House of Representatives

Explanatory Memorandum

Circulated By the Authority of the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, the Hon Chris Bowen Mp

Chapter 5 - Investigation powers

Outline of chapter

5.1 This chapter outlines amendments to the Telecommunications (Interception and Access) Act 1979 ('the TIA Act') and the Proceeds of Crime Act 2002 ('the POC Act'). It also outlines amendments to the search and seizure provisions of Part XID of the Trade Practices Act 1974 ('the TP Act').

Context of amendments

Telecommunications ( Interception and Access ) Act 1979

5.2 Cartels pose particular problems for enforcement agencies because they often involve multiple parties who generally know that what they are doing is illegal, and therefore operate in secret with limited documentary evidence and enhanced reliance on oral communication. In these circumstances the discovery and proof of a cartel is difficult, with regulators often taking on proceedings without the benefit of direct evidence of cartel conduct.

5.3 In these circumstances, the use of telecommunications interception powers can be a means of finding evidence of the 'directing mind' of corporate criminal behaviour. Accordingly, the Bill amends the TIA Act to provide access to telephone interception in an investigation of the cartel offences. As a matter of practice, this could occur via joint investigations between an interception agency and the Australian Competition and Consumer Commission ('the ACCC').

Proceeds of Crime Act 2002

5.4 Currently, a breach of the proposed cartel offences by a natural person would be covered by the definition of serious offence under section 338 of the POC Act. However, this definition does not capture corporations that breach the proposed cartel offence provisions. Accordingly, the various powers in the POC Act could not be applied to corporate offenders.

5.5 In light of this, the Bill extends the current definition of a serious offence to ensure that a corporation in breach of the cartel criminal offences is able to be dealt with under the POC Act.

Part XID of the Trade Practices Act 1974

5.6 The Trade Practices Legislation Amendment Act (No. 1) 2006 provided search and seizure powers in relation to potential contraventions of the TP Act. The Bill amends the TP Act to better align the current search and seizure provisions with the search and information-gathering provisions under the Crimes Act 1914 .

5.7 In addition, the search and seizure provisions of the TP Act do not currently provide an executing officer with the power to seize evidence for a breach of the related obstruction offences under sections 137.1, 137.2 and 149.1 of the Criminal Code. To ensure effective prosecution and enforcement of these provisions, the Bill provides executing and assisting officers with the power to seize evidence in relation to the obstruction offences under the Criminal Code.

Summary of new law

5.8 The Bill amends the TIA Act to list the proposed cartel offences and related offences as a serious offence under section 5D of the TIA Act. This amendment (to a threshold provision of the TIA Act) directly ensures that criminal cartel conduct (including related accessorial offences) is capable of being subject to telephone interception.

5.9 The Bill also amends the POC Act to extend the definition of serious offence to expressly refer to the proposed cartel offences, ensuring application to both corporations and individuals.

5.10 In addition to amending the TIA Act and the POC Act, the Bill:

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expands the scope for which the ACCC may currently obtain a search warrant under Part XID of the TP Act;

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facilitates the execution of a search warrant by providing for temporary absences; access, transfer and removal of data which might constitute evidential material; removal of items from premises for inspection; transfer of inspectors; video recording; and requiring a person with computer knowledge to assist;

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provides for a more effective and efficient prosecution of the false or misleading information and obstruction offences under the Criminal Code and ancillary offences under the TP Act, by allowing a search warrant to be issued and evidence to be seized in relation to those offences; and

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strengthens the penalty for failing to provide evidence or answer questions under Part XID of the TP Act.

5.11 The amendments above are aimed at better reflecting the search and information gathering powers under the Part IAA of the Crimes Act.

Comparison of key features of new law and current law

Detailed explanation of new law

Telecommunications ( Interception and Access ) Act 1979

5.12 The TIA Act regulates the use of intercepted material in investigations. Subsection 7(1) of the TIA Act prohibits the interception of communications in their passage over a telecommunications system. An exception applies if the interception of communications is carried out pursuant to a warrant issued under the TIA Act (interception warrant).

