My last article in this series explored restraints in distributorship agreements that run the risk of falling foul of the cartel conduct provisions of the Competition and Consumer Act 2010 (Cth). If the regulator of the Act, the Australian Competition and Consumer Commission, (ACCC), has a problem with what you have done, you will be served with a section 155 notice. This article will examine how to respond to a section 155 notice from the ACCC.

Section 155 Notice

A Section 155 Notice will require you to produce material that goes to communications with the distributor which may be evidence of matters involving criminal cartel conduct or civil cartel conduct. The time frame and scope of these notices can be negotiated to some extent with ACCC but you must get in early, and it is also important to devote the appropriate amount of time and resources to respond to the notice. If you need assistance with obtaining the material, you should contact the relevant stakeholders in your organisation, however, you should carefully consider who you choose to produce the material.

As the production of the material is inevitably followed by examinations of the relevant officers of the company, it is also vital to ensure that those who are likely to be examined are not put in charge of producing documents in response to the notice. This is because attempts by them to withhold information in responding to the notice can be disastrous in later examinations where the information has been obtained as part of the ACCC investigation from third parties in any event. For example, a disgruntled distributor who is the source of the complaint to ACCC, which causes the investigation to be launched in the first place. Therefore, it’s important to consider the information requested, and who you select to collate and prepare the material.

Never forget that despite “entire agreement” clauses in a final formal agreement that side deals or additional restraints that appear in the background emails that are illegal are still actionable. It is unlikely, if the conduct revealed by the production of information and documents and the examinations is illegal, that pleas that it was just table thumping or rogue and unauthorised conduct, or that the prosecution is based on technical grounds, will make the prosecution go away.

Compliance is Key

The way to ensure this does not happen in your organisation is through education and training. Such processes will ensure that your people understand the law and by building a culture in your business of compliance and an environment where it is possible for them to admit that a mistake has been made, so that it can be addressed at the earliest possible opportunity. There are a number of news stories every month concerning breach of Australian Consumer Law that could have been easily avoided if a company was compliant with its obligations.

If you have any questions about cartel provisions, addressing a section 155 notice or have a consumer law enquiry, get in touch with our consumer law team by calling us on 1300 544 755. We can also assist you in drafting compliant agreements including distributorship agreements and supplier agreements.

Catherine Logan

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