In this fortnight’s roundup: the world’s worst multinationals; INTERPOL’s logging concerns; Australian laundry detergent cartel and cement flyash cartel busted by the ACCC; the difficulty of proving an offender’s profits from crime noted in Nurofen case; new funds for ASIC; ASIC v royal commission powers explained; community partnership to assist Indigenous consumers; major UK waste company sentenced for illegal dumping; Canadian corporate sentencing principles summarised; destruction of Canadian threatened species birds nests results in criminal conviction; US medical clinic convicted of drug trafficking, health care fraud and money laundering; the importance of updating environmental permits, and a look at some UK regulatory permits.

“These Days, The Worst Multinational Corporations Have Names You’ve Never Heard” (Global)

Michael Hobbes writes this fortnight about the difficulties that attend when trying to get corporations with no public reputation, and no base or market in the developed world, to act lawfully – or, even more challengingly – to act lawfully and with decency.  Potential damage to reputation has made acting with decency a legitimate financial concern for the major corporations we know by name.  But what about the rest?  According to Hobbes, “[f]or the last 10 years, I’ve worked at an NGO dedicated to preventing multinational corporations from violating human rights. Here’s why every actor in the West that could have prevented what happened in Chisumbanje — the media, the international agencies, my own NGO — is becoming increasingly powerless to do so.”

INTERPOL Warns Consumers About Corruption In The Logging Industry (Global)

INTERPOL’s Earth Day message was to warn consumers about corruption in the global timber supply chain undermining efforts to protect the environment.

I’ll Stop Selling Standard Concentrate Laundry Powder If You Guys Do! (Aus – civil)

“The Federal Court has made orders that Colgate-Palmolive Pty Ltd (Colgate) pay total penalties of $18 million for contraventions of the Trade Practices Act 1974 (now called the Competition and Consumer Act 2010) (the Act) … Colgate admitted to entering understandings which limited the supply, and controlled the price, of laundry detergents, and agreed with the ACCC to joint submissions on penalty being put to the court.  … “The information sharing understanding involved phone calls between senior managers of competing companies, many of which started as social calls, but turned to unlawful exchanges of pricing information.  Any contact between competitors carries risk and while discussion of price is particularly serious, there are many topics which may lead to an anticompetitive understanding.”…

“Specifically, Colgate admitted that it made, and gave effect to, an understanding with Unilever Australia Limited (Unilever) and PZ Cussons Australia Pty Ltd whereby they agreed to cease supplying standard concentrate laundry detergents in early 2009 and supply only ultra concentrates from that time.  Colgate also admitted that it and Unilever shared sensitive market information, including information about when they would increase the price of their laundry detergents through telephone contact between Mr Ansell and senior Unilever executives, including Unilever’s sales director at the time.”

The Labour Of Hercules: Trying To Prove An Offender’s Profits From Misconduct (Aus – civil)

The final chapter of the Nurofen litigation is completed, now that “[t]he Federal Court has ordered Reckitt Benckiser (Australia) Pty Ltd to pay a penalty of $1.7 million for engaging in misleading conduct in relation to its Nurofen Specific Pain products, in proceedings brought by the Australian Competition and Consumer Commission.”

The judgment provides an insight into just how difficult it is – even in civil litigation – for a regulator to ascertain the profits flowing from unlawful corporate behaviour.  Justice Edelman explains, from [54] onwards, five reasons why “I do not consider that it is of any assistance to attempt to engage with the calculations [of Reckitt Benckiser’s profits from misconduct] suggested by the ACCC.”

The case is particularly notable because, according to His Honour, “The task pursued by the ACCC was a labour of Hercules. Without expert evidence it was an impossible task. Even with expert evidence it would have been, at best, an extremely rough approximation of profit and, at worst, an informed guess. Very few penalty hearings ever descend into this level of detail.”  (At [52])

Update – 16 December 2016: Did I say the final chapter was completed?  Of course it wasn’t!  The ACCC successfully appealed the penalty in Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; the penalty was increased from $1.7M to $6M.  The case is a must read.  Among the memorable comments: “As we discuss below, in a practical sense, the overall maximum penalty was so great that there was no maximum penalty.”  And, the full court rejected Justice Edelman’s approach to consumer loss: see [76] in particular, and their observation later that,

“Without compelling evidence to the contrary, there was no rational reason to speculate in favour of Reckitt Benckiser that consumers might have been willing to pay twice as much for the same product but for the contravening conduct. “

All this is made more intriguing by Justice Edelman’s intervening appointment to the High Court.

ASIC v Royal Commission Powers (Aus – regulatory)

Anna Olijnyk and Vicky Comino wrote a factcheck piece for The Conversation this fortnight, addressing Scott Morrison’s comments about the relative powers of ASIC and Royal Commissions.

Boost In Funds For ASIC (Aus – regulatory)

ASIC today welcomed the Government’s announcement of major additional funding for the regulator.  ‘This will enable further surveillance and enforcement in areas such as financial planning, responsible lending, life insurance, and misconduct and breach reporting. It will also allow us to build our technological capacity to identify and assess risks and misconduct,’ said ASIC Chairman Greg Medcraft.”

