Following a protracted legislative history, the Treasury Laws Amendment (2018 Measures No. 5) Bill 2019 finally passed both Houses of Parliament last week. Amongst other things, the Bill amends the Competition and Consumer Act 2010 (Cth) in an attempt to provide small business with greater access to remedies when faced with anti-competitive conduct.
Key points
- The Bill allows an applicant to seek a “no-adverse costs” order against a respondent in private actions brought to enforce competition laws, regardless of the outcome or likely outcome of the proceedings.
- The Bill is intended to address access to justice issues faced by small business.
- The amendment applies in relation to actions brought on or after 1 July 2019.
Access to justice reforms
While the Australian Competition and Consumer Commission (ACCC) is responsible for the public enforcement of contraventions of Part IV of the Competition and Consumer Act 2010 (Cth) (CCA), individuals, such as consumers or small businesses, may also seek relief from the courts for harm caused by anti-competitive practices. Consumers or small businesses will commonly seek damages or injunctions to prevent and restrain anti-competitive conduct, such as misuse of market power, exclusive dealing or cartel conduct.
The Bill allows for a no adverse costs order to be sought at any time during proceedings, by a person bringing an action in relation to loss or damage caused by anti-competitive conduct. If such an order is made, the person bringing the action will not be liable for the other party’s costs even if the person’s claim against the other party fails.
The Bill sets out the criteria which a court must consider when determining whether to make a no adverse costs order. The claim must satisfy a “public interest” test - it must raise a reasonable issue for trial which is not only significant for the applicant, but also “significant for other persons or groups of persons”. The applicant must also establish that the disparity in the parties’ financial positions is such that the possibility of an unfavourable costs order might deter the applicant from pursuing the action.
Removing barriers for small business
Small businesses face a range of difficulties in pursuing private action, including:
- the time and costs involved in pursuing private actions;
- a power imbalance when attempting to resolve disputes with large businesses or government;
- the complexity of private actions brought under Pt IV of the CCA; and
- the likelihood of being burdened with an unfavourable costs order if their claim fails.
Recently, the Australian Small Business and Family Enterprise Ombudsman identified that the average cost to small business of bringing such claims was $130,000.
Although the significant barriers faced by small businesses taking private action to enforce competition laws were recognised by the Harper Competition Policy Review (pg 407), not even the Panel was prepared to recommend a no adverse costs order regime, stating “such changes could have unintended consequences; for example, encouraging frivolous or vexatious actions” (Pg 411).
Whilst the relevant explanatory memorandum suggests that an applicant will need to request a no adverse costs order “at an early stage of the court case”1 the Bill allows requests to be made at any time during proceedings. Further, the amendments don’t just apply to small business, but extend to any person (including a consumer) bringing an action under Pt IV of the CCA.
Key takeaways
Although the amendments create a greater incentive for small business to pursue actions against well resourced big business and government, it is unlikely the amendments will lead to a substantial increase in private actions. The amendments only relate to claims for harm suffered from an alleged breach of Pt IV of the CCA, which are notoriously complex and difficult to prove. A small business bringing such an action would still face significant barriers in terms of the limited financial and human resources available to meet its own costs of proceedings. The public interest safeguard introduced also mitigates the risk of encouraging vexatious litigation.
If you require advice in relation to these amendments or other aspects of the competition law regime, please contact HopgoodGanim Lawyers’ Competition team.
1. Explanatory Memorandum, Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017, 3. The amendments were initially proposed by the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017. However, that Bill did not proceed and was removed from the Notice Paper in June 2018.