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Competition and Consumer Act 2010 (Cth)

Section 87B
Enforcement of undertakings

 

The provision

(1) The Commission may accept a written undertaking given by a person for the purposes of this section in connection with a matter in relation to which the Commission has a power or function under this Act (other than Part X).

(1A) The Commission may accept a written undertaking given by a person for the purposes of this section in connection with a clearance or an authorisation under Division 3 of Part VII.

(2) The person may withdraw or vary the undertaking at any time, but only with the consent of the Commission.

(3) If the Commission considers that the person who gave the undertaking has breached any of its terms, the Commission may apply to the Court for an order under subsection (4).

(4) If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders:

(a) an order directing the person to comply with that term of the undertaking;

(b) an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;

(c) any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach;

(d) any other order that the Court considers appropriate.

 

Legislative history

Inserted Trade Practices Legislation Amendment Act 1992 (Act 222 of 1992) s 13

Section 13
Insertion of new section

After section 87A of the Principal Act the following section is inserted:

Enforcement of undertakings

"87B.(1) The Commission may accept a written undertaking given by a person for the purposes of this section in connection with a matter in relation to which the Commission has a power or function under this Act (other than Part X).

"(2) The person may withdraw or vary the undertaking at any time, but only with the consent of the Commission.

"(3) If the Commission considers that the person who gave the undertaking has breached any of its terms, the Commission may apply to the Court for an order under subsection (4).

"(4) If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders:

(a) an order directing the person to comply with that term of the undertaking;

(b) an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach;

(c) any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach;

(d) any other order that the Court considers appropriate.".

The Explanatory Memorandum for this bill stated the following with respect to this section:

55. This clause inserts a new section 87B - 'Enforcement of Undertakings' - after section 87 A of the Principal Act. Subsection (1) provides that the Commission may accept a written undertaking given by a person in connection with a matter in relation to which the Commission has a power or function under the Principal Act (other than Part X). This provision provides legislative recognition of a practice already adopted by the Commission in appropriate cases. The content of an undertaking will be a matter for agreement between the Commission and the person giving the undertaking.

56. Subsection (2) provides that the person giving an undertaking may withdraw or vary the undertaking at any time with the consent of the Commission.

57. Subsection (3) provides the Commission with a right to enforce undertakings given under subsection (1). Where the Commission considers that a term of an undertaking has been breached it may apply to the Federal Court for an order under subsection (4).

58. Subsection (4) provides that, where the Court is satisfied that a term of an undertaking has been breached by the person giving the undertaking, it may make all or any of the orders described in paragraphs (a) to (d). Paragraph (a) provides for an order directing the person who has breached the term of an undertaking to comply with that term. Paragraph (b) provides for an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit directly or indirectly obtained that is reasonably attributable to the breach. This paragraph has been included to ensure that persons should not be able to profit from their own breach of an undertaking. Paragraph (c) provides for an order directing the person to compensate any other person who has suffered loss or damage as a result of the breach. Paragraph (d) permits the Court to make any other order that it considers appropriate. This is a wide power which would encompass at least orders of the kind mentioned in sections 80, 87(2) and 87 A(2) and orders ordinarily made to provide remedies at law or equity under the Court's inherent jurisdiction. It is intended to provide the Court with suitable flexibility to deal with the range of circumstances which may arise in the enforcement of undertakings.

Subsection (1A) inserted by Trade Practices Legislation Amendment Act (No 1) 2006 (Act 131 of 2006) s 3 and Sch 1 (item 21)

Section 21

After subsection 87B(1) Insert:

(1A) The Commission may accept a written undertaking given by a person for the purposes of this section in connection with a clearance or an authorisation under Division 3 of Part VII.

 

The EM for this bill stated:

5 Schedule 1 - Merger clearances and authorisations

...

Item 21 - After subsection 87B(1)

.37 Item 21 inserts new subsection (1A) to make it clear that the Commission may accept a written undertaking given by a person, for the purposes of section 87B, in connection with a clearance granted by the Commission or an Authorisation granted by the Tribunal.