5.13 An interception warrant may only be issued with respect to a serious offence . The two indictable cartel offences (in sections 44ZZRG and 44ZZRF, as well as the mirror offences in the Schedule version of Part IV and the related ancillary offences) are listed as a serious offence under section 5D of the TIA Act. This approach provides certainty of application. [Schedule 1, item 2, subsection 5D(5A)] .

Proceeds of Crime Act 2002

5.14 While a breach of the proposed cartel offences by a natural person would be covered by the definition of serious offence under the POC Act, the current definition does not appear to capture corporations that breach the proposed cartel offence provisions. This means that the various powers in the POC Act could not be applied to corporate offenders. To ensure that a corporation in breach of the new offences is captured under the POC Act, amendments extend the definition of serious offence to expressly include the proposed cartel offences. [Schedule 1, item 1, paragraph 338(ed)]

Amendments to the ACCC's search and seizure powers

5.15 A series of amendments to the ACCC's search and seizure regime, based on the search and information gathering provisions under Part IAA of the Crimes Act:

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expand the scope for which the ACCC may currently obtain a search warrant;

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facilitate the execution of a search warrant;

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provide for a more effective and efficient prosecution of the obstruction offences under the Criminal Code; and

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strengthen the penalty for failing to provide evidence or answer questions under Part XID of the TP Act.

Ancillary liability offences

5.16 The Bill enables the ACCC to obtain a search warrant and seize evidential material in relation to the specified forms of ancillary liability offences. This is to ensure that both the primary cartel offences can effectively and efficiently be enforced. A definition of the term contravention therefore refers to the ancillary liability offences (of attempt, incitement and conspiracy) provided in the Criminal Code. [Schedule 2, item 7, section 154A]

Search and seizure of data

5.17 The Cybercrime Act 2001 (Cybercrime Act) amended section 3L of the Crimes Act to enable an executing officer to operate electronic equipment to access data if he or she believes on reasonable grounds that the data might constitute evidential material. Part XID of the TP Act does not contain an analogous provision.

5.18 Currently, Part XID permits a magistrate to issue a warrant to the ACCC enabling the search for, and seizure of, evidential material, subject to certain conditions. However, it is unclear whether the ACCC is currently able to seize, transfer, copy or otherwise handle data.

5.19 The provisions under Part XID of the TP Act are inconsistent with Part IAA of the Crimes Act and do not capture the policy intent of the Cybercrime Act. Given the legislative history of the Crimes Act, there is a risk that a court would conclude that a provision equivalent to subsection 3L(1) was deliberately omitted from the TP Act.

5.20 Accordingly, amendments enable the ACCC to put data accessed by electronic equipment into documentary form; and transfer data to a disk, tape or storage device brought to the premises. [Schedule 2, items 13 and 20, subsections 154F(1) and 154H(1)]

5.21 Given that the above amendments introduce the term data , this term along with other related terms (data held in computer and data storage device) are defined, ensuring consistency between the Part XID of the TP Act and Part IAA of the Crimes Act. [Schedule 2, items 8 to 10, section 154A]

Removal of items from premises

5.22 There may be some instances where the ACCC is not able to practicably examine and process data or things at the occupier's premises to determine whether they may be seized (for example, the process of cracking passwords may take a significant period of time). This was an issue in relation to the Crimes Act. To address this, the Cybercrime Act amended section 3L of the Crimes Act to allow an executing officer to temporarily remove things from premises to conduct an examination and determine whether the things may be seized under the search warrant.

