Federal Court upholds investigative powers of ACCC

The Federal Court today confirmed the powers of the Australian Competition and Consumer Commission to investigate possible breaches of the Trade Practices Act 1974 by using section 155* of the Act to compel information from persons it believes to be capable of providing information which may assist in the investigation.

In proceedings instituted in the Federal Court in April 2004, Seven Network Limited alleged that the ACCC had improperly used its powers under section 155 by issuing Seven Network with a Notice which required it to furnish the ACCC with information relating to a matter it was investigating.

The Notice issued under section 155 related to two items broadcast on the Seven Network's Today Tonight television program in October 2003 and January 2004 which featured the 'Wildly Wealthy Women Millionaire Mentoring Program'.  The ACCC is investigating the Mentoring Program as part of its current focus on real estate investment programs, and had issued a Notice to Seven Network requesting information regarding the identity of persons involved in the creation and production of the items aired on Today Tonight. 

"The ACCC issued the Notice because I have reason to believe that the Seven Network may be in possession of information that may assist the ACCC's investigation into whether or not Seven Network (or a related company) and/or the principals running the 'Wildly Wealthy Women Mentoring Program' may have engaged in misleading or deceptive conduct”, ACCC Chairman, Mr Graeme Samuel, said today.

Seven Network argued that the Notice had been improperly issued because it said the alleged conduct could not amount to a breach of the Act and that the Notice did not disclose the necessary relationship between the information sought and the possible contraventions specified in the Notice. Seven Network also argued that no representations of the kind identified in the Notice were made by Seven Network.

In today's judgment, Justice Branson rejected Seven Network's application for the court to declare the Notice unauthorised, invalid and of no effect.

"I reject the contention that the matters identified in the Notice are incapable of constituting contraventions of s 52 of the TPA by reason of s 65A** of the TPA… I reject the contention that the Notice is defective insofar as it alleges that Seven Network or one of its wholly owned subsidiaries made the representations", Justice Branson said.

The decision also clarifies the ACCC's ability to use s155 to identify individuals who are expected to have information relevant to the matter the subject of investigation.  Justice Branson rejected Seven Network's argument that the Notice is invalid on the basis that it merely seeks to identify possible witnesses in respect of a possible contravention of the Act.

"In the context of possible contraventions of the TPA identified in the Notice, each of the individuals whose name and address is sought by the Notice is more than just a possible witness on the issue of whether the person or persons who made the representations had reasonable grounds to make them…I do not regard their respective names as having only an indirect or remote connection with the matters identified in the Notice", she said.

ACCC Chairman, Mr Graeme Samuel, said the decision was significant because it confirms that section 155 is simply an investigative tool and not an allegation of wrongdoing on the part of the recipient.

"Parties should have no objection to providing the information requested unless they have something to hide", Mr Samuel said.  

Background

* Section 155 of the Trade Practices Act is the ACCC’s most widely used mandatory information-gathering power.  It gives the ACCC the power to require a person to provide information, documents, and/or give evidence under oath or by way of affirmation, and limited powers to enter premises and inspect and/or copy documents where the Chairman of the ACCC has a reason to believe that a party, either the recipient of the Notice or another party, may have engaged in a breach of the TPA. 

** Section 65A limits the operation of certain provisions of the Trade Practices Act, including s 52, in respect of the media and others in the business of providing information.  There are certain exceptions to s 65A, including where the publication is an advertisement or is in connection with the supply or possible supply of goods or services pursuant to an arrangement or understanding with a person who supplies goods or services of that kind.