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 7 - Protected cartel information

Outline of chapter

7.1 The Bill enhances the protection afforded to information given in confidence to the Australian Competition and Consumer Commission ('the ACCC') which relates to a breach, or possible breach, of a cartel prohibition. This chapter outlines provisions that provide that, in appropriate circumstances, such information is protected from disclosure to:

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a person under section 157 of the Trade Practices Act 1974 ('the TP Act');

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a court or tribunal;

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a party to a court proceeding to which the ACCC is not a party; and

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a person who is considering instituting proceedings before a court.

Context of amendments

7.2 The ACCC has expressed concerns that its ability to obtain confidential information regarding cartel conduct has been significantly hindered by concerns that it may be required to disclose that information to third parties in certain circumstances.

7.3 The ability of the ACCC to obtain confidential information from informants is of particular importance to the detection of cartel conduct. Cartel conduct by its nature is often engaged in covertly. As a result, information from cartel participants or those closely connected to a cartel participant is often required to reveal the conduct.

7.4 However, given the relationship of such informants to the cartel, they may be discouraged from providing the relevant information if concerns or uncertainty exist as to the circumstances in which the information may be disclosed to others.

For example, if appropriate protection was not afforded informants may be reluctant to cooperate with the ACCC due to concerns such as reprisals or liability to third parties.

7.5 For the TP Act to meet its objectives it is essential that the ACCC is able to obtain the information necessary to effectively enforce it. If the protection provided to confidential cartel information is not clarified, the ACCC's ability to obtain the information necessary to enforce the cartel provisions of the TP Act may be frustrated.

Summary of new law

7.6 The Bill promotes competition by enhancing the protection afforded to protected cartel information, that is, information given to the ACCC in confidence which relates to a breach, or possible breach, of a cartel prohibition. The protection of such information is enhanced by amending the TP Act to provide that:

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the ACCC may refuse a request for documents under subsection 157(1) if the request relates to a document containing protected cartel information;

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the Commission or a Commission official is not to be required to produce to a court or tribunal a document containing protected cartel information, or to disclose protected cartel information to a court or tribunal, except by leave of the court or tribunal;

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the Commission or a Commission official, in connection with proceedings before a court to which it is not a party, is not to be required to make discovery, or produce, to a person a document containing protected cartel information; and

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the Commission or a Commission official is not required, in connection with prospective proceedings, to make discovery (however described), or to produce, to a person a document containing protected cartel information where that person is considering instituting proceedings before a court and the proceedings have not yet been instituted.

Comparison of key features of new law and current law

Detailed explanation of new law

Amendments relating to the disclosure of documents by the ACCC

7.7 Current section 157 of the TP Act provides a right of access regime for certain documents obtained by the ACCC. The Bill limits the ACCC's requirement to furnish documents requested under subsection 157(1) of the TP Act if the request relates to a document containing protected cartel information. [Schedule 1, items 112 and 113, subsections 157(1), (1A) and (1B)]

7.8 Subsection 157(1) currently provides that the ACCC must, at the request of a person and upon payment of any prescribed fee, furnish to the person documents connected with matters to which certain notices, proceedings, or applications relate and which tend to establish the case of the person.

7.9 As a result, the Bill amends section 157 to provide that the ACCC may refuse to comply with a request under subsection 157(1) where the request relates to a document containing protected cartel information.

7.10 To ensure that this power is exercised appropriately, amendments require the ACCC to have regard to specific factors when exercising this power. These factors are:

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the fact that the protected cartel information was given to the ACCC in confidence;

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Australia's relations with other countries;

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the need to avoid disruption to national and international efforts relating to law enforcement, criminal intelligence and criminal investigation;

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in a case where the protected cartel information was given by an informant:

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the protection or safety of the informant or of persons associated with the informant; and

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the fact that the production of a document containing protected cartel information, or the disclosure of protected cartel information, may discourage informants from giving protected cartel information to the ACCC in the future;

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the legitimate interests of the corporation which, or the person who, made the request under subsection 157(1); and

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such other matters (if any) as the ACCC considers relevant.