Item 27 - At the end of Part VII

...

Division 3 - Merger clearances and authorisations

...

.10 The regulations may prescribe that the application form contain a requirement that the applicant make an undertaking under section 87B that it will not make the acquisition while the application is being considered by the Commission.

...

.13 Subsection 95AP(2) provides that a condition of clearance may require that an undertaking be made to the Commission under section 87B and may require the undertaking to be in specified terms.

...

New section 95AV Requirements for valid authorisation application

...

.17 The application form [for authorisation] may contain a requirement (to be prescribed by regulation) that the applicant make an undertaking under section 87B that it will not make the acquisition while the application is being considered by the Tribunal.

...

New section 95AZJ Authorisation subject to conditions

...

.6 Subsection 95AZJ(2) provides that a condition of an authorisation may require that an undertaking be made to the Commission under section 87B and may require the undertaking to be in specified terms.

The first supplementary EM for this bill stated

1.9 The effect of subsection 95AE(2), as modified by this amendment and when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for a clearance in relation to that acquisition is being considered by the Commission. Such an undertaking is given by a person for the purposes of section 87B in connection with a clearance under Division 3 of Part VII

...

1.22 Amendment No. 8: Enforceable undertaking - Schedule 1, item 27, page 18 (after line 12), after subsection 95AR(2), inserts a new subsection 95AR(2A) providing that the regulations may prescribe that the application form for a minor variation contain a requirement that the applicant give an undertaking under section 87B that the applicant will not make the acquisition while the application for minor variation to a clearance is being considered by the Commission.

1.23 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while a minor variation to a clearance in relation to that acquisition is being considered by the Commission. Such an undertaking is given by a person for the purposes of section 87B in connection with a clearance under Division 3 of Part VII.

...

1.37 Amendment No. 13: Enforceable undertaking - Schedule 1, item 27, page 20 (after line 17), after subsection 95AS(2), insert a new subsection 95AS(2A) providing that the regulations may prescribe that the application form (specified in subsection 95AS(2)) for a revocation, or revocation and substitution, of a clearance contain a requirement that the applicant give an undertaking under section 87B that the applicant will not make the acquisition while the application for revocation, or revocation and substitution, of a clearance is being considered by the Commission.

1.38 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for a revocation, or revocation and substitution, of a clearance in relation to that acquisition is being considered by the Commission. Such an undertaking is given by a person for the purposes of section 87B in connection with a clearance under Division 3 of Part VII.

...

1.49 Subsection 95AS(14) provides that the Commission may grant a substituted clearance subject to such conditions as may be imposed under section 95AP (for example, including a condition that the applicant give an undertaking to the Commission under section 87B in specified terms). The subsection also provides that a substituted clearance will take effect in a manner consistent with a clearance granted under section 95AM and that the Commission may specify when a substituted clearance is in force.

...

1.55 The effect of subsection 95AV(2), as modified by this amendment and when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for an authorisation in relation to that acquisition is being considered by the Tribunal. Such an undertaking is given by a person for the purposes of section 87B in connection with an authorisation under Division 3 of Part VII.

...

1.76 Amendment No. 26: Enforceable undertaking — Schedule 1, item 27, page 29 (after line 24), after subsection 95AZL(2), insert a new subsection 95AZL(2A), providing that the regulations may prescribe that the application form for a minor variation contain a requirement that the applicant give an undertaking under section 87B that the applicant will not make the acquisition while the application for minor variation to an authorisation is being considered by the Tribunal.

1.77 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while a minor variation to an authorisation in relation to that acquisition is being considered by the Tribunal. Such an undertaking is given by a person for the purposes of section 87B in connection with an authorisation under Division 3 of Part VII.

...

