address this issue, the committee requests the Minister's advice as to why it is proposed to reverse the legal burden of proof in this instance and why it is not sufficient to reverse the evidential, rather than the legal, burden of proof.

Pending the Minister's reply, the committee draws Senators' attention to the provision, as it may be considered to trespass unduly on personal rights and liberties, in breach of principle 1(a)(i) of the committee's terms of reference.

Significant penalties^[22]

1.29 Item 4 of Schedule 11 proposes increasing the penalty for a contravention of section 155 of the Competition and Consumer Act 2010. This provision makes it an offence for a person to refuse or fail to comply with a notice to furnish or produce information or to appear before the ACCC. This is currently subject to a penalty of imprisonment for up to 12 months or up to 20 penalty units. Item 4 proposes increasing this penalty to imprisonment for up to two years or 100 penalty units (or 500 penalty units for corporations).^[23] The justification given in the explanatory memorandum for this substantial increase is that '[t]his aligns the penalty under section 155 with the penalty for non-compliance with similar notice-based evidence-gathering powers of other regulators'.^[24] It also notes that the Harper Review into competition policy recommended that the maximum penalty for an offence under section 155 be increased.^[25]

1.30 However, it is not clear that a significant penalty of up to two years imprisonment or 100 penalty units for a failure to comply with a notice is a comparable penalty to other similar offences. The committee notes that the Guide to Framing Commonwealth Offences provides that a 'notice to produce or attend' provision, being a provision that allows an enforcement or regulatory agency to require a person to produce information or documents, or to appear at a hearing to answer questions, should, if this is to be an offence, generally be subject to six months imprisonment and/or a fine of 30 penalty units.^[26]

1.31 The committee also notes that while some offences relating to the Australian Security and Investment Commission's (ASIC) investigation powers subject a person to imprisonment for up to two years or 100 penalty units (or both), for a failure to appear for examination, answer a question or produce documents,^[27] other provisions appear to provide for lower penalties. For example, an offence of failing to attend a hearing conducted by ASIC, or to take an oath or an affirmation or answer a question or produce a document at the hearing, is subject to three months imprisonment or 10 penalty units.^[28] Similarly, a failure to attend, be sworn or make an affirmation, furnish or publish information, answer a question or produce a document before the Commonwealth Ombudsman is subject to imprisonment for three months or 10 penalty units.^[29]

1.32 It is also noted that the explanatory memorandum states that these amendments are a result of recommendations of the Harper Review. However, the Harper Review noted that '[i]n relation to public enforcement by the ACCC, there appears to be general approval of the severity of the sanctions for contravention of the competition law' but that 'the current sanction for a corporation failing to comply with section 155 of the CCA is inadequate'.^[30] It therefore does not necessarily appear to provide support for the marked increase in penalties applicable to individuals (particularly the doubling of the maximum period of imprisonment, which only applies to individuals and not corporations).

1.33 It is therefore not apparent to the committee that increasing the penalty to up to two years imprisonment or 100 penalty units (or both) for individuals for a failure to comply with a notice issued by the ACCC is an appropriate penalty by reference to comparable Commonwealth offences and the requirements in the Guide to Framing Commonwealth Offences.

1.34 The committee therefore seeks the Minister's detailed advice as to what is the level of penalty applicable to all comparable Commonwealth offence provisions and what is the justification for the proposed increase in penalties for individuals in this instance.

Pending the Minister's reply, the committee draws Senators' attention to the provision, as it may be considered to trespass unduly on personal rights and liberties, in breach of principle 1(a)(i) of the committee's terms of reference.

Retrospective commencement^[31]

1.35 Schedule 12 of the bill seeks to make amendments to the National Access Regime, which provides a regulatory framework for third parties to seek access to nationally significant infrastructure services that are owned and operated by others. Part 2 of Schedule 12 seeks to amend the Regime to ensure it better promotes effective competition in dependent markets. Item 37 states that the amendments made by Part 2 of Schedule 12 apply in relation to decisions made by the Minister under section 44N of the Competition and Consumer Act 2010, 'on or after 1 January 2017'.

1.36 The explanatory memorandum simply restates the terms of this provision, without explaining why the commencement date for this Part is proposed to be retrospective.

1.37 The committee has a long-standing scrutiny concern about provisions that have the effect of applying retrospectively, as it challenges a basic value of the rule of law that, in general, laws should only operate prospectively (not retrospectively). The committee has a particular concern if the legislation will, or might, have a detrimental effect on individuals.

1.38 Generally, where proposed legislation will have a retrospective effect the committee expects the explanatory materials should set out the reasons why retrospectivity is sought, and whether any persons are likely to be adversely affected and the extent to which their interests are likely to be affected.

1.39 The committee therefore seeks the Minister's advice as to why 1 January 2017 was chosen as the date for the commencement of the amendments made by Part 2 of Schedule 12 and whether this retrospective application may cause disadvantage to any individual (and if so, what is the justification for doing so).

Pending the Minister's reply, the committee draws Senators' attention to the provision, as it may be considered to trespass unduly on personal rights and liberties, in breach of principle 1(a)(i) of the committee's terms of reference.

---

[19] Schedule 11, item 3.

[20] Explanatory memorandum, p. 89.

[21] Explanatory memorandum, pp 90-91 (emphasis added).

[22] Schedule 11, item 4.

[23] As a result of subsection 4B(3) of the Crimes Act 1914 which provides that generally the maximum pecuniary penalty for a corporation is five times that of individuals.

[24] Explanatory memorandum, p. 91.

[25] Explanatory memorandum, p. 87.

[26] Attorney-General's Department, A Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, September 2011, pp 89 and 93.

[27] See section 63(1) of the Australian Securities and Investments Commission Act 2001.

[28] See section 63(3) of the Australian Securities and Investments Commission Act 2001 (relating to contraventions of section 58).

[29] See section 36 of the Ombudsman Act 1976.

[30] Harper, Anderson, McCluskey and O'Bryan, Competition Policy Review, Final Report, March 2015, p. 71 (emphasis added).

[31] Schedule 12, item 37.