Compliance programs

A company is liable for the conduct of its employees and agents even if they inadvertently break the law.

A compliance program is a wise risk-management tool that:

  • ensures all directors and staff understand their legal obligations
  • can greatly reduce the risk of a breach of the Competition and Consumer Act. Company managers should view a robust compliance program as a prudent risk management tool.   

Benefits of a compliance program

Implementing a compliance program that guards against cartel activities and makes an open commitment to comply with the law can:

  • improve business performance
  • boost market position by promoting good corporate citizenship
  • enhance your firm’s reputation with customers and with staff
  • encourage innovation
  • encourage feedback and build customer loyalty through open complaint-handling procedures that can help identify illegal conduct within the business.

It may also convince the court to reduce penalties or fines in the event of a breach.

What sort of compliance program?

The nature of an appropriate compliance program will depend on the profile of the company. Each program should be tailored to a company’s business activities and the particular risks it may face.  For a compliance program to be effective there must be a strong commitment from the top of the organisation towards building and maintaining a culture of compliance.

Smaller operators

Smaller businesses that can easily watch activities across the organisation usually need to:

  • set up an effective complaints-handling process
  • run targeted staff training.

Larger companies

Larger companies, where cartel activity may be harder to detect, usually need to set up a more comprehensive regime, including:

  • a specialist consultant
  • a dedicated team
  • an effective complaints-handling process
  • targeted staff training
  • an independent audit process.

Compliance resources

Compliance programs cover all relevant areas of the Competition and Consumer Act and Australian Consumer Law, including cartel conduct, product safety and misleading and deceptive conduct.

Australian Standards you can use to assist you in setting up a compliance program are:

  • compliance programs AS 3806–2006
  • handling customer complaints AS ISO 10002–2006.

Compliance programs and the law

The Federal Court has given great weight to the compliance culture of companies. One of the factors to be considered when setting penalties is:

Whether the company has a corporate culture conducive to compliance with the TPA, as evidenced by educational programmes and disciplinary or other corrective measures to an acknowledged contravention. [Justice French, Trade Practices Commission v CSR Ltd (1991)].

The court does not consider the cost of such a program to be an excuse for not having an effective, compliance program. In fact:

The cost of failing to comply should be set at a level which is significantly greater than the cost of ensuring compliance (via a compliance program)
[Justice Emmett, ACCC v MNB Variety Imports Pty Ltd (1998)].

The court does not consider the mere existence of a program as a cause to reduce penalties: A well drafted set of policies and procedures will mean little if there is no follow-up in terms of training company officers (including directors) and, where appropriate, refresher training
[Justice French, ASIC v Chemeq Ltd (2006)].

The Visy Trade Practices Compliance Manual might have been written in Sanskrit for all the notice anybody took of it
[Justice Heerey, ACCC v Visy Ltd (2007)].

In most cases where a company that breaches the Competition and Consumer Act has no compliance program, the court will order that an effective program be established. The ACCC has developed four compliance program templates that can be adapted for companies of any size or risk profile.

Attachments

 

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