May 2008
The Long Arm of the Law: Section 155 of the Trade Practices Act
Section 155 of the Trade Practices Act 1974 (Cth) ( TPA) provides the ACCC with wide powers to obtain from companies, businesses and individuals information, documents and evidence in the course of investigating possible contraventions of the Act.
Section 155(1) provides that where the chairperson or the deputy chairperson of the ACCC, has reason to believe that a person is capable of furnishing information, producing documents or giving evidence in relation to a matter that constitutes or may involve a contravention of the TPA, a member of the ACCC can issue a Notice requiring that person to provide such information, documents or evidence (' Notice')
Specifically, a section 155 Notice may require the recipient to:
(a) Furnish information in writing in the time and manner specified (155(1)(a));
(b) Produce documents in accordance with the Notice (155(1) (b); or
(c) Appear before the ACCC at a time and place specified in the Notice to give any such evidence, either orally or in writing, and produce documents (155(1)(c).
Use of Section 155
Section 155 has been part of the TPA since its enactment in 1974. However, the use of 155 Notices by the ACCC has significantly increased, with 484 such Notices issued in 2007. [1]
Before issuing a Notice, the ACCC will consider whether the relevant information, documents or evidence are available voluntarily.
However, not all parties wish to cooperate with the ACCC. The decision not to cooperate with the ACCC can be for a variety of reasons and in these circumstances the ACCC may issue a Notice to gain required information, documents or evidence.
In deciding to issue a Notice under section 155 the ACCC will consider
- The risk that the information could be destroyed or not provided;
- Whether the information, documents or evidence are necessary to the investigation;
- The time and cost implications for the recipient of the Notice, but this alone will not prevent a Notice being issued;
- Whether it is appropriate to obtain the required evidence in any other way, such an a formal interview; and
- Whether it is acting in good faith.
Reason to believe
The ACCC must have reason to believe before issuing the Notice. Reason to believe requires a belief, supported objectively by material facts and circumstances, that there is a possible contravention of the TPA. In other words there must be reasonable grounds or cause for a belief to be held.
Reason to believe does not require definitive evidence of a contravention to be provided, it is sufficient if there is a possibility the information, documents or evidence will assist. This means reason to believe can exist for conduct that may contravene the TPA, for an existing or future contravention of the TPA. [2]
Scope of the Notice
Notices can be addressed to both corporations of individuals within them. T
here are no limitations as to the content which can be requested under the Notice to the recipient. [3]
The Notice issued must identify the matters that constitute or may constitute a contravention of the TPA, but these do not bind the ACCC, [4] and:
- Specify the information and documents sought is enough detail to allow the recipient to comply; and
- Request information and documents that relate to the matters that may constitute a contravention.
If the Notice relates to an oral examination the description of the matter determines the scope of the questions that can be asked by the ACCC.
It is not appropriate for the ACCC under a section 155 Notice to require an addressee to:
- Give an interpretation of a information or documents;
- Seek out information or documents not in the possession, custody or control of the recipient;
- Formulate an opinion.
Limits
The only limits on the ACCCs powers to issue a section 155 Notice are:
- Legal professional privilege which remains applicable
- If any proceedings have been commenced a Notice can not be issued.
Use of Information obtained
There are no particular provisions in the TPA setting out the requirements for the use of the information, documents or evidence obtained in response to a section 155 Notice by the ACCC from the recipient. Generally the information, documents or evidence will be used in legal proceedings.
However, the ACCC can not disclose the information provided under a Notice except in limited circumstances (s155AAA).
The ACCC is also entitled to inspect, retain, copy and take extracts from documents provided in response to a Notice. [5]
Compliance with the section 155 Notice
A section 155 Notice specifies the requirements as to when the information, documents or evidence must be produced to the ACCC.
A time period of between two to three weeks will be allowed to comply with the Notice. However, shorter or longer periods of time may be given depending in the circumstances of the matter. The ACCC will consider requests for extensions of time and any such request must be made before the time specified in the Notice and reasons for the request provided.
The cost of responding to a Notice is borne entirely by the recipient and these costs can be significant.
A person is not excused from furnishing information or producing documents on the grounds that the information or document may tend to incriminate the person. However, any information and documents referred to in the Notice are not admissible in criminal proceedings against them other than proceedings under section 155(5) or, in the case of a corporation, proceedings under the TPA. [6]
Failure to comply
The recipient of a section 155 Notice is obliged to comply and must not:
- refuse or fail to comply to the extent that the person is capable of complying with it, or
- In purported compliance with a Notice, knowingly furnish information or give evidence that is false or misleading.
It is an offence not to comply with a Notice under section 155(5) of the TPA and individuals can be fined $2,200 or 12 months imprisonment and corporations can be fined $11,000 per offence. In such a situation the ACCC may refer the matter to the Commonwealth Director of Public Prosecutions for consideration as to whether the recipient of the Notice should be prosecuted.
The ACCC has made a number of public statements that compliance with a section 155 Notice will be taken very seriously and is an enforcement priority. This is indicated by a two very recent prosecutions for failure to comply with a Notice under section 155:
ACCC v Neville (2007) ATPR 42-195
The ACCC issued a Notice requiring Mr John Neville to attend an oral examination relating to an alleged arrangement or understanding between real estate agents in the Blue Mountains to prevent advertisements coming to public attention of competitors who were offering discounted fees. The ACCC instituted criminal proceedings against Mr Neville for providing false and misleading information on two occasions when responding to questions by the ACCC in an examination and failing to re-tract those false and misleading statements.
Mr Neville pleaded guilty and was fined $2,160 and sentenced to 200 hours of community service. It was decided that a term of imprisonment was not appropriate in the circumstances as Mr Neville's conduct was that of denial and laying of a false trail, by his cavalier and offhand conduct, rather than that of minimisation and evasion. The Court held that it was necessary to deter non-compliance with the TPA and that it was important that persons furnishing information or giving evidence in response to a Notice do so frankly and honestly.
ACCC v Rana [2008] FCA 374
The ACCC issued a series of section 155 Notices to the NuEra Group of Companies and its Directors, Mr Paul Rana and Mr Michael Rana in connection with the investigation of false and misleading representations and unconscionable conduct in cancer cure claims. The NuEra Companies and Mr Paul and Michael Rana failed to reply to the Notices.
The ACCC took criminal proceedings against three of the NuEra Companies for failing to respond to the section 155 Notice as well the Directors Mr Paul Rana and Mr Michael Rana for having aided, abetted, counselled or procured the commission of an offence.
The Court found that the NuEra Companies had failed to comply and they were fined $6,000. Mr Paul Rana was sentenced to 6 months imprisonment and Mr Michael Rana 2 months imprisonment.
This case demonstrates that enforcement of compliance with a section 155 Notice will be exercised rigorously, comprehensively and in an extensive fashion by the ACCC.
What this means
The section 155 Notice illustrates that companies require:
- A strong Trade Practices Compliance program to prevent contraventions of the TPA and subsequent investigations by the ACCC occurring;
- The importance of an experienced legal professional that can respond to the Notice on your behalf to ensure appropriate compliance and reduce costs.
Stephens Lawyers & Consultants have a high level of expertise in Trade Practices Law.
Authored by Louise Porthouse.
For further information contact:
Stephens Lawyers & Consultants
Level 3, 530 Lonsdale Street Melbourne VIC 3000
Phone: (03) 8636 9100 Fax: (03) 8636 9199
Email: stephens@stephens..com.au
Website: www.stephens.com.au