No room for doubt: Overseas entities now clearly within the grasp of the ACCC's expansive investigative powers

Companies operating in Australia should be prepared to face the possibility of far-reaching section 155 notices that can now extend to overseas recipients, following the recent amendment to the Competition and Competition Act 2010 (CCA).

The ACCC's 155 powers

Under section 155 of the CCA, the ACCC has a number of powerful information-gathering tools at its disposal. A section 155 notice may be served on someone if there is reason to believe they can furnish information, produce documents or give evidence relating to a matter that is, or may constitute, a relevant contravention of the CCA (including the restrictive trade practices provisions, the Australian Consumer Law (ACL) and certain other specific sections of related legislation). The notice requires that person under compulsion of law to furnish the information in question, produce the documents specified in the notice and/or appear before the Commission to give written or oral evidence under oath or affirmation.

Section 155 notices are intended to assist the ACCC in its investigations of contraventions or potential contraventions and may be directed at any person holding relevant information or documents – not only the person under investigation. They may be directed at individuals or at companies.

Serious penalties apply for non-compliance. For individuals, failure to comply is an offence punishable by imprisonment for two years or a fine of up to 100 penalty units (currently $27,500). Companies may face a fine of up to 500 penalty units (currently $137,500).

The expanded scope of section 155 notices

Because section 155 notices are directed at specific individuals or entities, the obligation to furnish information and produce documents pursuant to a notice is personal to the individual or entity and that individual or entity need only furnish information and produce documents that, after conducting reasonable searches, are identified as being within their own possession, power or control. This is of particular relevance to companies operating in Australia via an Australian subsidiary if a section 155 notice is issued to the Australian subsidiary and the information and documents sought by the notice are not within that entity's possession, power or control but that of the parent or another entity within the corporate group.

Where the parent or other relevant entity within the corporate group is located outside of Australia, absent cooperation on a voluntary basis, it has been unclear whether the ACCC had the power to separately serve a notice on that other entity outside Australia or otherwise require the local subsidiary to obtain the information or documents from its related entity overseas for production in Australia pursuant to the original notice served on it.

From 17 December 2022, the changes made by the Treasury Laws Amendment (Energy Price Relief Plan) Act 2022 (Cth) make it clear that section 155 notices can be served on a person, whether in or outside Australia, and therefore can extend to information in the possession, power or control of companies (or people) outside Australia.

The amendment to section 155 notices was introduced so that the ACCC can effectively enforce the CCA against those market participants may be based overseas but engage in market conduct in Australia. The Government formed the view that:

• businesses based offshore but operating within Australia; and
• persons that may carry on a business in Australia but who are not present in Australia

should not be able to avoid the enforcement powers of the ACCC and should still be capable of being served a section 155 notice, such that the ACCC has sufficient power to ensure that Australian markets do not develop in a manner that could harm consumers.

Parallel changes to Federal Court Rules

This amendment came at a time where a number of other changes were being made to the availability and ease of serving documents overseas, particularly with the passing of the Federal Court Legislation Amendment Rules 2022 (Cth). These new rules for service of Federal Court proceedings outside Australia came into effect on 13 January 2023 and removes the requirement that leave of the court be obtained prior to service of originating applications on parties outside of Australia. This applies to a range of proceeding types defined in rule 10.42, including (among others):

• proceedings based on tortious acts or omissions in Australia;
• contractual disputes with a nexus to Australia;
• a proceeding arising under a law of the Commonwealth, a state, or a territory where a relevant act or omission occurred in Australia, loss or damage was sustained in Australia, the law applies expressly or by implication to acts or omissions occurring outside Australia, or the law confers jurisdiction on the court over persons outside Australia.

Under these amended rules, competition and consumer law claims brought under the CCA/ACL could readily be served on overseas entities without requiring leave of the court.