In its decision today, the Federal Court brought to an end legal proceedings by Harvey Norman against the ACCC attacking the ACCC's investigatory processes, by allowing the retailer to discontinue the proceedings.
Legal proceedings were commenced by Harvey Norman during ACCC investigations to determine whether Harvey Norman catalogue advertising in the lead up to the Goods and Services Tax breached bait advertising and the false, misleading or deceptive conduct provisions of the Trade Practices Act 1974.
The ACCC investigation was launched after consumer complaints about non-availability of a Quicken Quickbooks accounting software package advertised in Harvey Norman catalogues. Initial ACCC investigations confirmed the non-availability in many stores. The ACCC then, in the first instance, sought relevant information and documents on a voluntary basis from Harvey Norman but did not get a full response. Only two out of 14 questions of a standard kind that would determine whether or not there was a basis for the ACCC's concerns were answered. Further requests for information to be provided on a voluntary basis were refused.
In order to ascertain all the facts the ACCC had no option but to use its statutory powers to issue notices requiring Harvey Norman executives and franchisees to provide information, and to give evidence about the correctness of the representations made in the catalogues and the entities within the Harvey Norman group responsible. This also necessitated the engagement of lawyers by the ACCC to advise and assist in pursuing a more formal investigation.
However, at the commencement of statutory examinations of Harvey Norman corporate personnel, Harvey Norman claimed a potential conflict of interest had arisen in the ACCC's legal representation by the law firm Phillips Fox.
After examining the conflict claims the ACCC was satisfied that they were without foundation. To keep the investigation moving and to avoid any possible appearance of conflict of interest the ACCC decided to continue the investigation with new legal representation. Despite this action taken by the ACCC Harvey Norman decided to launch Federal Court proceedings against the ACCC claiming there was still a risk the ACCC could make unauthorised use of confidential information concerning operations of Harvey Norman.
"The ACCC considered this claim to be fanciful", Professor Fels said.
Harvey Norman did not produce any evidence to the court to substantiate its attack on the ACCC's investigatory processes. It is clear that no confidential information passed to the ACCC. Subsequently, Harvey Norman applied to the Federal Court to discontinue its proceedings. In granting leave to Harvey Norman to discontinue proceedings, the Federal Court ordered the retailer not to commence further proceedings against the ACCC in relation to its claims without the leave of the court.
Justice Margaret Stone said "…I find no fault with the ACCC's conduct in seeking to preserve the integrity of its investigation". Justice Stone acknowledged that "the duties and powers of the ACCC are extensive and of great public importance". Her Honour also found that there is no reason why the ACCC's investigation should not continue in the normal way.
"Mr Gerry Harvey, the Managing Director of Harvey Norman, has been widely attacking the ACCC over the past year. Some of this was at a time when the fact of the ACCC's investigation of Harvey Norman was not in the public domain and the context of the attacks may not have been properly understood.
"As a result of his company's actions in going to the Federal Court, the facts of the ACCC’s investigation have become public – consequently, the public will have a better understanding of the context of his criticism of the ACCC.
"The fact that a prominent business is conducting public attacks on the ACCC is not a reason that will lead the ACCC to abandon a legitimate investigation of matters arising under the Act", Professor Fels said.
The ACCC investigation is continuing.