7.11 Subsection 157(2) and (3) currently provide that if the ACCC does not comply with a request under subsection 157(1), the Court must order it to do so unless it considers the disclosure inappropriate. To prevent a person using subsection 157(2) to circumvent the intention behind the amendments detailed above, amendments provide that if a request under subsection 157(1) is refused, the Court is not able to order the ACCC to comply with it under subsection 157(2). [Schedule 1, item 114, subsection 157(2)]

7.12 In order to ensure a consistent meaning throughout Part XII, protected cartel information is defined for the purposes of section 157 to have the same meaning as in section 157B. [Schedule 1, item 115, subsection 157(6)]

Disclosure of protected cartel information

7.13 The Bill protects in appropriate cases information given to the ACCC in confidence that relates to a breach, or a possible breach, of the cartel prohibitions from being subject to a subpoena, non-party discovery, pre-trial discovery, or like orders. The protections are in addition to existing exemptions and immunities which may operate to protect such information from inappropriate disclosure, including but not limited to public interest immunity.

Disclosure of protected information to a court or tribunal

Commission or a Commission official not required to disclose protected cartel information

7.14 Protected cartel information is protected from inappropriate disclosure to a court or tribunal. [Schedule 1, item 116, section 157B]

7.15 The Commission or a Commission official is not to be required to produce to a court or tribunal a document containing protected cartel information, or to disclose protected cartel information to a court or tribunal, except by leave of the court or tribunal. To ensure that leave is only granted in appropriate cases, the Bill provides an exclusive list of factors to which a court or tribunal must have regard when exercising its power to grant leave under subsection 157B(1). These factors are:

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the fact that the protected cartel information was given to the ACCC in confidence;

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Australia's relations with other countries;

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the need to avoid disruption to national and international efforts relating to law enforcement, criminal intelligence and criminal investigation;

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in a case where the protected cartel information was given by an informant:

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the protection or safety of the informant or of persons associated with the informant; and

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the fact that the production of a document containing protected cartel information, or the disclosure of protected cartel information, may discourage informants from giving protected cartel information in the future;

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in the case of a court-the interests of the administration of justice;

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in the case of a tribunal-the interests of securing the effective performance of the tribunal's functions. [Schedule 1, item 116, subsection 157B(2)]

7.16 If a document containing protected cartel information is produced, or protected cartel information is disclosed, to a court or tribunal in relation to particular proceedings pursuant to subsection 157B(1), then the document or information must not be adduced in other proceedings before the court or tribunal except: in accordance with leave granted under subsection 157B(1) in relation to the other proceedings; or as a result of an exercise of power by the Commission or a Commission official under subsection 157B(4) in relation to the other proceedings. This overrides the operation of court rules such as Order 33 Rule 5 of the Federal Court Rules, which provides the Federal Court with discretion to grant leave to a party, in certain circumstances, to read evidence taken, or an affidavit filed, in other proceedings. [Schedule 1, item 116, subsection 157B(3)]

Commission or a Commission official may disclose protected cartel information

7.17 The Commission or a Commission official may produce to a court or tribunal a document containing protected cartel information, or disclose protected cartel information to the court or tribunal [Schedule 1, item 116, subsection 157B(4)] . To ensure that this power is exercised appropriately, the Commission or a Commission official must have regard to an exclusive list of factors when exercising its power [Schedule 1, item 116, subsection 157B(5)] . These factors are the same as those outlined above to which a court or tribunal must have regard when granting leave under subsection 157B(1).

7.18 If a document containing cartel information is produced, or protected cartel information is disclosed, to a court or tribunal in relation to particular proceedings pursuant to subsection 157B(4) then the document or information must not be adduced in other proceedings before the court or tribunal except in accordance with the leave granted under subsection 157B(1) in relation to the other proceedings, or as a result of an exercise of power under subsection 157B(4) in relation to the other proceedings. Similarly to subsection 157B(3), this overrides the operation of court rules which may otherwise permit protected cartel information which has been produced or disclosed by the ACCC for use in particular proceedings being adduced in another proceeding. [Schedule 1, item 116, subsection 157B7)]

Definitions

7.19 For the purposes of the provisions relating to protected cartel information, a number of terms are defined. [Schedule 1, item 116, subsection 157B(7)]

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Commission official means a member, or associate member of the Commission; a person referred to in subsection 27(1); or a person engaged under section 27A. The definition extends to the staff engaged under the Public Service Act 1999 to assist the Commission, and persons engaged by the Commission to give advice to, and perform services for, the Commission.

