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Failed Appeal for Cussons

May 30, 2019

 

 

Last week, the ACCC put out a public release about their failed appeal against Cussons Australia.

 

Bronwyn Gallacher from CCL Consultants shared some of her thoughts with GRC Professional regarding the implications of the ACCC’s appeal having ‘insufficient evidence’ to prove PZ Cussons Australia (‘Cussons’) had engaged in cartel behaviour in the laundry detergent market.

 

Interview 

 
Are there any lessons to be learned from this decision?

This is a very recent decision of the Full Court of the Federal Court (it was delivered on 24 May 2019) and as such, the reasons for judgement are not yet available. At this point in time, the most important lesson to be learned is that cartel behaviour is high on the ACCC’s radar. Rod Sims, Chairman of the ACCC, has also since confirmed that pursuing cartel conduct “…is an enduring enforcement and compliance priority” for the regulator. Consequently, businesses must have a sound understanding of the cartel provisions in the Competition and Consumer Act 2010 (Cth) (CCA) and risk management actions in place to minimise the potential for breaches.

 

Do you think the decision would have been different if the appeal had been launched after the legislation against substantially lessoning competition had been introduced?

The ACCC has suggested this judgment concerns insufficient evidence regarding the facts of the issue, rather than a question of law. Having said this, the relevant conduct predates the current law on cartels. In November 2017, section 45 of the CCA was amended to include a new prohibition on concerted practices with the purpose, effect or likely effect of substantially lessening competition. It is presumed this prohibition will be interpreted by the courts as having a lower threshold than that applied to traditional cartel conduct, which may make it easier for the ACCC to bring Cussons-type actions. Businesses must be mindful of this, as we are likely to see more of these types of actions being brought by the ACCC.

 

Do you think companies have factored in this piece of legislation into their GRC programs—the one that was passed in November of 2018?

 Most businesses that are forward-thinking in compliance will already be across the new concerted practices prohibition. But for those who are not prepared, this is a timely reminder to implement necessary actions to mitigate their risk. This includes:

  • updating the organisation’s compliance program;

  • educating employees on the law and the risks of breaking the law;

  • equipping employees with the workplace skills they need to act independently of competitors;

  • constraining employees from attending industry meetings and/or gatherings unless prior approval has been sought and granted;

  • seeking legal advice for planned competitor collaboration or contact, including industry meetings; and

  • maintaining detailed records of all communications with competitors.

 

 Do you have any other comments on this appeal?

It is important to remember that the ACCC was successful in the action it took against Colgate and Woolworths in relation to their behaviour in the laundry detergent market. Both Colgate and Woolworths admitted to their involvement in cartel conduct and paid penalties of $18 million and $9 million respectively.

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