Compliance - Competition and Consumer Act 2010

Policy

The Compliance - Competition and Consumer Act 2010 (CCA) policy seeks to ensure that Note Printing Australia (NPA) complies with its legislative obligations, including obligations arising from the Competition and Consumer Act 2010 (CCA).

Compliance to the CCA involves NPA complying with the law and behaving as a responsible corporate citizen and makes good business sense as well. On the other hand, failing to behave in accordance with the law is bad business. We cannot ignore the significant penalties that apply to both companies and their representatives personally for breaches of the CCA.

As a result, the board of NPA wants to ensure that a culture of compliance exists.

Scope

This policy applies to all NPA staff and its agents.

Staff are required to read this manual carefully and raise any issue of concern with any one of the following:

  • their direct manager;
  • the Head of Human Resources;
  • the Head of Risk Management and Security; or
  • the CEO.

1. NPA Compliance Program

This policy is part of NPA's compliance program. The Australian Competition and Consumer Commission (ACCC) website states that a competition and consumer compliance program is designed to:

'identify and reduce the risk of breaching the Competition and Consumer Act 2010 (the Act) and to remedy any breach that may occur. A successful compliance program will facilitate compliance within the organisation and help the company to become or remain a good corporate citizen.'

Penalties for breaches of the CCA are very substantial. The involvement in litigation under the CCA is also very costly and demanding for those directly involved and for management.

The existence of a compliance program is important in reducing corporate and personal risk for at least three reasons:

  • Prevention

If all personnel at NPA are aware of the requirements of the legislation we are less likely to find ourselves in a situation where a breach is alleged.

  • Defence

In some situations the existence of a compliance policy and implementation of a program might assist in establishing a defence to an alleged breach.

  • Mitigation

The existence of a compliance policy and implementation of a program will almost always be very relevant to any penalty imposed. The Courts are more likely to impose a greater or maximum penalty when there is no compliance regime or a poor or ineffective one.

2. Compliance with the Legislation

All NPA personnel are expected to comply with the CCA at all times.

A failure to do so will lead to serious consequences. Inadvertent breaches may result in disciplinary action. Wilful or reckless breaches will usually involve dismissal.

The CCA prevents the company from covering civil penalties for breaching the CCA or the associated legal costs awarded against staff who have breached the CCA.

The Corporations Act prevents the company from indemnifying a person against liabilities owed to the company or a related body corporate or to some other person that did not arise out of conduct in good faith, or for criminal penalties and legal costs when the person is found liable.

3. Getting help

If staff have a query about the CCA or its application to a particular situation that arises in relation to their work, they can raise it with one of the persons listed in paragraph 1 above. That person will then answer the query or seek assistance from senior management and/or NPA's legal advisers.

This requirement is not only designed to ensure that NPA minimises its risk but also to allow the burden of handling a difficult situation to pass to those who are best able to deal with it.

Section A: Competition and Consumer Act


4. General


4.1 Purpose of the CCA

The object of the CCA "is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection".

Thus, the CCA is designed principally to achieve two objectives. First, to ensure that corporations operate competitively, without collusion and without unfairly using their power, whether that power is acquired by size or otherwise. Secondly, the CCA is designed to ensure that companies behave fairly in transactions (particularly with consumers).

4.2 Liability

Generally, in determining whether there has been a breach of the CCA, the intention of a party is irrelevant. Thus, the courts will generally only look at the effect of the behaviour of a company and its representatives in determining liability irrespective of whether the prohibited behaviour is intentional.

4.3 Record keeping

The ACCC has very wide powers to require companies and individuals to furnish information and produce financial and other records. This will include computers, file notes, letters, emails and diary entries. As a separate exercise the ACCC can require individuals to attend to be examined orally about such documents and any other matters relating to a possible contravention of the Act.

NPA staff must never destroy documents with a view to concealing a possible contravention of the CCA. First, NPA would regard that as a very serious breach of duty and would take swift disciplinary action in respect of it. Secondly, it is rare for there not to be copies of documents destroyed or references to them and the fact of destruction will almost always be discovered and adverse inferences drawn. Thirdly, the destruction or concealment of evidence, where it is reasonably likely to be required in evidence in a legal proceeding that is in existence or may be commenced in the future, will likely be a criminal offence in itself.

Not only should staff be careful to avoid situations which might lead to a contravention of the CCA, they should also take great care about matters that are recorded in writing so that, as far as possible, they cannot be misconstrued. If staff are in any doubt at all they should consult one of the persons listed above.

4.4 Dealing with the ACCC

It is the policy of NPA to co-operate fully with the ACCC. However, it is important that any communications with the ACCC be handled through appropriate channels, either by involving one of the persons listed above or NPA's legal advisers.

