ACCC Policy: Promoting Early Reporting & Compliance with Trade Practices Act, Study notes of Business Administration

Download ACCC Policy: Promoting Early Reporting & Compliance with Trade Practices Act and more Study notes Business Administration in PDF only on Docsity! cartel activity within this company and want to come forward, but do not yet have the full facts. The ACCC will discuss with the applicant whether they are first in. The introduction of a single level of immunity. This would allow applicant to be granted immunity from penalty and prosecution even if ACCC is aware of conduct. Currently the policy has for full immunity the requirement that the ACCC is not aware of the specific conduct. An extended timeframe which will enable full immunity to be available up until ACCC decides to institute proceedings. This creates more time, but there will still be a ‘race to the door’ amongst co-conspirators as it will still only apply to the first applicant. This change will, in our view, also enhance the policy as an investigative tool and create more certainty for applicants. The enhanced protection of information involves introducing a paperless process. This will make it clear that information already provided can be done on a ‘without prejudice’ basis. The practical implication of these changes is to encourage applicants coming to the ACCC at the earliest possible opportunity. With the marker system, it will be possible for applicants to come in and secure their place in the queue even before they have all the facts. Their information is protected and will be returned if it is subsequently revealed that there is no breach. All it requires is one phone call, and a full application can be made later. The leniency policy, together with the tougher penalties now makes any risk weighted cost benefit analysis tip massively against involvement in a cartel. No matter how secretive the cartel, and how carefully it is disguised, there is now the ever present risk of a co-conspirator rushing to our confessional to claim the advantage from our leniency policy. And when the cartel is exposed, the new fines mean the cost for any company will always outweigh the gain, and for individuals involved, there is the prospect of massive fines, massive legal bills, the end of a career in business and possibly even jail. • Part V Consumer Protection When it comes to consumer protection the ACCC’s priority remains to target misleading and deceptive conduct, where such conduct is blatant and there is widespread detriment to consumers. We target conduct with a national or international focus and cases where enforcement action will have a broad national educative or deterrent effect. A very good example of this is the real estate sector where in 2003 we flagged that allegations of misleading and deceptive behaviour in the property industry Page 9 of 15 Docsity.com – such as property investment seminars and “dummy bidding” - would be a priority for us. As a result of extensive media interest in this announcement, and some well- honed court cases, we have seen a marked change in behaviour by the property industry. Another area we have targeted in recent times has been disadvantaged and vulnerable consumers. We use this term widely, and it can incorporate everything from door to door salesmen exploiting people with intellectual disabilities to sell them products they don’t need or can’t afford to those preying on the sick and elderly with false promise of health cures. Such campaigns are focussed on strategic litigation and the use of publicity to bring about behavioural change in a way that benefited consumers, and, we believe, business whose reputation can only be enhanced by fair and ethical behaviour. • Some repositioning in consumer protection In addition to establishing improved databases and systems for our enforcement activities, we have, in the consumer protection area, also shifted our focus somewhat, in the sense that we have cleared the decks, and are continuing to do so, in respect of what I will call local consumer protection matters. Through a process of consultation and collaboration with state consumer affairs bodies we are selecting and carefully moving a number of the local consumer affairs matters to the state consumer affairs bodies, where they are more appropriately dealt with. This enables the national regulator to focus its resources on matters of significant national importance and of significant, widespread consumer detriment. The states are also working on processes to enable them to take collaborative action in relation to conduct which crosses one or more state borders. The ACCC has always placed a high priority on consumer product safety, and our role in this area has recently been greatly enhanced with the transfer from Treasury to the ACCC late last year of direct responsibility for product safety. As a result, the ACCC is now responsible for not only enforcing product safety regulations, but in advising government about what regulations are needed, and what form they should take. • Consumer protection remedies Touching on remedies in the Part V area we are also looking at our mix of cases and the remedies we seek. In the area of consumer protection we have two courses of action available to us under Part V of the Trade Practices Act in respect of what I will broadly call misleading and deceptive conduct. The first is to proceed by way of civil proceedings, which has its advantages but also its limitations. It enables us to obtain orders to restrain by means of injunction the continuation of the issues that are the subject of potential Page 10 of 15 Docsity.com than act in a way that does damage to both consumers and the business, and then to try to undo the damage later. Given the massively increased financial penalties and possible criminal sanctions that corporations and their executives now face for ignoring this obligation, I suggest it will now be crucial that a corporation be able to demonstrate to its shareholders the existence of a corporate culture that is effective in the management of compliance. To do this, a company needs a system of deep-rooted values, attitudes and beliefs that affect the way those within the company perceive the company itself and what it stands for and the way it perceives its relationship with suppliers, customers and regulators. I suggest we all agree that a compliance