Major Reform to Australian Competition Laws

On 18 October 2017, the Commonwealth Senate passed the Competition & Consumer Amendment (Competition Policy Review) Bill 2017, implementing a number of amendments to Australia’s Competition and Consumer Act 2010 (CCA).  The changes follow recommendations arising from the ‘root and branch review’ of competition law and policy commenced by the Federal Government in 2015 (commonly known as the ‘Harper Review’).  This follows the passage of changes to the misuse of market power provisions of the CCA (also recommended by the Harper Review) made by the Competition and Consumer Amendment (Misuse of Market Power) Act 2017, which passed on 23 August 2017.

The two Acts implement what are arguably the most significant changes to Australian competition law in 20 years.  The commencement date for the changes has not yet been proclaimed but is likely to be early in 2018.

Our Comment: It is recommended that corporations and businesses seek general legal advice regarding the ambit of the legislation to get in front of the changes before they become law.

Defamation by Google Search

In a landmark case the Full Court of the South Australian Supreme Court dismissed an appeal by Google disputing its liability for defamation. The  Court confirmed that the company can be held legally accountable for defamatory information found through its search engine.

Published in The Advertiser Newspaper – 5 October 2017 (Page 12)

The published reasons for the decision of the Supreme Court in Google Inc v Duffy [2017] SASCFC 130 include the following key findings:

  • Google was a secondary publisher of the relevant paragraphs and knowledge of those search results should not be attributed to Google  until notice is given.
  • The search results published by Google incorporated the defamatory material because it facilitated the reading of the defamatory material in a substantial and proximate way.
  • The fact that the defamatory imputations were contained in search results which repeated material from the underlying web pages did not deny their capacity to convey a defamatory meaning.

Our Comment: The decision shows that the existing law of defamation is well equipped to deal with online publishing. Online publishers should also note the potential adverse effect of notices alerting them to defamatory material and ensure that they have procedures in place to deal with such notices.

Mooted changes to banking executives accountability

The Turnbull Government has released draft legislation for the Banking Executive Accountability Regime (BEAR). Announced in the 2017-18 Budget, BEAR will make banks and their most senior executives and directors accountable for meeting heightened standards of behaviour in line with community expectations and ensure that the banking system is strong, fair and competitive. Submissions in response to the draft are due by 29 September 2017.

Treasury Media Release – 22 September 2017

ACCC appeals Medibank court decision

The ACCC alleged that Medibank made false, misleading or deceptive representations and engaged in unconscionable conduct in relation to its failure to notify Medibank members, and members of its subsidiary brand ahm, of its decision to limit benefits for in-hospital pathology and radiology services, despite representing across a number of its communication and marketing materials that it would.

The Federal Court dismissed the allegations, finding that:

  • Medibank’s use of the word “cover” cannot be read to mean “entirely cover” or “indemnify” and therefore not misleading.
  • Medibank did not represent to consumers that it would notify them in advance of detrimental changes to their benefits.
  • As Medibank did not engage in misleading or deceptive conduct, it cannot have been unconscionable to its customers.

The ACCC has lodged an appeal to the Full Federal Court for a review of the case.

ACCC Media release – 21 September 2017

Our comment: The outcome of the appeal will be important for both private health funds and private health insurance consumers alike. However, regardless of the outcome, the best way of avoiding litigation is to ensure that representations about the  characteristics of goods and services are clear, correct and suitably qualified. Litigating around ambiguity, and whether successful or not, is still litigation and can lead to poor public relations.

Record damages awarded to Rebel Wilison in defamation case

The Supreme Court of Victoria awarded Rebel Wilson damages of $4,567,472 which is not only a record, but may have an immediate impact on how celebrity gossip magazines operate in Australia.

Reported in the Australian online edition of The Guardian, 13 September 2017

Our comment: Although the record damages award may catch the public’s attention, the importance of the Supreme Court’s decision can be found in Justice Dixon’s reasons which contain a considered and detailed examination of the legal principles relating to the assessment of damages in defamation cases. What is clear from the reasons is that damage to a person’s reputation can produce a significant loss in a number of different and possibly unexpected ways.

Full case report

Residence of foreign companies for tax purposes

A foreign company is resident in Australia if it carries on business in Australia and has its central management and control in Australia or its voting power controlled by shareholders who are residents of Australia.

In the important decision of Baywater Investments & Ors v Commissioner of Taxation [16 November 2016] the High Court reviewed the decided cases regarding the “central management and control” of a company and confirmed that this is a question of fact and degree to be answered according to where the management and control actually takes place. Ordinarily, a foreign company is resident where the meetings of its board are conducted, but that result will not follow where the board of directors does no more than note and implement decisions made by an outsider.

On the facts in Baywater Investments Limited every decision of consequence was made by an individual in Australia and there was no occasion for the directors to exercise any judgment and they did not. The real business of the company was conducted by that individual. The central management and control of the company was therefore in Australia.

Full case report.

Our Comment: The case emphasises the need to examine the business and trading activities of the company when determining the question of residency for tax purposes. An important factor remains the degree of management and control exercised by the overseas directors.

New franchise laws nearing vote as Labor wins protections

The Federal Labor Party successfully negotiated with the Nick Xenophon Team to reverse the onus of proof so that employers will be forced to show they pay staff correctly if they do not keep wage records and are accused of underpayments.

Reported in the Financial Review, 5 September 2017, page 8

Our Comment: With recent adverse publicity regarding the underpayment of employees by franchisees, it is important that franchisees ensure employee entitlements are correctly paid and recorded as the new laws will require them to prove that they have complied with their wage obligations.

Business SA loses court case to prove it is a charity for tax purposes

The role of Business SA as the State’s peak business lobby group has been called into question after the Supreme Court ruled that its “dominant” purpose was not to advance trade and commerce in South Australia and dismissed its claim against RevenueSA, which collects State taxes, to claw back almost $2.6 million in payroll tax.

Reported in The Advertiser Newspaper – 1 September 2017 (page 8)

Our comment – In recent times regulators have shown greater willingness to question the tax exempt status of charitable bodies. Charites should ensure their constitution and activities meet both State and Commonwealth legislative criteria when seeking exemption from taxation.