Australia-first Community Partnership To Assist Indigenous Consumers (Aus – regulatory)

The ACCC, QOFT and ICAN have jointly arranged to install signage at the entrances to the Far North Queensland Wujal Wujal Indigenous community reminding “door-to-door traders they have legal obligations to consumers and can’t approach houses displaying do-not-knock notices.  It is also hoped that the signage helps to empower Wujal Wujal residents to understand and assert their rights under the Australian Consumer Law.” If door-to-door sales techniques sound like something only sole traders and small companies use, you might like to review the Lux litigation from 2004 and 2013.

Cement Australia: That Anti-Competitive Conduct Won’t Fly(ash) (Aus – civil)

“The Federal Court has ordered penalties totalling $18.6 million against Cement Australia Pty Ltd and related companies, for numerous contraventions of section 45 of the Trade Practices Act 1974 (now called the Competition and Consumer Act 2010) (the Act), which prohibits corporations from entering into, and giving effect to, contracts and arrangements that have the purpose or effect of substantially lessening competition, in proceedings brought  by the Australian Competition and Consumer Commission.  At this stage the penalty judgment has been made available to the parties only on a restricted basis, pending resolution of confidentiality issues.”

Of note: the length and difficulty of the investigation and litigation.  Some of the regulatory submissions to the white collar senate inquiry mentioned the significant difficulties regulators face in the investigation and litigation of corporate misconduct and crime: this case is a useful demonstration.  The conduct occurred from 2002-2006; litigation commenced in 2008 against five corporate defendants; there was a “lengthy fully contested hearing” and now in 2016, some eight years after the initiation of litigation, and ten years after the misconduct ceased, penalty orders have been made.

Powerday Plc Convicted Of Illegal Waste Offences, Fined $1M (UK)

Powerday Plc, [one] of London and South East England’s biggest waste companies, was sentenced for offences … which saw more than 17,000 tonnes of waste deposited and stored illegally.  Fines were imposed amounting to £1 million and the company agreed to pay the Environment Agency’s costs of £243,955.35 for the investigation and prosecution of the offences.”

Various Regulatory Documents: UK (UK)

I thought it might be interesting to look at some of the permissions and policies published by a UK regulator this fortnight.  The UK Environment Agency issues environmental permits: here is an example of one granted this fortnight.  And here is the agency’s updated enforcement policy for the River Thames.

OHSA Sentencing Considerations In Canada (Canada – criminal)

Dentons summarises a recent Canadian decision in an OHS matter where the Crown’s submission as to appropriate penalty was rejected and a smaller penalty imposed.  It provides some interesting comparisons to Australian theory and practice.  “The Court noted that the primary function of sentencing for regulatory breaches was deterrence; however, sentencing was still an individualized process requiring that all factors be considered, not just deterrence. The relevant factors included the financial circumstances of the corporate defendant. In the Judge’s view, the larger the corporation, the larger the fine. Conversely, when sentencing smaller corporations with more restrictive financial viability, the Court should apply a sentence that reflects that situation while still deterring offenders in similar circumstances from committing similar offences.”

Perhaps the most important difference to note is that in Canada, unlike in Australia, the prosecutor may make a submission about the appropriate size of a fine.

Destruction of Threatened Species Bird Nests Results In Conviction And $8000 Fine (Canada – criminal)

A Canadian excavation company, Bergedac Ltée, “pleaded guilty in the Court of Quebec (criminal division) and was fined $8,000 for violating section 13 of the Migratory Birds Convention Act, 1994. … The investigation found that, in June 2013, more than 40 Bank Swallow nests were destroyed in the sand pit located near Beaumont, Quebec. The Bank Swallow populations had been declining significantly for about 40 years. The sand pits are preferred nesting spots for this species, which is designated as threatened by the Committee on the Status of Endangered Wildlife in Canada.”  The fine will be paid to the Environment Damages Fund; the company’s name was entered onto the Environmental Offenders Registry.

Ace Clinique of Medicine, LLC – Drug Trafficking, Fraud and Money Laundering Specialists (USA – criminal)

“A federal jury in London has convicted a doctor, his wife and their clinic of drug trafficking, health care fraud and money laundering, for orchestrating a scheme in which they made millions of dollars by unlawfully prescribing large amounts of prescription pills to citizens of eastern Kentucky… Ace Clinique of Medicine, LLC, was found guilty on over 180 counts of drug trafficking, health care fraud and money laundering.  The jury rendered its verdict after 13 hours of deliberation, following seven weeks of trial… The investigation was conducted by the FBI and the Kentucky State Police.  Assistant U.S. Attorneys Roger West and Andrew Sparks prosecuted this case on behalf of the federal government.”

The Importance Of Maintaining And Updating Environmental Permits (USA – regulatory)

The US EPA explains the importance of its work in reviewing and updating environmental permits.