Roundtable - Private Enforcement
15 November 2010
Melbourne Law School convenes a “Roundtable on the Private Enforcement of Competition Law”
Associate Professor Caron Beaton-Wells, Director of the University of Melbourne’s Competition Law & Economics Network, convened a “Roundtable on the Private Enforcement of Competition Law”, bringing together key stakeholders in competition law in Australia at the Melbourne Law School, on Friday 12 November 2010. This report provides background on and outlines some of the important points discussed at the Roundtable.
How is competition law enforced in Australia?
To date in Australia, most of the enforcement of competition law has been undertaken by the public enforcement body – the Australian Competition and Consumer Commission (the ACCC). The primary objective of the ACCC’s enforcement activity is to detect, stop and deter anti-competitive activity – particularly when the offences involve collusion between competitors such as price fixing. Deterrence of such behaviour is fundamental to the promotion of competition in our markets for the benefit of all Australians. However, the law also recognises that consumers and businesses that suffer loss or damage as a result of anti-competitive conduct should be compensated. Despite this, there have been very few private actions for compensation over the 35 year history of the Trade Practices Act 1974 and only five class actions (all for cartel conduct), only one of which has resulted in the payment of compensation. The others include private actions brought by Maurice Blackburn on behalf of businesses affected by the Air Cargo cartel and the Visy/Amcor cartel. Both of these cartels have been admitted by several of the companies involved and have attracted millions of dollars of penalties that are paid into general revenue. Yet, in Australia at least, the ‘victims’ are still fighting for compensation. However, in the United States 90% of legal suits concerned with competition law breaches are brought by private litigants and such actions are regarded as much if not more of a deterrent than the actions brought by the public authorities. In Europe, as in Australia, there has been historically a low level of private enforcement, but in recent years the European competition authorities have been debating ways in which to remedy this.
What was the impetus for this Roundtable?
The impetus for the Roundtable was the concern that a similar structured debate involving all the key stakeholders in Australia is overdue. It was also recognised that the University, as an independent institution, has much to offer by bringing together and facilitating an exchange between stakeholders in a field in which conflicting priorities and different perspectives have the potential to impede constructive debate.
Who was part of the Roundtable?
Convened by Melbourne Law School on an invitation-only basis, the Roundtable was attended by 30 of the most senior representatives from stakeholder organisations - the ACCC (whose representatives included Chairman Graeme Samuel), the Commonwealth Treasury, the Law Council of Australia, the Federal Court, plaintiff law firms (Maurice Blackburn and Slater & Gordon), litigation funder IMF, and the Consumer Law Action Centre - as well as selected individual practitioners (from Freehills, Mallesons Stephen Jaques, Baker & McKenzie and Allens Arthur Robinson) and academics with experience in this field from around Australia.
What was discussed at the Roundtable?
The discussion took place over a full day and canvassed the many hurdles facing private litigants in Australia, with a particular focus on issues that arise at the interface between ACCC enforcement activity and private actions for damages. One such issue concerns the extent to which the ACCC should make information in its possession available to private litigants to assist them in proving their claims. Another issue concerns the extent which admissions obtained by the ACCC in its settlements with offenders should be able to be used by private litigants, so that they do not carry the burden of re-establishing liability. A further issue relates to the extent to which the ACCC itself should seek compensation for victims, either as a condition of the resolution of the penalty proceedings that it brings or through the institution of independent representative proceedings for compensation. All of these issues raise difficult questions of public policy, legal interpretation and litigation procedure and practice. The discussion at the Roundtable on these and other sensitive issues was facilitated by the Commonwealth Solicitor-General, Stephen Gageler SC, Melbourne Law School’s Associate Professor Beaton-Wells and Sydney academic, barrister and former Law Reform Commissioner, Professor Peter Cashman. Confidentiality protocols enabled participants to be as frank as possible and a broad consensus on a range of key issues was established, including:
- Private actions play a valuable role in enforcement of Australia’s competition laws and they should be seen to supplement the activity of the ACCC, not only as a mechanism for obtaining compensation but also in boosting deterrence.
- Where liability for a breach of the law has been established in proceedings brought by the ACCC, private litigants should be able to avoid the delay, expense and uncertainty associated with having to re-establish the same matters proven or admitted in the ACCC proceedings.
- It was also agreed that there should be ways in which to incentivise parties that wish to cooperate with private claimants. Currently, few such incentives exist given that in a case in which there is more than one ‘guilty’ party (as is always the case with cartels) a cooperating party will still face claims for contribution from its co-conspirators.
- More could also be done to limit the delays and costs associated with litigation brought by private claimants seeking compensation. On other issues, it was evident that the Roundtable served an important purpose in highlighting the need for further discussion and exploration. In particular, participants were interested to explore the idea of cy-pres remedies for cartel cases in which proof of loss is particularly difficult.
Contributors
Associate Professor Beaton-Wells was assisted in organising the Roundtable by a working group, comprising ACCC Commissioner, Sarah Court, Maurice Blackburn partner, Brooke Dellavedova and former Mallesons Stephen Jaques partner (now consultant), Roger Featherston.
Way forward
Since the Roundtable Associate Professor Beaton-Wells has contacted Treasury to raise the specific issue of the extent to which private claimants for damages should be required to prove matters established in prior ACCC proceedings. She has encouraged Treasury to consult with stakeholders on the issue, including on the question whether there should be amendment of s 83 of the Competition and Consumer Act 2010 to address it and if so, what form that amendment might take.