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Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017

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2016-2017

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

SENATE

 

 

 

 

 

COMPETITION AND CONSUMER LEGISLATION AMENDMENT (SMALL BUSINESS ACCESS TO JUSTICE) BILL 2017

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

Circulated by authority of Senator Gallagher



COMPETITION AND CONSUMER AMENDMENT (SMALL BUSINESS ACCESS TO JUSTICE) BILL 2017

 

OUTLINE

 

This Private Senators' Bill amends two acts, the Competition and Consumer Act 2010 and the Australian Small Business and Family Enterprise Ombudsman Act 2015 . It allows judges in the Federal Court to waive liability for adverse costs to small business private litigants in cases related to the misuse of market power. It also allows the Small Business and Family Enterprise Ombudsman to provide assistance to small businesses in preparing these cases. 

 

Misuse of market power

 

Since its inception, the Trade Practices Act 1974 (now the Competition and Consumer Act 2010 ) has had section 46, designed to prevent firms with substantial market power from deliberately using that power to eliminate or substantially damage a competitor, prevent the entry of a competitor, or to deter or prevent competition.

 

However, there is concern that there is an uneven playing field between large and small businesses in Australia. The Australian Competition and Consumer Commission (ACCC) has taken action in this space, although it has been suggested that this is insufficient relative to the number of allegations.

 

This Bill addresses a prominent problem with the operation of section 46 without changing the intention. The problem relates to private parties litigating breaches of the competition law, namely the risk of significant adverse cost orders should an applicant lose and the time taken to finalise action in the Courts.

 

This issue was addressed by the Harper Competition Review that found small business access to remedies to be wanting, stating:

 

“From submissions and consultations with small business, the Panel is convinced that there are significant barriers to small business taking private action to enforce the competition laws”

 

The Harper Review made the following recommendation:

"Recommendation 53 — Small business access to remedies

The ACCC should take a more active approach in connecting small business to alternative dispute resolution schemes where it considers complaints have merit but are not a priority for public enforcement.

Where the ACCC determines it is unable to pursue a particular complaint on behalf of a small business, the ACCC should communicate clearly and promptly its reasons for not acting and direct the business to alternative dispute resolution processes. Where the ACCC pursues a complaint raised by a small business, the ACCC should provide that business with regular updates on the progress of its investigation.

Resourcing of the ACCC should allow it to test the law on a regular basis to ensure that the law is acting as a deterrent to unlawful behaviour. Small business commissioners, small business offices and ombudsmen should work with business stakeholder groups to raise awareness of their advice and dispute resolution services.

The Panel endorses the following recommendations from the Productivity Commission’s Access to Justice Arrangements report:

·          Recommendations 8.2 and 8.4 to ensure that small businesses in each Australian jurisdiction have access to effective and low cost small business advice and dispute resolution services;

·          Recommendation 8.3 to ensure that small business commissioners, small business offices or ombudsmen provide a minimum set of services, which are delivered in an efficient and effective manner;

·          Recommendation 9.3 to ensure that future reviews of industry codes consider whether dispute resolution services provided pursuant to an industry code, often by industry associations or third parties, are provided instead by the Australian Small Business Commissioner under the framework of that industry code;

·          Recommendation 11.1 to broaden the use of the Federal Court’s fast track model to facilitate lower cost and more timely access to justice; and

·          Recommendation 13.3 to assist in managing the costs of litigation, including through the use of costs budgets for parties engaged in litigation."

Allowing judges in the Federal Court to waive liability for costs to small business private litigants will empower private litigants under Part IV of the Competition and Consumer Act 2010 to bring litigation without the burden of prohibitive legal fees.

At an early stage of the court case, the private litigant will be able to request a ‘no adverse cost order’, preventing large legal fees of the defendant being transferred to the litigant. The judge will then assess the initial arguments and decide whether there is merit to the application. If merit is established, any liability for the defendant’s legal fees will be waived.

The role of the Australian Small Business and Family Enterprise Ombudsman

 

Parliament passed the Australian Small Business and Family Enterprise Ombudsman Act 2015 and Australian Small Business and Family Enterprise Ombudsman (Consequential and Transitional Provisions) Act 2015 in 2015 to establish the Australian Small Business and Family Enterprise Ombudsman.

 

The Ombudsman commenced operations on 11 March 2016. The Ombudsman replaces the former Office of the Australian Small Business Commissioner. The role of the Small Business Ombudsman is to:

·          Advocate for small businesses and family enterprises;

·          Provide access to dispute resolution services; and

·          Ensure government policies are small business 'friendly'.

 

To assist in the process of a private litigant requesting a ‘no adverse cost order’, this legislation will allow the Ombudsman to provide professional assistance as to whether the ‘no adverse costs order’ is likely to be granted.

