Commonwealth of Australia Explanatory Memoranda

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COMPETITION AND CONSUMER AMENDMENT (COMPETITION POLICY REVIEW) BILL 2017

                             2016-2017




    THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA




                  HOUSE OF REPRESENTATIVES




COMPETITION AND CONSUMER AMENDMENT (COMPETITION POLICY REVIEW)
                           BILL 2017




        ADDENDUM TO THE EXPLANATORY MEMORANDUM




                    (Circulated by authority of the
                Treasurer, the Hon Scott Morrison MP)
   COMPETITION AND CONSUMER AMENDMENT (COMPETITION POLICY
                       REVIEW) BILL 2017

NOTES ON CLAUSES

Schedule 11--Amendments to the power to obtain information, documents and
evidence in section 155 of the Competition and Consumer Act 2010

On page 91, after paragraph 11.38, insert:

1.    It is appropriate to apply a legal, rather than an evidential, burden to the new
reasonable search defence.

2.     The concern with an evidential burden is that it would be relatively straightforward
for defendants to provide evidence suggesting a reasonable possibility that they had
conducted a reasonable search. In many cases, this evidence would simply be the description
of the scope and limitations of the search provided to provide the ACCC. The prosecution
would then face the very considerable challenge of proving beyond reasonable doubt that a
search was unreasonable. This would present significant practical difficulties.

3.     Whether a search was reasonable or not may often turn on the nature of the
methodology used to conduct the search. The reasonableness of the methodology would be
assessed against the factors set out in the new defence, including the number of documents
involved and the ease and cost of retrieving the documents.

4.     Information about these matters would typically be peculiarly within the knowledge
of the defendant. The prosecution would therefore often find it very difficult to obtain
compelling evidence that it was reasonable for a defendant to have conducted a more
extensive search. For example, the ease and cost of retrieving documents could depend on
factors such as: the search capabilities and limitations of the defendant's electronic filing
system; how rigorously the defendant stored documents in the correct places; and where the
computer servers containing electronic documents were located.

5.     Introducing the reasonable search defence with an evidential burden would therefore,
in many cases, so reduce the risk of a defendant being successfully prosecuted for failing to
comply with a section 155 notice, as to significantly undermine the effectiveness of section
155 as an enforcement tool.

6.     In contrast, requiring defendants to prove that a search was reasonable on the balance
of probabilities requires them to provide a more persuasive case to the court, with
significantly more supporting evidence. Given the defendant's unique knowledge of how its
documents are stored, if the additional evidence exists, it would be relatively easy and
inexpensive for the defendant to provide it to the court. The additional evidence would also
help redress the prosecution's lack of information (as outlined above) when seeking to
disprove the defence beyond reasonable doubt.

7.    A legal burden therefore finds a better balance between introducing the new defence
and ensuring that section 155 remains an effective tool in the ACCC's enforcement
capability.