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Disclose means divulge or communicate.

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Protected cartel information means information that was given to the ACCC in confidence; and relates to a breach, or a possible breach, of the cartel criminal offences and civil prohibitions.

Disclosure of protected cartel information to a party

Commission or Commission official not required to make discovery of documents containing protected cartel information etc .

7.20 The Commission or a Commission official, in connection with proceedings before a court to which it is not a party, is not required to make discovery (however described), or produce, to a person a document containing protected cartel information [Schedule 1, item 116, subsection 157C(1)] . Similarly, the Commission or a Commission official is not required, in connection with prospective proceedings, from making discovery (however described), or from producing, to a person a document containing protected cartel information where that person is considering instituting proceedings before a court and the proceedings have not yet been instituted. [Schedule 1, item 116, subsection 157C(2)]

7.21 This prevents the ACCC from being required to make non-party and pre-trial discovery of, or from otherwise being required to produce, a document containing protected cartel information. The prohibition applies in connection with proceedings before any court, including a State or Territory court, and with respect to any cause of action, including causes of actions originating under State or Territory law.

Commission or Commission official may disclose protected cartel information

7.22 The Commission or a Commission official may provide a copy of a document protected in appropriate circumstances.

7.23 If a person is a party to proceedings before a court and the ACCC is not a party to the proceedings, the Commission or a Commission official may, on application by the person, make a copy of a document containing protected cartel information and give the copy to the person. [Schedule 1, item 116, subsection 157C(3)]

7.24 In the case of pre-trial discovery, if a person is considering instituting proceedings before a court and those proceedings have not yet been instituted, the Commission or a Commission official may, on application by a person, make a copy of a document containing protected cartel information, and give the copy to the person. [Schedule 1, item 116, subsection 157C(4)]

7.25 The Commission or a Commission official must have regard to an exclusive list of factors to ensure that the ACCC exercises its discretion appropriately. These factors are:

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the fact that the protected cartel information was given to the ACCC in confidence;

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Australia's relations with other countries;

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the need to avoid disruption to national and international efforts relating to law enforcement, criminal intelligence and criminal investigation;

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in a case where the protected cartel information was given by an informant:

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the protection or safety of the informant or of persons associated with the informant; and

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the fact that the production of a document containing protected cartel information, or the disclosure of protected cartel information, may discourage informants from giving protected cartel information in the future;

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the interests of the administration of justice. [Schedule 1, item 116, subsection 157C(5)]

7.26 If a copy of a document is given to a party, or prospective party, to proceedings before a court as a result of an exercise of power under subsections 157C(3) or (4), the copy must not be adduced in other proceedings before a court or tribunal except as provided for by subsections 157B(1) or (4) or subsections 157C(3) or (4). [Schedule 1, item 116, subsection 157C(6)]

7.27 Commission official and protected cartel information are defined for the purposes of section 157C, and given the same meaning as they are given in section 157B. [Schedule 1, item 116, subsection 157C(7)]

General powers of a court

7.28 Certain powers of a court are not affected by sections 157B or 157C. [Schedule 1, item 116, section 157D]

7.29 The power of a court to control the conduct of a criminal or civil proceeding, in particular with respect to abuse of process, is not affected by section 157B or 157C, except so far as that section expressly or impliedly provides. [Schedule 1, item 116, subsection 157D(1)]

7.30 A refusal by a court to grant leave under subsection 157B(1) does not prevent the court from later ordering that a criminal proceeding be stayed on the ground that the refusal would have a substantial adverse effect on a defendant's right to receive a fair hearing. [Schedule 1, item 116, subsection 157D(2)]

7.31 A refusal by a court to grant leave under subsection 157B(1) does not prevent the court from later ordering that a civil proceeding be stayed on the ground that the refusal would have a substantial adverse effect on the hearing in the proceeding. In deciding whether to order a stay of the civil proceeding, the court must consider:

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the extent of any financial loss that a party would suffer as a result of the proceeding being stayed;

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whether a party has reasonable prospects of obtaining a remedy in the proceedings; and

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any other matter the court considers relevant. [Schedule 1, item 116, subsections 157D(3) and (4)]