If NPA staff are approached by the ACCC they should advise that it is company policy to co-operate but that they are obliged to first notify one of the persons listed above. That person will then investigate the matter and arrange for an appropriate response to be made promptly to the ACCC.

4.5 Dealing with suppliers and customers

There is nothing wrong with being tough in negotiations but it is important to behave fairly when dealing with suppliers and customers. This will reduce the risk of disputes with them and will also reduce the risk of interest from regulators like the ACCC.

4.6 Dealing with competitors

Generally it is wise to avoid communication with competitors. This will be unavoidable at times, for example, when attending currency conferences. However, NPA staff must avoid discussions about prices and potential future sales matters.

5. CCA Provisions


5.1 Misleading or deceptive conduct (Sch.2 - s 18)

A corporation must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

Intention to mislead or deceive is not necessary; an accidental or mistaken statement or conduct will be a breach of the CCA if it in fact misleads and deceives.

In some cases, silence can constitute misleading or deceptive conduct.

An example of a breach of this provision might occur where, to obtain a new customer, NPA representatives state that NPA will supply on a particular or preferential pricing basis but they know that NPA is unlikely to be able to supply on that basis.

5.2 False or misleading representations (Sch.2 - s 29)

It is unlawful to falsely represent goods or services as having particular qualities, or as being of a certain standard, grade, composition, value, etc.

If the ACCC takes action against a company under Section 29 a Court can fix penalties of up to $1.1 million for a company and up to $220,000 for any individual involved in the breach.

For example, it would be a breach of Section 29 for a NPA representative, in order to win new work/customers, to make representations about the features of a product that are not correct. Thus, if it was represented to a prospective customer that banknotes produced by NPA had particular security features that did not exist or if NPA provides a breakdown of its costs of producing the banknotes which is inflated or otherwise incorrect, it is likely that there would be a breach of Section 29.

The affected customer could sue NPA, and the NPA representative concerned, for damages. Further, the ACCC could take action to impose pecuniary penalties on both.

5.3 Restrictive Trade Practices - Part IV

A corporation must not make, or give effect to, a contract, arrangement or understanding that contains a cartel provision.

A cartel provision is a provision relating to:

  • price-fixing (a provision in a contract, arrangement or understanding between competitors that has the purpose or effect of fixing, controlling or maintaining the price of goods or services on a discount or rebate etc); or
  • restricting outputs in the production and supply chain (a provision in a contract, arrangement or understanding between competitors having the purpose of preventing, restricting or limiting the production or supply of goods or services); or
  • allocating customers, suppliers or territories (a provision in a contract, arrangement or understanding between competitors having the purpose of allocating between the parties to the contract etc the persons who supply to or acquire from such parties' goods or services or the geographical areas in which they operate); or
  • bid-rigging (a provision in a contract, arrangement or understanding between competitors having the purpose of, for example, one or more of the parties bidding but others not doing so or not doing so competitively),

by parties that are, or would otherwise be, in competition with each other.

Penalties

Maximum penalties for cartel conduct:

Civil offence

  • For a corporation - the greater of $10 million, or 3 times the value of the benefit from the cartel, or (where the value cannot be determined) 10% of the annual turnover of the corporate group.
  • For individuals - $500,000.

A corporation or individual who makes a contract, arrangement or understanding that contains a cartel provision with the intention of dishonestly obtaining a benefit would be guilty of a criminal offence.

Criminal Offence

  • For a corporation - as above.
  • For individuals - imprisonment of 10 years, and/or $220,000 fine.

5.4 Other provisions

There are other restrictive trade practices provisions such as:

Misuse of market power

A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of eliminating or damaging a competitor or preventing a person from entering the market.

Exclusive dealing

A corporation shall not in trade or commerce engage in the practice of exclusive dealing. Exclusive dealings include providing goods and services on the condition the customer does not:

  • acquire goods and services from a competitor;
  • re-supply the goods and services from a competitor; or
  • re-supply the goods or services to particular persons or in particular places.  

Similar provisions apply to the supply of goods and services by a corporation.

Resale Price Maintenance

A supplier may not impose a minimum resale price on a person and the person must not enter into an agreement to maintain a minimum resale price.

International Anti-Cartel Conduct

Whilst the nature of NPA's business is such that the restrictive trade practices provisions of the CCA are unlikely to be of day-to-day concern, it is important to understand the principles because similar provisions are contained in legislation in other countries.

For example, in Canada there is the Competition Act 1985 and in New Zealand there is the Commerce Act 1986.

The ACCC has set up working relationships with its counterpart agencies in other countries that have similar anti-cartel laws.

Penalties can be even more severe in other countries. For example, in Canada penalties can range up to 14 years in prison and $25 million.