5.23 Part XID of the TP Act does not contain an analogous provision. To ensure that Part XID of the TP Act is consistent with Part IAA of the Crimes Act, amendments enable the ACCC to examine items or process data outside the occupier's premises, where there are reasonable grounds to believe that the item or data contains evidential material. [Schedule 2, item 19, section 154GA]

Person with computer knowledge to assist

5.24 The ACCC is currently not able to seek an order from a magistrate requiring a person with computer knowledge to provide assistance to the ACCC during the execution of a search warrant. This is inconsistent to section 3L of the Crimes Act, which enables a magistrate to order a person with computer knowledge to assist an executing officer. Accordingly, amendments enable an executing officer to apply to a magistrate for an order requiring a person to provide reasonable and necessary assistance to allow the officer to access, transfer and convert data. Amendments also specify the circumstances in which a magistrate may grant an order and provide a penalty of 6 months imprisonment for a breach of the court order. [Schedule 2, item 32, section 154RA]

False or misleading information

5.25 Part XID does not currently provide the executing officer or an officer assisting with the power to seize evidence of a breach of sections 137.1 (false or misleading information), 137.2 (false or misleading document) or 149.1 (obstruction of a Commonwealth public official) of the Criminal Code whilst executing a warrant. To ensure effective and efficient prosecution of the obstruction offences, amendments enable an executing officer and any officer assisting to seize evidence relating to breaches of sections 137.1, 137.2 and 149.1 of the Criminal Code. [Schedule 2, item 18, paragraph 154G(2)(a)]

Video recordings

5.26 Currently, Part XID does not expressly provide for officers executing a search warrant to take photographs or make video recordings of anything at the premises. Providing an express basis for this will allow the ACCC to record evidence that will assist in showing contraventions of the cartel offences (such as a video recording showing where secret records of a cartel were hidden) or a breach of offences relevant to the execution of the warrant (such as photographs providing evidence that the occupier failed to provide reasonable facilities and assistance in breach of section 154Q).

5.27 Further, expressly enabling the ACCC to photograph or make video recordings of the premises or things at the premises provides the Government with evidence to defend unwarranted claims for compensation under section 154ZC (compensation for damage done to electronic equipment), and assists the ACCC to ensure the proper handling and cataloguing of evidential material seized. [Schedule 2, item 17, subsection 154G(1A)] .

Substitution of inspector named as investigating officer

5.28 Part XID of the TP Act does not allow the substitution of an investigating officer by virtue of the current definition of an executing officer . The execution of a search warrant may extend over a number of days. To ensure that an executing officer is able to transfer his or her responsibilities to another officer for personal, work or other reasons, and to ensure consistency with Part IAA of the Crimes Act, the amendment enables the transfer of an executing officer's role from one inspector to another. [Schedule 2, item 12, section 154A]

Temporary absences

5.29 Many search warrants involve lengthy and complex executions over a number of days, given that evidence of cartel conduct is usually difficult to find and spread over a large number of documents. Currently, executing officers or assisting officers are not able to temporarily leave the premises for breaks or other reasons. To ensure that they are able to do so, amendments enable an executing officer and officers assisting, if the warrant is still in force, to complete the execution of the warrant after all of them temporarily cease their execution and leave the premises for not more than one hour (or for a longer period if the occupier of the premises consents in writing). [Schedule 2, item 17, subsection 154G(1B)]

Australian Federal Police to assist in search warrant

5.30 A person may obstruct the execution of a search warrant by, for example, obstructing an executing officer of the ACCC. In such circumstances, it is necessary for a member of the AFP to be authorised to assist. Actions which the AFP may undertake include arresting a person for obstruction in breach of section 149.1 of the Criminal Code or using reasonable force against a person or an object. Accordingly, amendments provide the AFP with the authority to assist an ACCC officer executing a search warrant, including by using reasonable and necessary force against any persons or property. [Schedule 2, item 28, paragraph 154L(ba)]

Penalty for failing to answer questions or produce evidence

5.31 The current penalty for failing to answer questions or produce evidence during an execution of a search warrant is inadequate because it does not specify a maximum term of imprisonment. It is also inconsistent with the maximum penalties imposed for breaching other similar provisions, such as subsection 155(6A) of the TP Act and section 149.1 of the Criminal Code.

