Lawyers question no-costs move for competition claims

Michael Pelly
Feb 18, 2019
AFR
Lawyers have questioned a bill that allows a small business to seek a “no-adverse-costs order” when suing a big company for anti-competitive behaviour, saying there are still significant obstacles for litigants.
They say the requirement that a claim be in “the public interest” will be one hurdle, along with the cost and complexity of the litigation.
Under the Treasury Laws Amendment (2018 Measures No. 5) Bill, a judge can agree to the order if the case is about more than settling a private dispute.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, says the new provision will help take the sting out of market power claims that cost an average $130,000 to bring in the courts.
However, Corrs Chambers Westgarth partner Mark Wilks said claims would still be very expensive, notwithstanding they would not have to pay the other side’s legal bill if they lose.
“The proposed amendments are designed to facilitate claims, focusing on anti-competitive practices, by small business against larger and better-resourced opponents,” Mr Wilks said.
“Whilst the elimination of adverse costs risk may confer a benefit on an applicant with limited resources, I query how effective it will be in encouraging or facilitating claims when the applicant will still be liable for their own costs in bringing the proceedings.”
‘Complex and expensive’
Mr Wilks, the firm’s head of commercial litigation, pointed out that the amendments only relate to claims brought under Part IV of the Competition and Consumer Act, including misuse of market power, resale price maintenance and exclusive dealing.
“Such claims are inherently complex and expensive, often involving highly paid experts on both sides,” he said.
Clayton Utz partner Kirsten Webb highlighted the factors involved in the public interest test.
The bill says a litigant must raise “an issue that is not only significant for the applicant, but may also be significant for other persons or groups of persons” and convince a court that “the disparity between the financial position of the applicant and the financial position of the respondent or respondents is such that the possibility of a costs order that does not favour the applicant might deter the applicant from pursuing the action”.
Ms Webb, the firm’s head of competition law, was sceptical of claims the bill will increase access to justice.
“The objective seems to be to give small and medium-sized enterprises (SMEs) a greater ability and incentive to take action to enforce their rights under Part IV of the Competition and Consumer Act.
‘Levels playing field’
“It’s hard to say whether this amendment will lead to more SMEs going to court. I expect they’d weigh up the likelihood of getting a no adverse costs order in the first instance, based on the criteria that’s set out.”
Ms Carnell has called the provision “an important step towards levelling the playing field and would help address the power imbalance that currently exists”.
“I don’t know many small businesses that have that kind of money [$130,000] lying around in their bank account,” Ms Carnell said.
She noted that if a small business owner takes big business or the government to court, they are at risk having to pay the other side’s cost if they lose or withdraw from the case.