Are you a data hungry business? Here's what you need to know about the ACCC's newly improved Section 155 powers

By Kathryn Edghill, Cicely Sylow


Section 155 of the Competition and Consumer Act 201o (Act) confers powers on the Australian Competition and Consumer Commission (ACCC) that allow it to issue notices for the compulsory obtaining of information, documents and evidence regarding suspected breaches of the Act.  These notices can be issued to parties which are the subject of an investigation or merger review or to any third party whom the ACCC believes may have relevant information.  

The ACCC's section 155 powers were amended on 6 November 2017 to allow them to be used to investigate suspected non-compliance with court enforceable undertakings (e.g. a section 87B or 218 undertaking) and in relation to applications for merger authorisations.  In recognising of the digital age and the kilobytes to zettabytes of data businesses capture, the changes also introduced a new 'reasonable search' defence for requests for documents. Penalties for non-compliance have been increased five-fold from 20 to 100 penalty units (500 penalty units for corporations) or imprisonment for two years.  

The ACCC has issued new section 155 guidelines in January 2018 to address these recent amendments to the law.

How has technology changed the compliance burden of section 155 notices?

A section 155 notice can place a substantial compliance burden on the recipient as it can require a business to spend significant time and money to respond to the notice.  As we produce, capture and store more data, this burden only increases.  Although technology has increased the amounts of data businesses hold, it has also provided efficient electronic searching tools that can automate large parts of the search process.  Using technology effectively can be the key to minimising your compliance burden when faced with a section 155 notice.

A notice seeking documents frequently covers a wide range of data.  A 'document' includes anything on which there is writing, marks, figures, symbols or from which sounds, images or writings can be reproduced as well as maps, plans, drawings or photographs.  Nearly all the data held by a business would fall within the meaning of 'document'.

The ACCC will consider a range of factors when setting the scope of the notice and the nature of the documents it is seeking. If the notice does not contemplate your particular circumstances accurately, or would place an unnecessarily heavy burden on you, it is important to raise these factors with the ACCC as soon as possible after receiving the notice.  In particular, and from a technology perspective, the ACCC may take into account:

  1. The volume of documents sought, the extent to which these are stored electronically and the number and location of potential custodians of documents.
  2. Whether the documents need to be retrieved and produced from databases.
  3. Any other information about the way the recipient of the notice conducts its document management system and its digital environment.

It is advisable for the recipient to engage with the ACCC upon receiving the notice to discuss timing and how it proposes to conduct the searches, to assist in producing the responsive documents in the most efficient and timely way possible.  To the extent there are genuine reasons why the recipient may be unable to comply with the notice (for example, the notice is overly broad or it is impossible to respond by the due date) the ACCC may agree to vary the notice or revoke and replace the notice with a new one.

The new 'reasonable search' defence

The recent amendments to the Act introduced a 'reasonable search' defence to recognise the burden of complying with a section 155 notice concerning 'documents' where there are bytes and bytes of data to search and it is impractical to examine all of them.  These amendments follow similar changes the Courts have made to discovery processes in recent years.  Since November 2017, a person will not be found to have refused or failed to comply with a notice if the person can prove, on the balance of probabilities, that after a 'reasonable search' has been conducted, he or she is not aware of the documents. A written response to the notice is still required and this must include a description of the scope and limitations of the search.  For example, this would outline factors which the person considers made it unreasonable to search any further than they searched or made it reasonable to limit the search in the way they did.  

Importantly, this defence will not be established if the person is in fact aware of the responsive documents and fails to provide them to the ACCC.

What is a 'reasonable search'? 

Determining whether a search is 'reasonable' needs to take into account the nature and complexity of the allegations, the number of documents involved and the ease and cost of retrieving a document relative to the resources of the person who was given the notice.  Other 'relevant matters' may also be taken into account.  For example, this may include whether the ACCC and the person have agreed to the scope of the search.

How to approach conducting a 'reasonable' search

First, you need to understand how and in what form information is captured by your business and where it is located.  For example, are documents held in hard copies, a self-hosted storage system or in a cloud-based service? If your information is hosted, is it located on a domestic server or is the server located overseas? Furthermore, are the documents held in a sophisticated document management system that will allow precisely defined search parameters, or in a cloud storage facility that is merely a virtual cardboard box? 

Secondly, you need to understand the type and content of the information you are looking for in order to determine the types of documents that will be responsive to the notice. You need to determine search parameters, including identifying the critical words and language that may have been used (e.g. does your industry use particular jargon that requires more 'creative' search parameters).  These parameters may need to be revised throughout the search process or at the request of the ACCC. 

Thirdly, you need to identify what technology you are going to use to help review and sort the documents and provide them to the ACCC.  There are various software programs that can greatly assist in the process, particularly if your documents are not stored in a sophisticated document management system to begin with.

Wider application of the section 155 powers

Merger Authorisation Decisions

The recent amendments to the Act now allow the ACCC to authorise mergers using a 'public benefits' test.  The changes also allow the ACCC to use its section 155 powers to obtain information in relation to a matter that is relevant to its merger authorisation decision.

Alleged contraventions of a court enforceable undertaking

Where a company has given an undertaking to the ACCC under s87B of the Act (or s218 of the Australian Consumer Law) to perform or refrain from certain activities, the ACCC may now issue a section 155 notice to investigate whether the undertaking is being complied with. Failure to comply with an enforceable undertaking may result in the Court ordering penalties equal to the value of any financial benefit obtained, compensation to a third party that has suffered loss and/or any other order the Court considers appropriate (including adverse costs orders). 

Compliance with a section 155 notice is compulsory

If you have been served with a section 155 you must comply with it (to the extent it is valid).  A person or body corporate cannot refuse to respond to the section 155 notice or knowingly provide information that is false or misleading.  Nor are you excused on the basis that the information provided may incriminate you.  Failure to comply with a section 155 notice is an offence punishable by up to 2 years imprisonment or a fine of up to $21,000 for individuals and $105,000 for corporations (100 and 500 penalty units respectively). 

If you have received a section 155 notice and need assistance responding to the notice, please contact your usual Bird & Bird contact or one of the authors below.  We thank Thomas Sutcliffe (Summer Clerk) for his contribution to the preparation of this alert.