1.95 Amendment No 33: Enforceable undertaking — Schedule 1, item 27, page 32 (after line 15), after subsection 95AZM(2), insert a new subsection 95AZM(2A) providing that the regulations may prescribe that the application form for a revocation, or revocation and substitution, of an authorisation contain a requirement that the applicant give an undertaking under section 87B that the applicant will not make the acquisition while the application for revocation, or revocation and substitution, of an authorisation is being considered by the Tribunal

1.96 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for a revocation, or revocation and substitution, of an authorisation in relation to that acquisition is being considered by the Tribunal. Such an undertaking is given by a person for the purposes of section 87B in connection with an authorisation under Division 3 of Part VII.

...

1.112 Subsection 95AZM(16) provides that the Tribunal may grant a substituted authorisation subject to such conditions as may be imposed under section 95AZJ (for example, including a condition that the applicant give an undertaking to the Commission under section 87B in specified terms). The subsection also provides that a substituted authorisation will take effect in a manner consistent with an authorisation granted under section 95AZG and that the Tribunal may specify when a substituted authorisation is in force.

...

1.119 Amendment No. 41: Enforceable undertaking — Schedule 1, item 36, page 37 (after line 22), after subsection 111(2), insert a new subsection 111(2A) providing that the regulations may prescribe that the application form for a review of a determination by the Commission in relation to a merger clearance contain a requirement that the applicant give an undertaking under section 87B that the applicant will not make the acquisition while the application for review is being considered by the Tribunal.

1.120 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for review is being considered by the Tribunal. Such an undertaking is given by a person for the purposes of section 87B in connection with a clearance under Division 3 of Part VII.

...

The second supplemenary EM for this bill stated

Amendment No. 3: Enforceable undertaking

1.7 The effect of subsection 95AE(2), as modified by this amendment and when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for a clearance in relation to that acquisition is being considered by the Commission. Such an undertaking is given by a person for the purposes of section 87B in connection with a clearance under Division 3 of Part VII.

...

Amendment No. 8: Enforceable undertaking

1.16 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while a minor variation to a clearance in relation to that acquisition is being considered by the Commission. Such an undertaking is given by a person for the purposes of section 87B in connection with a clearance under Division 3 of Part VII.

...

Amendment No. 13: Enforceable undertaking

1.26 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for a revocation, or revocation and substitution, of a clearance in relation to that acquisition is being considered by the Commission. Such an undertaking is given by a person for the purposes of section 87B in connection with a clearance under Division 3 of Part VII.

...

Amendment No. 16: Powers of Commission; substituted clearances

...

1.34 Subsection 95AS(14) provides that the Commission may grant a substituted clearance subject to such conditions as may be imposed under section 95AP (for example, including a condition that the applicant give an undertaking to the Commission under section 87B in specified terms). The subsection also provides that a substituted clearance will take effect in a manner consistent with a clearance granted under section 95AM and that the Commission may specify when a substituted clearance is in force (provided under section 95AQ).

...

Amendment No. 19: Enforceable undertaking

1.37 The effect of subsection 95AV(2), as modified by this amendment and when taken in conjunction with the amendment made by Item 21 of Schedule 1, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for an authorisation in relation to that acquisition is being considered by the Tribunal. Such an undertaking is given by a person for the purposes of section 87B in connection with an authorisation under Division 3 of Part VII.

...

Amendment No. 27: Enforceable undertaking

1.56 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1 of the Bill, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while a minor variation to an authorisation in relation to that acquisition is being considered by the Tribunal. Such an undertaking is given by a person for the purposes of section 87B in connection with an authorisation under Division 3 of Part VII.

...

Amendment No. 34: Enforceable undertaking

1.68 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1 of the Bill, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for a revocation, or revocation and substitution, of an authorisation in relation to that acquisition is being considered by the Tribunal. Such an undertaking is given by a person for the purposes of section 87B in connection with an authorisation under Division 3 of Part VII.

...

Amendment No. 40: Substituted authorisations

1.78 Subsection 95AZM(16) provides that the Tribunal may grant a substituted authorisation subject to such conditions as may be imposed under section 95AZJ (for example, including a condition that the applicant give an undertaking to the Commission under section 87B in specified terms). The subsection also provides that a substituted authorisation will take effect in a manner consistent with an authorisation granted under section 95AZG, as provided for under section 95AZK.