While this will not be legally binding, the Ombudsman will assist small businesses better understand their prospects of successful action under the Competition and Consumer Act.

 

NOTES ON CLAUSES

 

Clause 1: Short Title

 

1.         This clause is a formal provision specifying that the short title of the Bill, once enacted, may be cited as the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Act 2017 .

 

Clause 2: Commencement

 

2.         This clause provides for the commencement of the entire Act to be the day after this Act receives the Royal Assent.

 

Clause 3: Schedules

 

3.         Each Act specified in a Schedule to this Act is amended or repealed as is set out in the applicable items in the Schedule. Any other item in a Schedule to this Act has effect according to its terms.

 

Schedule 1 - Australian Small Business and Family Enterprise Ombudsman Act 2015

 

Australian Small Business and Family Enterprise Ombudsman Act 2015

 

4.         Schedule 1 of this Bill amends the Australian Small Business and Family Enterprise Ombudsman Act 2015 to define the assistance the Ombudsman may give to a party seeking a ‘no adverse costs order’ in proceedings in relation to contraventions of Part IV of the Competition and Consumer Act 2010 .

 

Item 1 - At the end of section 7

 

5.         This item includes conduct within the meaning of the Competition and Consumer Act 2010 as being within the meaning of ‘action’ when referred to in the Australian Small Business and Family Enterprise Ombudsman Act 2015 .

 

Item 2 - At the end of section 15

 

6.         This item clarifies that assistance provided by the Ombudsman in advising on and preparing a ‘no adverse costs order’ in relation to the Competition and Consumer Act 2010 , as specified under Division 3A of Part 4 in the Australian Small Business and Family Enterprise Ombudsman Act 2015 , is included as part of the ‘assistance function’ for the Ombudsman.

 

Item 3 - After subparagraph 23(h)(ii)

 

7.         This item ensures that the number of requests for assistance in relation to an application for a ‘no adverse costs order’ will be included in the Ombudsman’s annual report.

 

Item 4 - At the end of section 65

 

8.         Section 65 of the Australian Small Business and Family Enterprise Ombudsman Act 2015 sets out the constitutional connections in relation to the Ombudsman’s assistance function. The list in this section sets out the ‘relevant actions’ in relation to which a person may request assistance from the Ombudsman. This item is to ensure, for the avoidance of doubt, that requests for assistance with applications for a ‘no adverse costs order’ are covered in this list.

 

Item 5 - After division 3 of Part 4

 

9.         Item 5 inserts a new division 3A - Assistance where there may be a contravention of the Competition and Consumer Act 2010 .

 

10.       In this new division, section 74A details the action undertaken by a private litigant under the Competition and Consumer Act 2010 for which the Ombudsman may provide assistance.

 

11.       Section 74B details the type of assistance the Ombudsman may provide to a private litigant.

 

Item 6 - At the end of Division 2 of Part 5

 

12.       Item 6 adds a new section 91A which permits a person (in the Ombudsman office) to disclose material to the person(s) they are assisting that they have obtained in the processes of assisting that person.

 

Schedule 2 - Competition and Consumer Act 2010

 

Competition and Consumer Act 2010

 

13.       Schedule 2 of this Bill amends the Competition and Consumer Act 2010 to allow a no adverse cost order to be sought by a person who brings an action under subsection 82(1) in relation to loss or damage by conduct of another person that was done in contravention of a provision of Part IV.

 

Item 1 - At the end of section 82

 

14.       Item 1 of Schedule 2 adds, to the end of section 82, subsections (3), (4), (5) and (6).

 

15.       Subsections 82(3) and (4) allow for a person who brings an action under subsection 82(1) in relation to a contravention of Part IV to seek a no adverse cost order at any time during proceedings in the court.

 

16.       Subsections 82(5) and (6) restrict the court in making a no cost order to circumstances where the action has a reasonable chance of success, the matter may have significance beyond the litigant (such as that there are likely to be other similar cases), and where the financial disparity of the applicant relative to the respondent is such that a respondent could use a cost order as a deterrent to undertaking litigation.

 

17.       Should a person appeal the Court’s finding on cost orders, they are liable for costs in relation to that appeal.

 

 

 

 

 

 

 



 

 

 

 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

 

Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017

 

This bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the bill

 

This Private Senators' Bill amends the Australian Small Business and Family Enterprise Ombudsman Act 2015 and the Competition and Consumer Act 2010 in relation to the costs of actions taken by persons who suffer loss or damage as a result of breaches of the Competition and Consumer Act 2010 , and defines the assistance the Australian Small Business and Family Enterprise Ombudsman may provide potential litigants.

 

Human rights implications

 

This bill does not engage any of the applicable rights or freedoms.

 

Conclusion

 

This bill is compatible with human rights as it does not raise any human rights issues.

 

 

Senator Gallagher