5.32 To address this, the existing penalty for failing to answer evidence or producing evidence during an execution of a search warrant (30 penalty units) is removed and substituted by a new penalty (30 penalty units or imprisonment for 12 months, or both). [Schedule 2, item 29, subsection 154R(2)]

Privilege against self incrimination or exposure to a penalty

5.33 Currently, subsection 154R(4) provides that an answer given during an execution of a search warrant is not admissible in evidence against the individual in any criminal proceedings, or any proceedings that would expose the person to a penalty. The amendment removes this immunity in relation to civil proceedings, consistent with the Guide to Framing Commonwealth Offences, Civil Penalties and Enforcement Powers . This allows the privilege against self-incrimination to be abrogated for individuals and corporations, but a 'use' immunity to be available to individuals in criminal prosecutions.

5.34 Accordingly, the amendments allow answers provided under section 154R (answers provided during an execution of a search warrant) to be used in any proceedings that would expose a person to a civil penalty. However, answers given cannot be used in any proceedings that would expose the person to criminal proceedings other than in proceedings for a contravention of subsection 154R(2) or an offence under subsections 137.1 or 137.2 of the Criminal Code. [Schedule 2, item 30, subsection 154R(4)]

Time period for ACCC to retain items seized under warrant

5.35 To reflect the difficulty in accessing some electronic documents, the volume of documents seized and the ACCC's regular use of specialist consultant economists to assist in analysing such documents, the period of time in which the ACCC is able to retain things seized under a search warrant is extended from 60 days to 120 days. [Schedule 2, items 35 and 36, subsections 154U(1) and (2) and paragraph 154V(1)(a)]

5.36 Inspectors retaining items in relation to suspected breaches of the obstruction provisions of the Criminal Code may also need additional time to examine an item. To reflect this, amendments enable an inspector to apply to a magistrate for an order extending the time period for which he or she may retain a thing in relation to a suspected breach of the obstruction offences under the Criminal Code. [Schedule 2, item 41, paragraph 154V(2)(d)]

Magistrate may issue a warrant for any premises in Australia

5.37 Although it is clear that Part XID only applies to premises in Australia, it is currently not clear whether section 154X (issue of warrants) allows a magistrate to issue search warrants in respect of other States or Territories other than its own. To address this, amendments clarify that section 154X does not limit a magistrate to issuing a warrant in respect of his or her own State or Territory. [Schedule 2, item 42, subsection 154X(2)]

Application and transitional provisions

5.38 To avoid doubt as to the application of the amendments to search warrants, the amendment ensures that the amendments to Division 4 of Part XID and section 154A apply to all warrants issued after the commencement of the item. [Schedule 2, item 52]

Consequential amendments

Data

5.39 To reflect the amendments enabling the ACCC to access data, consequential amendments remove references to 'evidential material' and inserts references to 'data.' [Schedule 2, items 14 to 16, 21, 24 and 26, subsections 154F(2) and (3), 154H(3) and (4), and paragraph 154H(5)(a)]

Removal of items

5.40 The Bill makes consequential amendments to the proposed provisions allowing the ACCC to move or seize evidence by inserting words 'moved' or 'from premises' in certain provisions. [Schedule 2, items 22, 33 and 34, subsections 154H(3), 154T(1) and (2)]

Person with computer knowledge to assist

5.41 Consequential amendments to the provisions relating to the operation of electronic equipment insert a note referring to the proposed provisions requiring a person with computer knowledge to provide assistance. [Schedule 2, item 23, subsection 154H(3)]

References to the Criminal Code

5.42 The Bill makes consequential amendments to include the false, misleading and obstruction offences under the Criminal Code under the definition of evidential material . [Schedule 2, item 11, section 154A]

Time period for ACCC to retain items seized under warrant

5.43 As a consequence of the inclusion of a reference to the Criminal Code, the words 'in contravention of' are inserted in various provisions. [Schedule 2, items 37 to 41, subsections 154V(1) and (2)]

Removal of items from premises

5.44 The Bill makes consequential amendments to various provisions by referring to the words 'moved' and 'premises' to reflect the proposed ability of the ACCC to temporarily remove items from premises. [Schedule 2, items 22, 33 and 34, subsections 154H(3), 154T(1) and (2)]

AFP assisting

5.45 Consequential amendments insert references to 'a member of the Australian Federal Police' reflect that they will be empowered to assist the ACCC in the execution of a search warrant. [Schedule 2, item 27, section 154K]