...

Amendment No. 43: Enforceable undertaking

1.84 The effect of this amendment, when taken in conjunction with the amendment made by Item 21 of Schedule 1 of the Bill, is that the Commission may accept a written undertaking under section 87B, given by the applicant pursuant to a requirement in the regulations, that the applicant will not make an acquisition while an application for review is being considered by the Tribunal. Such an undertaking is given by a person for the purposes of section 87B in connection with a clearance under Division 3 of Part VII.

 

Commentary

 

Cases

External linkACCC v Signature Security Group Pty Ltd [2003] FCA 3 [Justice Stone]

[para 39] The ACCC seeks orders pursuant to s 87B(4) .... The respondent has submitted that to show that it has breached its undertakings it is necessary to show that it intentionally conducted itself in a manner inconsistent with the undertakings. The ACCC submits that the test is an objective one. In other words, the ACCC submits that intent is not a relevant consideration and that it is sufficient for it to show that the respondent's conduct is inconsistent with a term of the undertakings.

[para 40] I agree with the ACCC's submissions in this regard. ...

[para 41] 41 The purpose of a corporation giving undertakings to the ACCC is, at least in part, to avoid unnecessary litigation by voluntary undertakings that the corporation will not engage in conduct of the type precluded by the terms of the undertakings. It would be strange if the effect of the undertakings were to give the ACCC rights resulting from breach only where the conduct is intentional in circumstances where intention is not an element of the alleged offence under the Trade Practices Act. Such an interpretation would severely limit the efficacy of such undertakings which presumably are designed to prevent the alleged contravening conduct in any form, whether deliberate, inadvertent or otherwise. In any event if it were intended that intention be a necessary element of breach it would be easy for the parties to incorporate this in the undertakings.

ACCC v StoresOnline International Inc [2007] FCA 1597 [Justice Tamberlin (my emphasis except in para 22)]

[para 4] The test whether an undertaking given under s 87B has been breached is objective in the sense that intent of the party who breaches the undertaking is not relevant: see ACCC v Signature Security Group Pty Ltd (2003) 25 ATPR 41-908 at [41].

[para 10] 10 In the present case, s 87B(4) of the TPA gives the Court jurisdiction to make any order it deems appropriate in circumstances where a respondent has breached an undertaking given to the ACCC under s 87B(1). The ACCC has approached the Court for orders compelling compliance with the undertaking. More specifically, the ACCC seeks injunctions to restrain StoresOnline from committing further breaches. There is nothing in the language of s 87B which limits the jurisdiction of the Court to hear the ACCC’s application and, if appropriate on the evidence, make the orders it sees fit.

[para 13] ... The preferable approach, in my view, proceeds on the basis that Parliament introduced s 87B into the TPA to enhance enforcement by the ACCC by increasing the scope and flexibility of the powers of the Court to provide effective means of dealing with breaches or apprehended breaches of the TPA. The fact that Parliament granted power to the Court in s 87B(4) points to the conclusion that it did not intend the powers in relation to s 80 to be the exclusive expression of the Court’s ability to grant relief of an injunctive nature. It is not correct, in my view, to regard s 87B as limited in its operation to the scope of the powers conferred by s 80.

[para 14] ...s 87B of the TPA regulates the particular circumstances in which an undertaking is given directly to the ACCC rather than to the Court. The Court is not involved in that process, and the undertaking is a binding agreement which arises in the context of a statutory regime. The power under s 87B is designed to give effect to and reinforce the undertaking where there has been non-compliance. The Court is given power for the purposes of more effective enforcement if the undertaking is breached. The ordinary and natural meaning of s 87B(4) is to give the Court power to better enforce undertakings by converting them into orders of the Court, and to make other orders in its discretion, if and when it becomes appropriate.

