British and Australian financial regulators sign agreement to support innovative businesses

Under a new world-first agreement, innovative fintech companies in Australia and the United Kingdom will have more support from financial regulators as they attempt to enter the others’ market.

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                                              Alex Hutchens, Ben Wood

Significant Change - Australian Government’s effect on competition

Significant Change -  Australian Government’s effect on competition

Paul McLachlan, John Kettle, Alex Hutchens

The Australian Government announced today that it will amend section 46 of the Competition and Consumer Act 2010 (Cth) so that it is illegal for powerful companies to act anti-competitively.  Specifically, the law will prohibit a company with substantial market power from engaging in conduct with the purpose, effect or likely effect of substantially lessening competition in a market.

It is not an exaggeration to say that this is the most substantial reform of Australia’s competition law since the introduction of the Trade Practices Act in 1974.

McCullough Robertson advocated for a change to the law in the consultation on the proposed changes.  Most Australian firms have lobbied for there to be no change.

The current section 46 requires that the company with market power have ‘taken advantage’ of its market power for particular purposes.  The High Court has interpreted that obligation so that it is very difficult to prove a misuse of market power where the company could have engaged in the same conduct even if it did not have market power.  In practice, this has proved to be a very high hurdle, with courts usually finding that the firm’s conduct did not need and rely on the market power.  Despite widespread concerns about the power of large suppliers/customers in various industries, the ACCC has rarely succeeded in any prosecutions it has brought under the section.

The proposed section 46 will lower that hurdle substantially.  In many of the cases the ACCC has lost, the court has still found there to be a collective arrangement that substantially lessened competition (breaching other provisions of the Act).  Now, there will be no need to prove the existence of an agreement.  Any unilateral conduct by a firm with market power will be illegal if it has the effect of substantially lessening competition in a market (or is likely to): even where the effect is an unintended consequence, and even if the conduct was conduct that small firms can and do engage in.

This will bring Australian law much closer to the way competition law applies to single firm conduct in the European Union.  The experience in the European Union is that cases based on abuse of dominance are common (both by the European Commission and by private litigants) and have a strong success rate.

The reform implements the recommendations of last year’s Harper Review in full, after a further consultation by the Australian Government on this change specifically.  It recognises that when firms with market power engage in conduct, it can have vastly different effects on competition than when small firms engage in the same conduct.  Australian law has never recognised that distinction to date.

Please contact Paul, John or Alex for any information or discussion on this or any other competition issue.

Alex Hutchens

Paul McLachlan

John Kettle

2015 IPO update

Tips and trends for companies considering an IPO

Reece Walker, Derek Pocock, Ben Wood

2015 has been a good year for IPOs in Australia, with a number of sizeable listings, including the recent $2.3 billion listing of Link Group.  It has also seen a continuation in the trend of small and mid cap technology companies finding their place on the Australian Securities Exchange (ASX). 

The technology, media and telecommunications (TMT) industry has had a strong run of listings in 2015, including the $2.1 billion listing of accounting software developer MYOB Group earlier this year.

We have also experienced a steady stream of IPO activity, including advising on 4 IPOs in the TMT space this year (for OtherLevels, Superloop, Over the Wire, and Megaport).  With our involvement on a number of floats, we have also continued to see strong appetite from institutions as well as retail investors, validated through an increase in broker-firm offer rounds which are steadily becoming a recognised feature of many offers.

Welcome to the ideas boom

Top 10 initiatives from the Turnbull government’s $1b Innovation Statement

Alex Hutchens, Reece Walker

Prime Minister Malcolm Turnbull and Minister for Industry, Innovation and Science Christopher Pyne yesterday unveiled the Federal Government’s highly-anticipated Innovation Statement with the comment, “welcome to the ideas boom”.  

As the Turnbull government's first major policy document, it is expected to involve the investment of $1.1b over four years across a range of industries.  Mr Turnbull believes the plan will drive innovation in government, promote a culture of entrepreneurship and place innovation at the heart of everything we do in Australia.

Australian businesses, particularly start-up companies and those in the technology sector are set to benefit from the initiatives.  We have highlighted our top 10 opportunities below.

A not-so-safe harbour

Alex Hutchens, John Kettle, Paul McLachlan, William McCullough

It is impossible to avoid the frenzy that has been kicked up by the European Court of Justice’s (ECJ) decision of 6 October 2015 in Case C-362/14 Maximillian Schrems v Data Protection Commissioner.

What is/was the Safe Harbour?

Like Australia, the Member States of European Union (EU) are subject to strict data protection regulations. Generally speaking, personal data cannot be transferred out of a Member State unless the destination country has adequate protection for the data in question. Over a decade ago, the United States of America (US) and European Commission entered into the ‘Safe Harbour Agreement’ which meant that data could be shared where both companies comply with the Safe Habour Agreement.

All was well and good and many big businesses (including Amazon and Google) relied on the enforceability and protection of the Safe Harbour Agreement.

Apple facing damages bill for patent infringement

Alex Hutchens, John Kettle, Paul McLachlan, Eliza Humble

Apple Inc could be facing up to $US862 million in damages after a US Federal jury ruled on 13 October 2015 that it infringed a patent owned by the licensing arm of the University of Wisconsin.

High Court ruling on the patentability of human genes

Malcolm McBratney

Today’s landmark decision by the High Court in D'Arcy v Myriad Genetics Inc & Anor [2015] HCA 35 (7 October 2015) essentially prohibits patent protection for human genetic material and genetic sequences.  The decision reverses the 15 February 2013 Full Federal Court ruling, which found that United States company Myriad Genetics Inc’s (Myriad) patent on the isolated BRCA1 gene, associated mutations and utilisation of the sequence for diagnostic purposes was valid.