culture has the following elements: • it has a strategic vision. Compliance activities have to relate to some larger strategic goal • it identifies the specific risks that could arise within each strategic arena • it establishes control points for each of these risks • it is well documented • specific people are accountable for managing each specific element of the compliance system In other words, a good compliance culture links specific people, to specific documents, control points and risks, and ultimately to a specific goal. In a good culture of compliance, this will be a seamless web. A company with a good compliance culture is one in which a dominant value from top to bottom favours compliance with the law. As Graeme Samuel has said, a good compliance culture has to start at the most senior levels. The ACCC recognises that the development of a compliance culture is a complex process as it can involve change in both behaviour and attitudes within the organisation. In its initial stages it is also a time and resources consuming process. However, that should not deter organisations from implementing an effective compliance program. Indeed, there are many benefits from having a robust compliance culture: • it helps the company avoid breaching any of its statutory obligations and thus damaging its reputation • builds long term trust in consumers and minimises complaints • indirect consequences of non-compliance could include work ‘down time’, reduction in staff morale and damage to reputation • it will be taken into account in the event of a breach of the Trade Practices Act. With compliance programmes in recent times the Federal Court has indicated its reluctance to make orders for trade practices compliance programs in terms of the existing standard for compliance programs. In response to those concerns the ACCC has developed four trade practices compliance templates which assist greater clarity and measurability. Page 13 of 15 Docsity.com Level 1 and Level 2 templates have been designed to assist micro and small businesses looking for some guidance in putting in place effective compliance systems. Level 3 and Level 4 templates have been formulated for the needs and circumstances of medium and large businesses. The templates and the accompanying Compliance Review Guidelines will be placed on the ACCC website in the near future. The ACCC notes that there is no generic trade practices compliance program as each organisation’s circumstances are different. Depending on the size and risk profile of the company, a Trade Practices Compliance Program can be as simple as implementing an effective complaints handling system and training relevant staff; or as comprehensive as setting up a team of dedicated compliance staff and conducting regular risk assessment checks. Companies using the templates should not see them as a solution to all their problems. The requirements of the templates should still be tailored to the company’s specific needs and circumstances, ideally by compliance professionals after conducting a thorough trade practices risk assessment. The ACCC has also developed a Compliance Review Requirements publication to accompany the templates and provide clear instructions on what we are looking for in compliance program reports. This publication was developed at the same time as the Australian Compliance Institute work on its Protocols for Reviewing and Assessing the Adequacy, Effectiveness and Efficiency of Compliance Programs. The ACCC provided input to the ACI Protocols and sought advice from some ACI members and some independent compliance professionals on the sort of information and detail that they would find useful in Review Guidelines. The close collaboration has resulted in complementary documents that refect the views of both the Commission, and the compliance professionals and their clients. The templates do not seek to diminish the importance of the Australian Standard for Compliance Programs. The Commission’s Compliance staff are actively involved in the revision of the Standard and it is hoped that this revision will continue to provide the overarching compliance principles and guidelines required by Australian business. We are very happy with the positive and productive relationship we have with the compliance industry and will make every effort to maintain this productive relationship into the future. Finally, I should mention another important initiative. In 2002, the ACCC, in conjunction with the Regulatory Institutions Network at the Australian National University (Regnet), commissioned a major study on the impact of the ACCC's enforcement and compliance activities. It is a major benchmarking survey of almost 1000 medium to large Australian businesses about their views on the ACCC (not all complimentary I might add), the ACCC's enforcement and compliance activities and the compliance Page 14 of 15 Docsity.com philosophy and compliance activities of the businesses themselves. Respondents to the survey have included CEOs, company secretaries and their compliance officers. The study will help us understand what the drivers are for businesses to comply, or not comply, with the TPA. Is it enforcement, is it publicity, is it education or a mixture of all of them? Is it good corporate governance practices? The ANU's Regnet team are currently considering all the data from the survey, and we look forward to future discussion and publications about the results over the next year or so. Conclusion As I said at the outset, the ACCC would much prefer business did the right thing by complying with the Trade Practices Act in the first place, rather than us having to come in and try to undo the damage after the event. That is why we appreciate the work of compliance professionals and welcome the close co-operation we have with your members. But as I’ve also demonstrated here today, proposed tougher penalties including criminal sanctions, recent internal changes, and increased funding for litigation mean that where breaches occur, the ACCC is now much more focussed and better prepared to take on those who ignore our advice and flout the law. It is a message everyone in business can no longer ignore. Thank you for your invitation to speak here today, and I trust we will continue to work together to promote compliance with the Trade Practices Act for the benefit of all Australians. Page 15 of 15 Docsity.com