[para 15] Section 80 is a provision invoked when there has been contravention or possible contravention of specified provisions in the TPA. Section 87B is not one of those provisions. The limitations imposed by s 80 on the ability of the Court to make "any other order ... [it] considers appropriate" under s 87B(4)(d) must, on the reasoning advanced by StoresOnline, be found to be implicit in s 80. In my view, there is no basis to imply such a limitation. Section 87B is directed to investing the Court with powers. To limit the Court’s ability to grant injunctions at the request of the ACCC where undertakings given under s 87B have been breached is a non-beneficial and inappropriate interpretation of s 87B.

[para 17] Once it is established that a respondent has breached a term of an undertaking given to the ACCC, the Court may make an order directing the respondent to comply with that term of the undertaking (s 87B(4)(a)) and any other orders it deems appropriate (s 87B(4)(d)).

[para 22] I accept the submission of the ACCC that s 87B(4)(d) is a conferral of broad power which is "additional to the power conferred by s 87B(4)(a), to make any order that the Court considers appropriate". This approach is supported when one has regard to the explanatory memorandum to the Trade Practices Legislation Amendment Act 1992 (Cth), which introduced s 87B into the TPA. It states that s 87B(4)(d)

‘... is a wide power which would encompass at least orders of the kind mentioned in sections 80, 87(2) and 87A(2) .... It is intended to provide the court with suitable flexibility to deal with the range of circumstances which may arise in the enforcement of undertakings.’

(Emphasis added.)

This comment demonstrates that, where it is appropriate to do so, as in this case, the Court is empowered to make orders which extend beyond the ambit of ss 80, 87(2) and 87A(2) in the TPA and, if necessary, beyond the scope of the original undertaking to provide relief against apprehended breaches on a quia timet basis.

ACCC v Woolworths (SA) Pty Ltd [2003] FCA 530 [Justice Mansfield (my emphasis)]

[para 55] The ACCC’s power under s 87B is to accept an undertaking ‘in connection with’ a matter in relation to which it has a power or function. It is arguably a more extensive power. The scope of the power is to be determined as a matter of statutory construction. The expression ‘in connection with’ was given a wide scope of operation by Kitto J in Berry v Federal Commissioner of Taxation [1953] HCA 70; (1953) 89 CLR 653 at 658-659, as requiring ‘a substantial relation, in a practical business sense’. The test does not necessarily require an immediate causal relationship: per Wilcox J in Our Town FM Pty Ltd v Australian Broadcasting Tribunal [1987] FCA 301; (1987) 16 FCR 465 at 479-480.

[para 56] Clearly the two undertakings are proffered as part of the resolution of proceedings which involve allegations of making a price fixing agreement, and giving effect to it, by each of Woolworths (SA) and The Arnhem Club contrary to s 45(2)(a)(ii) and s 45(2)(b)(ii) of the TP Act. The nature and terms of undertakings which may be accepted by the ACCC under s 87B is different from, and more extensive than, the Court’s power to grant injunctions (and to accept undertakings) under s 80. ... On the other hand, the ACCC could not in my judgment accept an undertaking which did not have a proper connection with the alleged contravening conduct.

[para 58] In this matter, there is no legislative indication that the powers of the ACCC under s 87B should be limited to powers akin to those of the Court. Indeed, it may be the choice of the words ‘in connection with’ in s 87B, compared for example to the words ‘relates to’ in s 86C(4), are intended to indicate the powers of the ACCC should be widely interpreted. The words ‘in connection with’ are capable of bearing a wide meaning. Although they may require more than that, the contravening conduct provides the occasion for the acceptance of the particular terms of the undertaking. Having regard to what I have perceived as the role of the Court at this point, I do not think the Court should decline to note the payment undertakings as part of the overall settlement of the matter. I do not regard the payment undertakings as clearly not falling within the ACCC’s powers to accept them, that is as clearly not coming within the envelope of matters which are ‘in connection with’ the ACCC’s performance of its powers and functions arising from the admitted contravening conduct.