Welcome to the latest update from Gilbert + Tobin's Corporate Advisory team. The update provides a summary of key recent legal developments, particularly relevant to in-house counsel.
In this issue, you will find:
- OECD reports on pecuniary penalties for competition law infringements in Australia
- Bill to extend crowd-sourced funding regime to proprietary companies before the Senate
- Clarification, simplification and modernisation of the consumer guarantee framework
- Foreign investment threshold to be raised for acquisitions in non-sensitive sectors by TPP-11 countries
- #GDPR: The Final Countdown
On 26 March 2018, the Organisation for Economic Co-operation and Development (OECD) released its report “Pecuniary Penalties for Competition Law Infringements in Australia”. The report compares Australia's pecuniary sanctions regime for competition law infringements to that of a number of other major OECD jurisdictions.
The report indicates that the amount of pecuniary penalties imposed for competition law infringements in Australia is significantly lower, in both absolute and relative terms, than the amounts imposed in other OECD jurisdictions, particularly as regards large companies or conduct that lasted for a long period of time. For example, for penalties imposed in Australia in a number of cartel cases up to November 2017, the average pecuniary penalty in Australia was AUD 25.4 million, while the average base penalty in the comparator jurisdictions would have been AUD 320.4 million.
The Report recommends that Australian authorities consider actions to ensure that pecuniary penalties better deter anticompetitive conduct, such as:
- increasing awareness of and taking into account international practices in the determination of pecuniary penalties;
- linking the amount of the penalty to the economic impact of the sanctioned company’s conduct and the seriousness and duration of the infringement, and decoupling it from the sanction amounts imposed for similar anticompetitive conduct in the past; and
- studying whether to develop and adopt a structured method for the calculation of the amount of pecuniary penalties – including, potentially, the identification of a base pecuniary penalty.
In a speech on the report also given on 26 March 2018, ACCC Chairman Rod Sims:
- noted that the ACCC will re-think its approach to assessing penalties that it puts to the Courts, in particular how to take into account the size and revenue of the contravening firm, both in determining the penalty amount considered appropriate in the circumstances and in its submissions; and
- flagged the possibility of public ACCC guidance materials on penalties.
The Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017, which seeks to extend the crowd-sourced funding regime currently in place for public companies to eligible proprietary companies, has now passed through the House of Representatives and is currently before the Senate.
See previous G+T Insights on the Bill.
Treasury has released a Consultation Regulation Impact Statement which consults on the following proposals relating to the consumer guarantees regime in the Australia Consumer Law (ACL):
- Chapter 1: increasing the monetary threshold in the definition of ‘consumer’ from referring to a person who acquires goods or services that does not exceed $40,000 to now not exceeding $100,000;
- Chapter 2: clarifying the trigger for consumer guarantees remedies (comprising two scenarios that trigger remedies – being failure within a short period of time and multiple failures in the same good);
- Chapter 3: enhanced disclosure requirements for extended warranties; and
- Chapter 4: access to consumer guarantees for goods sold at auctions.
Submissions on the Consultation RIS are due by 23 April 2018.
Foreign investment threshold to be raised for acquisitions in non-sensitive sectors by TPP-11 countries
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11) is a free trade agreement between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam, which was signed on 8 March 2018 in Santiago, Chile.
Among other things, the TPP-11 will increase the threshold value at which private foreign investments by TPP-11 countries in non-sensitive businesses are automatically reviewed by the Foreign Investment Review Board from $261 million to $1,134 million. The threshold for sales of sensitive businesses will remain at $261 million and the lower screening thresholds of $15 million and $57 million will apply to investment in agricultural land and agribusiness respectively (the same as for non-TPP-11 countries). Australian investors will also benefit from preferential investment screening thresholds in the TPP-11.
Other highlights of the TPP-11 include:
- new reductions in Japan’s tariffs on fresh, chilled and frozen beef;
- new access for dairy products into Japan, Canada and Mexico;
- new sugar access into the Japanese, Canadian and Mexican markets;
- tariff reductions, and new access for our cereals and grains exporters into Japan;
- elimination of all tariffs on sheepmeat, cotton and wool;
- elimination of tariffs on seafood, horticulture and wine;
- elimination of all tariffs on industrial products (manufactured goods);
- guaranteed levels of access for services; and
- liberalised and improved regulatory regimes for investment, notably in mining/resources, telecommunications and financial services.
As a modern trade agreement, the TPP-11 will help grow digital trade with rules that cover the movement and storage of data, privacy, consumer rights, and combat spam.
TPP-11 was tabled in Parliament on 26 March 2018 for enquiry by the Treaties Committee.
Submissions are due by 20 April 2018.
Government agrees with high level disclosure guidance for carbon risk but declines to review the Corporations Act or require reporting
The Government has tabled its response to the report of the Senate Economic References Committee on carbon risk. The SERC report Carbon risk: a burning issue was originally tabled on 21 April 2017 and made a number of recommendations for the Government, ASIC and ASX, particularly in relation to the way in which companies report on carbon risk and related measures. Since then, ASIC has encouraged companies and boards to pro-actively consider reporting on climate change risk.
The Government indicates in its response that it agrees in principle with the need for ASIC and ASX (in particular the ASX Corporate Governance Council) to provide appropriate and high level guidance that companies can apply to meet disclosure obligations, but has declined to review the Corporations Act 2001 (Cth) or implement changes to require companies to report on carbon emissions and risk.
On 25 May 2018, the European Union’s (EU) General Data Protection Regulation (GDPR) – the most significant overhaul of Europe’s data protection laws in recent memory – will come into effect. While the GDPR applies primarily to organisations based in the EU, it may also have a significant impact on the data handling practices of many Australian businesses and government agencies.